September 2010, Auto Dealer Today - WebXclusive
Success in F&I Doesn’t Have to be Complicated
In Chet Holmes’ bestselling book, “The Ultimate Sales Machine,” he identifies that the reason many organizations struggle is because “management attempts to implement 4,000 different ideas. When all they really need to dominate any market is to identify their core strategies (usually about 12) and repeat them 4,000 times until everyone in the organization has mastered them!”
On the surface, this concept appears overly simplistic, but like most worthwhile endeavors, implementing this strategy requires far more discipline and consistency than most dealerships currently apply.
Each week and each month, there is this search for the next great idea. The seduction to uncover this hidden jewel or secret to success is very compelling. Unfortunately, Aesop’s Fable of the Tortoise and the Hare still holds true. It is the consistency of effort that will win the race.
The evidence to support the streamlining and simplification of the F&I process was well-chronicled in recent studies of the nation’s largest automotive retailers. AutoNation’s Mike Maroone was recently asked about the auto group’s strategy to achieve high performance in the F&I department. He indicated that two areas of focus have favorably impacted F&I results. First is training. Every F&I producer participates in full review sessions six times per year. Folks, we are talking every eight weeks, someone is working with each manager to improve and hone his or her skills.
When was the last time someone video-recorded the menu presentation of each of your managers? Do each of your F&I producers have a written multi-page presentation scripted out to define what every menu presentation will sound like? If not, perhaps they should.
The second area was focusing on five core F&I products—vehicle service contracts, maintenance programs, GAP, tire and wheel, and some form of security product. What does your menu look like? It has been well-documented over the years that consumers respond more favorably to presentations in which an odd number of products are offered (3,5,7,9) in a good, better or best format.
For all those reasons, as well as good time management , five is the recommended maximum number of products you should offer on your menu. Clearly one of the advantages of using an electronic menu template is the flexibility to tailor your selection of which five F&I products to offer each customer. In the end, apply the principle that less is more.
Buyers often respond unfavorably to the length of time associated with purchasing a new vehicle. Anything you can do to streamline and simplify the F&I menu process (limiting the F&I menu to the best five products) will help your cause.
Remember. Streamline, simplify and clarify.
There is another very interesting correlation between high-performing F&I departments and those that struggle—compensation. Every high-performing group knows exactly how their pay plan works. And yes, they also learn how to work their pay plan. Based on the revenue stream that one F&I manager can produce, does it not make sense to compensate accordingly? How many other members of your staff can impact your bottom line so directly? At California’s Magnussen Auto Group, F&I managers are in the top 10 percent of earners in each store.
Design your compensation strategy based on the end game you desire. What would you be willing to pay a producer who achieves $1,000 per vehicle? As Stephen Covey suggests, “Begin with the end in mind.”
Vol. 7, Issue 7