13 Methods to Implement
The F&I office has a lot of responsibilities for one department. F&I managers must sell products, ensure compliance, stay knowledgeable about bank and finance company programs, and maintain good relationships with those finance sources, among other things. That’s quite a workload, and it’s essential to develop good processes and procedures to accomplish those objectives. Auto Dealer Monthly spoke to several finance professionals to find out what best practices they recommend to help get the job done.
"As much as you have to be compliant with your client, you also have to be compliant with your [finance sources]."
- Mike Davis, Finance Director, BMW of Sudbury
Not surprisingly, the number-one practice cited by all was the use of menus. “Our number-one job is to protect the dealership. Our number-two job is to be a salesperson,” said Shane Seys, finance manager for Northtowne Automotive Group in Kansas City, Mo. Menus help accomplish both those objectives by ensuring that all customers are presented with the same products.
“Without the menu selling, it’s easy to miss something … or prejudge and think, ‘Hey, this person may not be interested in this.’ It’s not our position to do that,” said Mike Davis, finance director at BMW of Sudbury in Sudbury, Mass. “[Our job is] to offer the products, give people all the features and benefits of the products, and let them make up their own mind.”
Marv Eleazer, finance director of Langdale Ford in Valdosta, Ga., stated, “Consistency, that is the biggest key.” He said F&I managers need to “have a well-structured menu and … follow the same procedure every single time.”
It’s important to understand the customer’s needs, and F&I managers can somewhat tailor the menu presentation. However, F&I managers should be cautious about putting too much emphasis on some products and not enough on others simply based on the assumption the customer won’t be interested. Doing so can inadvertently cost the F&I office a sale. Finance Director Jack Higginbotham of Laurel Ford Lincoln Kia in Laurel, Miss., said, “The last person you think would buy something is the person who steps up and [buys] it.”
Don’t Overload the Menu
Providing a range of products to meet customers’ needs is good, but giving them too many options to consider can work against the F&I office. There is a fine line between offering enough options and piling on too many. Having too many products to present lengthens the amount of time in the F&I office for customers who’ve already spent a substantial amount of time on the vehicle purchase. It can also be overwhelming and result in the customer simply deciding not to buy anything rather than try to evaluate all the options. The number of products on the menu is something that will probably vary for every dealership. Some offer four core products, while others do well with eight.
“I like to keep it down to five products or less,” said Higginbotham. “With the influx of … items that are available [to] put on a menu, there’s just way too much information there and I think when you throw too much at it, it’s ineffective.” He added, “There’s too much room for confusion and it seems like [customers] get a little more flustered that way, and if for some reason they end up buying something that they don’t feel they should [have] later, it does affect your CSI.”
"I like to keep [the menu] down to five products or less ... I think when you throw too much at it, it's ineffective."
- Jack Higginbotham, Finance Director, Laurel Ford Lincoln Kia
Use Evidence Manuals
Evidence manuals are compilations of resources like third-party articles, research, statistics, and customer testimonials that prove the benefits of different F&I products. Davis said evidence manuals can be very effective for selling products. Since so many items on the menu are intangible (services or peace-of-mind products), it is helpful to visually illustrate the benefits of the products to the customers. For example, being able to show amounts paid on GAP claims is especially helpful. “That’s something that a lot of people aren’t even aware of,” said Davis. Evidence manuals provide a way to “substantiate the products” and build value in customers’ minds.
Eleazer recommended spot-checking deals to make sure all documents are present and properly executed. “We have electronic document scanning, which I recommend for any store because ... I can pull up any deal that I want or any deals in a particular range.” Then he can review the deals to make sure all documents were accurately initialed and all disclosures were made properly.
Many stores video-record transactions and spot-check them to make certain everything is presented in a compliant manner. Eleazer recommended checking up on the F&I managers a couple times a week, although he acknowledged that it is very easy for a finance director to become complacent about this. Neglecting to monitor employees, however, can allow bad habits to develop. He stated that regular monitoring enables the finance director to catch and correct undesirable behavior as it occurs, which is easier and less time-consuming than trying to break bad habits later.
Higginbotham is adamant on “training at least once a week, doing some role-playing or reviewing statistics.” This allows him to determine where F&I managers are “faltering that week” and “get them back on track.” He favors role-playing for training rather than videotaping presentations to review, which he said tends to make people self-conscious and makes it difficult to accurately assess their performance.
Davis said that although there is only one other person in F&I with him right now, they meet several times each week to go over deals. “It’s easy because there’s just two of us,” he said, but added that he has been in the position of managing five or six F&I employees before. “What we did in that case was … once a week we’d sit down, and we’d just talk about any issues … We’d talk about any problems we’ve had with clients and also with [finance sources],” he explained. “We’d also talk about positive stuff, success stories … Good ideas would come out of those meetings, and we’d implement new rules and new processes.”
"Our number-one job is to protect the dealership. Our number-two job is to be a salesperson."
- Shane Seys, Finance Manager, Northtowne Automotive Group
Use Word Tracks
The consensus is train with word tracks, but allow for some individualization. Higginbotham initially trains F&I staff at Laurel Ford Lincoln Kia with word tracks, but does not require them to stick with a script word-for-word, allowing them to put a little of their own style into it. Word tracks can help F&I managers stay consistent and follow the process, but if they don’t adapt the word track to fit the way they would normally speak, they can sound insincere, and the presentation may come across as just another sales pitch rather than an effort to educate the customer on products that might be valuable to them.
“The whole idea here is to communicate in a fashion that the customer understands and not to sound like a street merchant trying to hawk cheap merchandise,” said Eleazer.
Monitor Penetration Levels Daily
Higginbotham monitors his F&I staff’s numbers daily to watch penetration levels. “Fortunately, with computers we can look at that every day, so I can watch and make sure there’s not a trend beginning,” he said. If any shortcomings are found, he investigates to find out where the employee is running into a problem. Then, he might do some additional role-playing with the manager to determine if something in their presentation can be changed to help numbers.
Use a Checklist for Deal Documents
With all the paperwork involved in a single deal, it can be all too easy to let something fall through the cracks, even for longtime finance professionals. “I’ve been doing [finance] for years and years so it’s second nature to me, but even so … I use checklists for about everything,” said Higginbotham. “We’ve got a certain procedure on paperwork to make sure everything’s in there and if it’s not, it’s in there before the deal’s turned in,” he said. “[Make] sure before the customer leaves that you’ve checked off everything on that list so you’ve got all the forms you need.”
Control All Credit Applications
Protecting the customer’s privacy is extremely important, and the fewer people who touch a customer’s credit report, the better, according to Seys. “We control all credit applications,” he stated. “As soon as a credit application is filled out, it comes to the finance office and it stays here. We’re the only ones that pull the credit reports.” Not even desk managers see the report, he said.
"We have electric document scanning, which I recommend for any store because ... I can pull up any deal that I want or any deals in a particular range."
- Marv Eleazer, Finance Director, Langdale Ford
This is especially important on subprime deals. “If it’s a marginal deal, we will not roll the deal until all stips are in our office, and if it’s a questionable stip, we will actually send it to the [bank or finance company] to have them verify it before we’ll roll the deal,” said Seys, adding that there are not many spot deliveries at Northtowne Automotive Group. “We’re a very cautious organization.”
Davis reported that his department has found some success in follow-up. Customers who initially passed up things like service contracts or tire protection are sent mailers 30 days after their purchase thanking them for their business, reminding them that those products are still available and presenting some more reasons to consider purchasing them. “The whole process can be overwhelming. People don’t do it every day,” Davis explained. “A lot of times when that happens, they shut down and stop making decisions, which means ‘no’ on a lot of things.” He said they’ve found that sending out the mailer generates some positive feedback. “We usually pick up an extra few [sales] a month on everything.”
The F&I department at BMW of Sudbury also uses maturity lists from the manufacturer to follow up with and offer extended service contracts to customers whose warranties are about to expire. Davis said that many times those customers are “people that just weren’t sure how long they were going to keep the car, but obviously when they’re a few months away from the original warranty expiring, they’re in a much better position to make that decision.”
Always Be Open and Honest
“Honesty is always the best policy,” said Eleazer at Langdale Ford. “Make sure the customer knows exactly what they paid. There is no ambiguity, no sleight of hand, no payment packing.” He said he has discovered “the more open and honest you are with a customer, the more they appreciate it because they have been mistreated other places.”
In addition to maintaining compliance with all customers, there’s another party in the finance transaction to remember. “As much as you have to be compliant with your client, you also have to be compliant with your [finance sources],” Davis added. “When you’re dealing with [banks and finance companies], [you have to make sure] you’re dealing above-board as well.” Transparency with customers and finance sources is “no longer something that just differentiates you from everybody else, it’s absolutely required. It’s not something you should do; it’s something you have to do.”
Seys agreed and pointed out, “The more up front you are with [finance sources], the more likely they are to help you out when you need a favor.” He stressed the importance of maintaining good relationships with finance sources because they are the ones that “allow us to sell our products.”
Make Good Use of Downtime
“When you don’t have anything to do, there’s still plenty to do,” said Eleazer. “Make yourself visible to the sales staff, offer to step in and help on a deal, [or] offer to go in on a desk close.”
Slow times are also a great time for a little extra education. “It’s tough for our managers to actually get any time out for any outside training,” Seys said. His F&I managers pursue a lot of online training. “You have to keep your mind fresh, and you need to do something that keeps you continuously up-to-date with what is changing out there, what products are doing best, what sales techniques are doing best. If you just sit there and do nothing, eventually your numbers will go down to nothing.”
Eleazer suggested, “Familiarize yourself with some online forums that have other like-minded individuals and swap best practices and best sales ideas. Keep yourself busy during those moments when there’s nothing to do. Don’t just sit there on your cell phone or out by the coffee bar yakking it up with your coworkers. Make your downtime valuable, so that when you return to busier times, you’re mentally and emotionally keyed up, ready to do business the right way.”
Related Sidebar: "To Interview or Not to Interview in F&I: Differing Opinions
Vol. 8, Issue 9