Fee credits the dramatic rise in bottom-line results to a systematic, pressure-free approach to selling F&I products, an operational philosophy that promises everyone (regardless of credit score) the same fair deal and a commitment to quality programs that offer their customers nothing but the best products on the market.
From Fee’s perspective, it’s critical to start the process by treating a customer with a 400 credit score the same way you would someone with an 800 rating.
“The key is to establish the rapport and trust of customers while they’re at the sales desk,” said Fee. It’s up to the salesperson to establish some of the basics about a customer’s creditworthiness, like how he can prove his income. And, it’s also up to the sales person to get the customer to start thinking about some of the problems that might lie ahead when it comes to paying the note – problems that can be solved by the products that Fee’s department sells.
“If they have a trade,” said Fee, “the first thing we do is appraise the trade, before they even pick out a new car. We pick out a vehicle, and then present the figures.”
The dealership continues their straight forward approach with the customers. If the trade-in has a negative value, they show that to the customers on the form. They do not mark up the trade-in, then mark up the retail price of the new car to reflect the difference. By getting the basic loan terms hammered out early on, customers are much more likely to give serious thought to buying from Fee’s group when it comes time to look at F&I. A separate department handles after-market goods.
That’s when Fee and six F&I specialists come in armed with two menus: one that outlines the terms of the loan and the monthly payment and another menu of product options divvied up into different classes. First, customers are reassured about their monthly payment. Fee explained the process each new customer goes through:
“We say, ‘Here’s your payment. We could sign you right now.’ That way, they aren’t feeling the pressure. We’re selling F&I, but it’s more like offering it to them, selling the benefits of the program. It’s a less hostile atmosphere for the customer. We go over the loan as if it is approved. And we treat a customer not approved the same way as if they were pre-approved. If we have to sign them at 24 percent, so be it. If we get them a lower rate, then we can resell the product. They’re already signed at 24 percent, then if we can get them a 13 or 14 percent product we have the opportunity to present gap insurance and those other products again. We do not try to rate-bait a customer, sign them at 10 percent and then bring them back and bump them on the interest rates. In the rare situation where the deal is not approved as called, we’ll go back and say, ‘Here’s the rate you signed. You can walk away, or you can sign at the higher interest rate.’ That way you aren’t trying to jam a customer. And by treating customers that way, only one out of 40 will back out of the deal.”
The F&I representative starts by showing the customer the platinum program, a full slate of products that includes a rich, bumper-to-bumper warranty program, gap protection, life insurance to cover the balance of the loan, insurance to pay the note in the event of illness and so on.
As new product sales are added, F&I expands the length of the contract rather than bump the monthly payment rate.
“A customer we closed at 54 months is now shown a 60 months with the protection plan, so the payment program doesn’t balloon up that way.”
If they think it’s too expensive, the F&I department then rolls out a more limited gold menu plan. That offer can also be pared back again if a customer prefers to limit what he’s buying.
What’s amazing, said Fee, is how many times customers will sign up for the full list of platinum products. And that’s the beauty of the menu approach to selling F&I. Before the F&I menu arrived, F&I reps would prejudge the customer, decide he wouldn’t want or need gap insurance and then never offer it. By taking a simple, straightforward approach to rolling out what’s on offer, everyone – buyer and seller – finds the whole process more enjoyable.
It’s also a lot more successful.
“If you would have told me that this could work 10 years ago, I would have said you were crazy. I’ve been in the car business more than 20 years, started back when some dealers were jamming customers and doing payment packing, but now you can only hold 2 points with the bank. You can’t make 5 points. You can only make money on the products.”
If you want to make money in F&I these days, you have to change the way you do business.
“This menu and the way we do business caused charge-backs to drop, customers are more satisfied,” said Fee. “No one goes back and says the warranty doesn’t cover what we said. Our people can only sell the best warranty available. It’s more than enough protection. The warranty they get may cost $300 to $400 more for the premium, but the customer will never have a question, saying, ‘This doesn’t cover me? This guy told me this was bumper to bumper.’”
“When I got transferred to this location, I had seven customers in the first week coming up and complaining because some person sold them the worst package instead of the best,” said Fee. “Now, we try and stick with the manufacturer’s warranty, and it really does help. You don’t have to worry about a warranty company going out, like you did a few years ago.”
That doesn’t mean that the products are priced low. “As an additional product we can sell, the new Chrysler dent protection program offers a good markup.” Multiply that by the 400 to 500 sales that the store completes in a good month, and the added potential for new revenue is sweet.
But everyone gets the same product offers, and everyone gets the same price. That approach helps make customer complaints a rare event.
Every new hire on Fee’s staff has to be prepared to do business the Fee way. The first thing he looks for in a new recruit is a clear track record that speaks to customer satisfaction.
“The customer satisfaction index, that’s the first thing we talk about,” said Fee. “We don’t want to hire somebody who has bad customer satisfaction ratings; somebody who jams customers and won’t do full disclosures.”
Fee is also quick to give a lot of credit for his success to Becky Chernek, an F&I trainer and president of Chernek Consulting in Suwanee, Ga. who helps with all of Fee’s new hires. Chernek flew in six months ago to do a refresher course for everyone in all of Koons’ finance departments.
“She has a lot of experience,” said Fee. “She knows what it’s like to get down with a customer and go head-to-head. She can talk to a finance person at their level.” So can Fee, and there’s every indication the message has come through loud and clear.