F&I and Showroom, October 2017
www fi magazine com 30 F I and Showroom October 2017 For many dealers F I is the most profitable department in the store based on compensation as a percentage of gross However F I is poised to become the single highest gross profit center in the dealership if current trends continue but not for all dealers Many need a better process F I DEFINED Lets define what F I is That may sound elementary but there is more to F I than just selling products F I when done properly should deliver the vehicle get all the money bought protect CSI track contracts in transit ensure correct deal structure and complete all the basic documentation and dont forget to sell products Since the 90s we have all been hearing a pay plan is your job description and coin operated Since then I have worked with thousands of F I managers across the United States and Canada and the lesson holds true F I managers work their pay plan Unfortunately Ive seen too many F I managers who only care about themselves Theyll ask the customer for extra money down to squash the deal if they will not get products due to loan to value or payment to income restrictions This may be undesirable but their defense is that they are simply protecting their PVR In some cases the dealer says he wants the PVR at a specific number and that F I will get there or get bounced This is actually a problem I know this sounds counterintuitive but there must be some incentive for finance managers to get your customers delivered by getting loans approved moving products that increase future customer interaction and by demonstrating behaviors that increase loyalty not just PVR I frequently meet dealers whose finance pay plan is going in the absolute opposite direction of their overall goals They encourage behaviors in F I that work against creating longterm loyalty and profits Many companies continue to use the same training and compensation models developed in the 1980s Until about 10 years ago that training had a certain amount of effectiveness and then customer behaviors changed Now those models must be reexamined and modified to encourage overall dealership success THE WAY IT WILL BE Many dealers got crushed in 2008 but dealers with loyal customers didnt Dealers who want to weather the next storm will need customers who are loyal So how do we drive long term loyalty and profits Dealers who adopt a base hit mentality and stop trying to hit home runs will actually earn more money per vehicle One home run is never worth as much as four or five base hits A 10 or 15 year relationship with a customer who brings his or her vehicle back for service buys his or her next vehicle from you refers family and maintains your community reputation is worth much more than a single home run Ideally the customer leaves happy and goes home feeling good about the transaction A surprising fact is that most customers expect you to profit They just dont want to get ripped off There is middle ground here that is profitable for the long term and it must be harvested So where do we go from here The entire landscape of how customers purchase vehicles and how the dealership operates has changed The behaviors in the finance department have not but they must change along with it Perhaps dealers will adopt alternatives like trying to complete the transaction electronically or directly with the salesperson This is evident by the many different buying and selling structures whether technological or human that are positioning themselves to replace F I Technology can compete with an undereducated unethical and fear based F I manager but lets be real Youre not trying to hire that guy are you As an industry were trying to solve the wrong problem We need not eliminate F I our most profitable department We must improve it Neither electronic transactions nor hybrid sales departments will ever effectively compete with having an ethical knowledgeable and professional finance manager This is great news for dealers who are open minded to new information and willing to adopt new practices Because the data supports that having a standalone finance department when performing properly is only possible when we invest our efforts in developing a finance department in harmony with todays customer ABOUT THE AUTHOR Lloyd Trushel is a key member of a group of associated companies and undertakings that include Consator Group F IQ CAP Warranty First Choice Warranty Intelibuy and others He previously served as an F I trainer and account manager for Assurant Contact him at lloyd trushel@ bobit com TECHNOLOGY GETTYIMAGES COM ILDO FRAZAO
You must have JavaScript enabled to view digital editions.