F&I profit per vehicle and product penetration are effective metrics for dealers to gain insight into an F&I department's performance, but qualitative benchmarks can show dealers where more training may be necessary, says John Stephens, executive vice president of dealer services for EFG Cos.
To improve the F&I process, he said, dealers should examine whether F&I managers meet these four benchmarks:
1. Perform thoughtful F&I interviews. "That interview is a big, important part of the process," Stephens said. When F&I managers ask about driving habits and history before customers enter the F&I office, it "allows the mistrust to come down." F&I managers should be "more granular with the discussions to where it's not a sales pitch."
When the interview is over, Stephens suggests asking the customer to give the F&I manager 10 minutes to enter the information into the system. "You honor that time by coming back before the 10 minutes," Stephens said. "Customers appreciate when you meet those time requirements."
2. Build rapport by showing interest in customers. "It starts with a good meet-and-greet and letting the customer know they're important," Stephens said. Respect customers' time and ask them questions.
F&I managers should express the importance of understanding how long the customer typically keeps a vehicle and what he or she has liked and disliked about vehicle ownership.
"The best way to build rapport is to allow the customer to speak and allow them to have the time to be heard," Stephens said. "When they feel like they've been heard and understood, the barriers come down really quick."
3. Use the warranty as a tool for education and sales. The warranty review can tee up the product presentation for items that the warranty doesn't cover, Stephens said. Manufacturers' warranties vary. F&I managers should explain the warranty that comes with the vehicle and go through the protection options customers can add. "Customers appreciate it when you slow down to tell them about the warranty," Stephens said.
4. Recognize the individuality of objections. Typically, customers reject a service contract because they don't want to make the additional payments, Stephens said. But if an F&I manager points out that a $38-per-month charge is better than a $2,800 repair fee, customers may be swayed. Or they may not be, for various reasons. The conversation matters, Stephens said. "It gives you a clearer picture of what their financial circumstances are, what they want to accomplish and working toward that end. It goes beyond the sales approach. It's no longer selling; it's about fulfilling a need and meeting the customers' expectations."
Stephens often tells F&I managers to take notes when they face objections. Then go through those notes one by one to solve the problem. Acknowledge that you can't overcome every objection but ask enough questions to find out what the objection really is, he said.