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Agency Services EFG Companies

Strategic Partner? Or, Parasitic Vendor?

In this day and age, you can’t afford to underestimate the difference.

Contributing Author: Eric FifieldThe year is half-way over and you are probably re-evaluating your business to pave the way to making your year-end goals. One of the areas of high focus for every dealership and agent is their product provider. You have probably felt the burn or know someone who’s business suffered from partnering with a parasitic product provider. You know the signs:

  • No personal relationship
  • No idea what your business goals are
  • A new representative drops by every so often to drop off collateral and leave.

When evaluating current or potential product providers, it is vital to understand how those business partners act as an extension of your agency. Ask yourself the following questions:

  1. Do they listen to my input and proactively innovate new products that serve emerging demands?
  2. Are they flexible and willing to adapt with me as my business model changes?
  3. Are they willing to get directly on the front lines with me?
  4. Do they take a tiered approach to executing their programs with all customers within the agency model?
  5. What do consumers say about them according to their Better Business Bureau (BBB) score?
  6. What are their claims statistics?

Contributing Author: Paul RobersGood product providers do much more than drop off collateral at your dealerships. Rather, they understand that there are four levels of customers they must address to ensure the success of your business. First, they work hand-in-hand with you to understand your needs and tailor their service to you and your dealers based on those needs. Then they work with your dealers to understand their market challenges and address how your products meet their needs.

While dealer buy-in is important, the products won’t ever reach the customer without employee buy-in. A good product provider doesn’t stop once a dealer signs on to sell your products. Instead they work to secure employee buy-in by spending time at the dealership, training on the benefits and selling techniques of your products to people actually selling them.

Lastly, good product providers develop products, collateral, and marketing strategies that incentivize the consumer to purchase their next vehicle with your dealership partners. And, they back up product development with claims adjusters who are committed to exceeding customer expectations every day. Their claims statistics and BBB scores should demonstrate their commitment to excellence in terms of claims paid, timeliness of processing claims, and risk assessment and analysis.

With over 35 years as a world class financial service product provider and administrator, EFG Companies is committed to the continuous development of innovative products, services and go-to-market strategies that make our agents successful. Learn why agents across the US choose EFG as their administrator today.

Categories
EFG Companies F&I

Is Your Gross Profit Not Where You Want It?

Your F&I Products could be the culprit.

Contributing Author: John StephensAs a dealership owner or general manager, you probably continually analyze your numbers and productivity to see how you can increase profit. You consistently review how many deals your sales team closes in a month, your product penetration, web traffic, etc. When it comes to analyzing your F&I products, are you taking a strategic approach to analyzing their benefits for your dealership?

Strong F&I products do much more than sell. They:

  • differentiate your dealership in the market;
  • help build customer relationships;
  • are designed with the customer experience in mind; and,
  • increase service retention.

When evaluating your mix of F&I products, think beyond product penetration to how your products enhance gross dealership profit by creating a customer experience that fosters lasting relationships and repeat sales.

John Stephens CalloutWith over 36 years of developing innovative consumer protection products, EFG Companies knows how to structure your F&I products to get the best results. For example, our dealership partners love our Drive Forever Worry Free program. Why?

Drive Forever takes the approach of building customer relationships to increase gross profit. This is backed up by messaging tailored to a very specific market of people looking for used cars. The messaging and the brand speak to practicality and the necessity of protecting finances from the potential breakdown of the most expensive components on a used vehicle.

Drive Forever provides real protection and is structured to pay legitimate claims. While this means it’s not the cheapest product available, it is one of the more comprehensive and reliable products in the market. This provides dealerships a tangible payoff to their marketing efforts and messaging about being there for their customers. It goes from being lip service to that of tangible value to the customer and brand believability.

Lastly, Drive Forever directs customers back to the dealership for service appointments. When a customer’s vehicle breaks down, they are more likely to return to the dealership to facilitate the entire claims and maintenance process. This increases the likelihood of selling the customer another vehicle up to 80 percent.

Excellent F&I products help drive greater traffic to all aspect of your dealership. From sales through F&I to service, EFG knows how to structure your products to put your dealership in the best light with your customers, and thereby increase retention and gross profit.

To learn how our innovation, dealer engagement and focus on increasing profits can benefit your dealership, contact us today!

Categories
Dealership Training EFG Companies F&I

Increase Profit and Remain CFPB Compliant

Contributing Author: John PappanastosWith the Consumer Financial Protection Bureau (CFPB) threatening to crackdown on what they deem as predatory auto loan practices, everyone is scrambling to make sure they are compliant with the fair lending requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The CFPB was created in July 2010 in an effort to consolidate most Federal consumer financial protection authority in one place.  To-date, the thrust of the CFPB’s oversight has been on rooting out deceptive advertising and sales practices, including misrepresentation of products or product costs, and enrolling customers in products or programs without their consent.   In general, the laws prohibiting these practices are not new; however, the CFPB has also stepped up efforts to eliminate discriminatory practices.  Take the following example:

Sally, a subprime borrower, walks into a dealership to purchase a car. Her F&I manager submits the paperwork to several lending institutions, who then decide to extend a rate on the loan. The interest rate offered by the lender to Sally reflects the higher risk in a loan to an individual of Sally’s credit worthiness.  The F&I manager presents Bank ABC’s rate to Sally, but what she doesn’t know is that, after getting the bank’s rate, her F&I manager increased it with the intention of the dealership participating in the lending profit.  No problem so far.

However, a discriminatory practice occurs if the F&I manager marks up Sally’s interest rate by a greater amount than the dealership typically marks up the bank’s “buy rate” for other customers, even if Sally has few other options to finance her vehicle purchase and is willing to accept the interest rate presented by the dealership.  The fact is that the bank’s buy rate already appropriately reflects the risk in a loan to Sally and the cost to the dealership associated with financing Sally’s purchase is no different than that associated with every other customer.   If the F&I manager increased the rate more for Sally than he would have for another customer because of her race, gender, ethnicity, or any other protected class, then his actions could be deemed discriminatory and the dealership could be held liable.

In addition to discriminatory F&I practices, dealers are concerned as to whether the sale of F&I products, such as extended vehicle service contracts, could increase their liability.  As the CFPB is expected to eventually monitor dealership practices more closely, it makes sense for dealers to double check every process and procedure to ensure compliance.

With respect to F&I products, dealers who partner with third party administrators that understand the depths of their business and the regulation that goes with it don’t have to worry.  Organizations like EFG Companies (EFG), that hold administrative licenses in every state for the sale of F&I products, have made compliance a core facet of their business, influencing everything from product development to claims and client support.

For example, the sale of vehicle service contracts and GAP policies are some of the most highly regulated products by the states.  However, dealers who abide by sound advertising and sales practices cannot be held liable. Rather, the contract administrator becomes liable for any issues relating to the VSC. For this reason, dealerships already had significant reason to abide by discrimination laws before CFPB decided to crack down.

Dealerships found that when partnering with organizations like EFG, their training prepared the F&I managers to remain in compliance with all laws surrounding the sales of F&I products. Companies like EFG take liability very seriously, and, as extensions of the dealership, they verse themselves in the entire F&I process and the laws surrounding it to adequately train dealership personnel.

With engagement from F&I product providers that embody dependability and integrity, dealers can rest assured that their F&I department is sufficiently trained to remain in compliance with all laws surrounding the F&I process.

EFG goes above and beyond to mitigate liability by developing customized go-to-market execution plans for each client.  This effort begins with a comprehensive review of the dealership’s existing processes and leads to joint agreement with the dealer with respect to a well-defined blueprint for compliant – and profitable – implementation.  EFG then creates customized training curriculum and conducts interactive training with dealership personnel, supported by ongoing monthly audits, to ensure that compliance pitfalls are avoided.

Dealerships have an excellent opportunity of increasing profit with F&I products. However, they should keep these considerations top of mind when selecting their product administrative partners:  their operating history and customer service brand recognition in the marketplace, their compliance focus and capabilities, and their liability structure.  Whomever they choose as their partner must be strong in all three areas to provide the level of service and compliance expected from a trusted partner.