Are your sales and F&I teams at odds with each other? Do you often hear sales team members complain of getting their front-end margin slashed when customers go to finance? Or, do you hear finance managers’ despair over having limited back-end flexibility for F&I products?
When sales people go through our F&I training, their feedback is often that all sales people should go through this training, as it would completely change the way they approach sales. Many sales professionals have no idea what goes on in the finance office, or how their efforts at securing a sale impact F&I.
So, what does go on in the finance office?
Any F&I manager will tell you that their job consists of securing financing that will cover both the cost of the vehicle and the sale of F&I products. They take customer information, submit loan applications, review lender bids, select a lender that meets the needs of both the dealership and the customer, and present the financing options and available F&I products to the consumer. While much of their time is spent on paperwork, the majority of their effort is spent on selling F&I products to increase the dealer’s back-end profit.
What effect does the sales process have on F&I?
The answer to this question is everything. Think about it like this. A sales person lands a customer on a $35,000 vehicle. When the finance manager pulls the customer’s credit and runs the numbers, they see that they will not be able to get a loan for more than $35,000. This makes it almost impossible to sell F&I products, which significantly reduces the dealership’s overall ability to maximize profit on the sale.
Take the same scenario of landing a customer on a $35,000 vehicle, but it turns out they only qualify for $25,000. How likely do you think it will be that the customer will still buy from you if you have to go back and tell them that you can’t get a loan for the amount they need, and that you either need a bigger down payment or to find a different car?
The sales team should shoot for landing customers on vehicles that are not at the top of their budget. This way, the dealership can increase both front and back-end profit, making the sales, F&I and dealership management teams happy.
How can sales professionals qualify customers?
Now, as a sales professional, you may be thinking that getting credit information is not a good way to start the buying process. And, we completely agree. When customers first enter a dealership, they are often excited and looking forward to their vehicle purchase. Sales professionals want to build on that excitement, not diminish it by talking about credit-worthiness. However, there are some simple questions that sales professionals can ask before demonstrating a vehicle to help them select vehicles in roughly the right price bracket for the consumer in front of them.
- Is your vehicle paid off, or are you still making payments?
- What is/was your monthly payment for your current vehicle?
- How much higher are you looking to spend?
Adding these questions into the sales process, along with questions around family transportation needs, distance to work, the types of vehicles they like, etc. helps sales people land customers on the right vehicle that meets their daily commute, family, and home life needs, as well as their financial needs. The point here is to not try to sell the most expensive vehicle in the dealership, but rather to find a vehicle that meets the budgetary constraints of the consumer. The F&I office can provide a rough guideline of the average monthly payment for the vehicles in the dealership. Keep these numbers handy to help guide the vehicle selection process.
For example, if you know a customer can afford vehicles priced between $25,000 and $30,000, and they want an SUV, then you are better able to provide them exactly what they want much more quickly. This gives them a better customer experience, helps heighten their excitement, and helps you determine the right number for your commission and the dealership in the negotiation process.
This whole process takes a collaborative effort between sales and F&I. After all, it’s much easier to qualify customers if you know what the F&I team needs. That’s why whenever I go into a dealership with a fragmented sales and F&I team, I work to get the F&I managers out on the floor to help qualify customers, close deals, and answer any questions on funding. This not only helps align the goals between the two departments, but also creates a better transition from sales to F&I.
Qualifying customers doesn’t need to be a scary or uncomfortable topic. However, it does require active engagement between both the sales and F&I teams. The more they work together, the more seamless the entire car-buying process will be. With more than 40 years helping dealerships achieve their profitability goals, EFG Companies provides clients with the right mix of training, recruiting, marketing, reinsurance, and product development and administration to build wealth for the long term. Contact us today to get started.