Did the first half of this year leave you cautiously concerned or hopefully optimistic? Depending on your product mix, you either experienced strong sales in the off-road powersports area or a soft market for new retail bikes. Several OEMs also reported single digit declines, and the average wholesale price for on-road vehicles was down about three to six percent. However, the average wholesale price for off-road vehicles remained strong, showing a four percent increase. With this level of uncertainty, what steps should you take to ensure a successful second half of the year?
Savvy dealers will focus on maximizing every possible sale. And that means maximizing profit per unit – PRU. There are many factors involved in calculating the PRU including overhead, OEM rebates and marketing charges, etc. But one clear way to increase PRU is through maximizing F&I and funding as many deals as possible. So let’s look at the deal after the customer says “I’ll take it!”
Where the Real Work Begins
It’s likely that a customer has entered your dealership to purchase a bike – not a maintenance package or a vehicle service contract (VSC). Chances are, they don’t even know these products exist – or any of the other F&I products you have to offer. The concept of protecting their purchase has probably not crossed their mind. They are simply interested in getting on that shiny bike and hitting the road.
Maximizing the PRU requires giving the consumer a view of the broader picture. Whether you offer simply a VSC and GAP, or also tire protection and overall maintenance, give the customer a clear description of all the products available – and why they are important to them. A menu is a useful way to disclose product offerings effectively and compliantly, increasing product penetration and PRU.
There are four components to menu selling:
- Defined transition to F&I
- Obtaining signatures
- Risk discussion
- Benefit presentation
Transition takes the customer from “I’ll take it” to the dealer saying, “Let me help you purchase this bike.” By clearly outlining the steps involved in F&I, the customer will know what to expect and will be less likely to speed through the process.
The signatures step is the ‘checks and balances’ part of the process. At this time, the dealership team member has the opportunity to verify that every document has been presented to the customer with appropriate signatures, file it accordingly, and ensure that all necessary documents are complete.
The risk discussion is a critical step in the process. Review any manufacturer warranties that come with the motorcycle, while highlighting all the components that lack protection. If your dealership stocks pre-owned motorcycles that are outside the manufacturer’s warranty, highlight the fact that the bike comes with no protection to begin the risk discussion. This will help build value for the F&I product presentation.
The final step is the benefit presentation. Highlight the F&I products offered, tying them in to the risk discussion and any other information gathered from the customer during the sales process. Is this a first-time buyer or bike collector? Is the vehicle intended for recreational use or a primary means of transportation? Dialogue selling and active listening during the sales process will provide these details.
After reviewing each product, go back to the menu and begin closing the F&I discussion. Confirm pricing verbally, including the base vehicle payment and rate using the product menu. Re-affirm with the consumer that they can take delivery at the agreed-upon base payment. Finally, use the menu to ask for the sale while ensuring the consumer knows the protection options available and the cost breakdown.
Following this methodical approach can significantly increase your F&I product penetration, maximize your PRU, streamline your operations, and keep everything compliant. Take a look at your current product penetration rates to set your monthly and quarterly production goals for the next half of the year. Make sure your team is on-board with competitive pay plans and ongoing training. Keep good records and hold your team accountable for both successes and training opportunities.
Next month, I’ll discuss the second portion of increasing PRU – converting cash deals to finance.