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Dealership Training

Meeting “Look-to-Book” Expectations

Eric Fifield Chief Sales Officer EFG Companies
Contributing Author: Eric Fifield Chief Revenue Officer, EFG Companies

When I’m in a dealership talking about conversion rates, the team members often focus on the process of transitioning a potential customer to a confirmed sale. I hear about engagement rates and digital touch points. But often, the biggest struggle isn’t with closing a sale, but rather with effectively managing lender look-to-book metrics. This critical component can often make or break a sale. What are your lenders’ look-to-book requirements and how can F&I departments optimize their conversion rates?

Some F&I managers still feel tempted to use the “free-for-all” approach – offering all deals to every lender on their list. This approach relies heavily on automated approvals, but fails to factor in specific lender criteria. This often results in several denials, especially if a percentage of your business happens to fall in the subprime space. In the prime space, this approach can jeopardize lender relationships if your team sends several lenders applications that they all approve. Your team can only select one lender, which alienates the rest.

A more prudent approach is adopting a preferred lender process, wherein your F&I managers select a group of lenders to send the majority of your contracts. This requires that your team has good working knowledge of each lenders’ requirements to ensure that every deal submitted is approved. Dealers should approach preferred lender candidates based on the needs of their operations, as well as the types of lenders available including those who offer wholesale financing, retail financing, automated vs. manual credit decisions, etc.

Making the Cut

These days, lenders set volume targets and keep a close eye on losses. A lender using a look-to-book ratio considers it an indicator of efficiency, as well as the percentage of approved deals that are booked as loans. Lenders are also segmented into the type of loans they approve – ranging from super-prime to non-prime. It makes no sense to offer an application with a FICO score below 640 to a lender that is only interested in super-prime credit.

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Dealership Training

Preparing for a Surge

Dave Gibbs Training Manager EFG Companies
Dave Gibbs
Training Manager
EFG Companies

It’s Spring! Warmer weather coupled with tax day refunds equals the potential for a customer surge. While this is certainly good news, one of the biggest challenges could be servicing that increased traffic. Whether it be prospective customers researching a purchase online or potential showroom floor traffic, responsiveness is critical to closing the sale.

To address this challenge, a knee-jerk reaction would be to extend dealership hours, schedule more employees on the showroom floor for longer hours, and hire more sales and F&I team members. Bulking up might seem like the logical solution. However, longer dealership hours can incur non-productive costs, including hourly wages and higher utility bills. Adding more staff on the floor – with longer hours – might increase your response time but it could also increase burn-out with your employees. Hiring new employees is great but your experienced staff might be too busy training those folks to effectively respond to prospective customers!

Work smarter, not harder

When experiencing a surge, the smart action is to step back and evaluate the dealership’s existing processes and measure their effectiveness. I often hear panicked dealer principals exclaim “But I don’t have time to step back! We’re slammed!” What you don’t have time for are lost sales and damaged reputations because your frazzled sales team was unprofessional, or the F&I department hurriedly left money on the table!

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Recruiting

Are Your Recruiting Practices Causing Turnover?

Contributing Author: Amber Hash Recruiting Manager EFG Companies
Contributing Author:
Amber Hash
Recruiting Manager
EFG Companies

Auto dealers have always had a difficult time with employee retention. It takes a certain kind of individual who can handle the long hours, commission-based pay, and constant pressure to make a sale and increase gross. It’s easy to think that turnover is just the nature of the industry. But, we all have those dealer principals in our 20 groups who brag about the tenure of their staff. What do they have going for them that most dealers don’t?

According to the 2017 NADA Dealership Workforce Study, the median workforce tenure in retail automotive is 2.5 years. But, it takes employees in key production positions, like F&I managers, an average of three years to reach full productivity.

So, why are dealers losing key employees right before they reach their potential? A lot of it has to do with the dealer’s recruiting practices.

A common trend in the retail automotive industry is to hire the first person interviewed, often on the spot. This is especially prevalent in high volume dealerships that need to fill positions quickly to keep production levels up. The problem here is there is no vetting to make sure the person being hired is the right fit for the dealership.

One interview does not provide the entire picture of a person’s strengths, weaknesses, energy level, and ability. It’s always better to build time into your recruiting model to conduct multiple interviews, background checks, and references checks to ensure you have the right person for the job.

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