Contributing Author: Eric Fifield Chief Revenue Officer, EFG Companies
When presenting F&I products, are your F&I managers focusing too much on the product details? How’s that working for you? Are you happy with those product penetration rates?
Think about when you review long lists of information, you start to tune out, right? The same thing happens when F&I managers approach a product presentation from the standpoint of selling what the product does. Tallying off coverage levels, terms, systems, and parts is the fastest way to disengage from the customer and get them watching the clock instead of listening to the presentation.
At EFG, we teach professionals to approach the F&I product presentation from the standpoint of WHY. Why should a customer purchase a certain product? How does it benefit them? You could say that the product benefits customers by listing off everything it covers, but once again, that long list isn’t directly relatable to most customers.
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.
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!
