Author Archives | Rick

Sales Up, Guard Down!

Sales Up, Guard Down!

The car business exists in a constant state of flux. As independent agents, we have to step back and evaluate the business during the good and the bad times. Consistently growing the skills and knowledge level of all our team members is as critical when the money is flowing as it is in an economic downturn. It is simply human nature when things are going well to spend the money, take the business we have for granted and neglect the need to always be ahead of the competition. This leads to a “sales up, guard down” mindset.

The list of companies that let their guard down is filled with those that are trying to catch up in markets they used to lead. Names like Blockbuster, Kodak and Motorola strike immediate perceptions of companies that took their success for granted. At the height of their success, no one could imagine anyone challenging their domination of the market. Yet they were all surpassed by those who consistently worked to improve. I am more convinced than ever that perseverance plays the largest part of success.

Here are two things we can learn from those companies so we do not duplicate their mistakes:

1. Bad habits are developed during good times and have a way of revealing their consequences long after they have taken root. You must constantly be looking for ways to improve your products and services and stay one step ahead of your clients. Good companies don’t succeed by playing it safe and sticking to what they know; they’re always experimenting with new angles, new services and more efficient approaches. These efforts can seem unnecessary, or at least back burners in priority, when we have plenty of business and are growing year after year. However, the consequences of the lack of focus will eventually show up when the market slows down. The time to grow the skills of your team and fine-tune your processes to maximize profits is always; good times and bad!

2. It is critical to build a resilient, flexible business that is ready to take advantage of opportunities and respond to challenges in the market in days, not months. When the CEO of Blockbuster was told in 2008 that both Netflix and Redbox posed a threat to their dominance of the market, he responded with a defiant attitude.

“Neither Redbox nor Netflix are even on the radar screen in terms of competition,” he said. “It’s more Walmart and Apple.”

Blockbuster could not change because they would not change. They felt invincible! We all have been lulled to sleep by the sound of success; however, it must never silence the call for improvement. As independent agents, we are counted on to make dealers aware of changes in the market and how to address them. We must not be so engrossed in our current success that we lose the desire to help each dealership grow and change in order to stay out front of their competition. We help them grow when we grow.

Companies often develop good habits in bad times and bad habits in good times. Times are good now. Independent agents who find a way to grow in the good times will both survive and thrive during the inevitable downturns. But for now, make 2017 a record year and adjust and grow all the way through!

I look forward to seeing you on my next post! Please feel free to contact me. Exchanging ideas with F&I professionals is my passion!

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The Ride Back Home

The Ride Back Home

During a cross-country rail trip to New York in early 1928, Walt Disney not only lost his cartoon star, Oswald the Lucky Rabbit, but half of his animation staff to his film distributor. Before boarding the return train to California, Walt sent his brother, Roy, a telegram: “Don’t worry, everything OK.” On the train home, Walt contemplated a new character — a mouse, which he named Mortimer. His wife, Lillian, had a different idea, and Mickey Mouse was born. What can we learn from Walt’s ride home?

1. Your Attitude Toward Failure Will Determine Your Level of Success.

More important than how much loss you suffered as a result of a failure is what you will do next. You have two choices: You can be brutally honest with yourself, determine what part of the failure you are responsible for and embrace it, and start planning your comeback, or you can blame others, the weather, the economy or multiple things out of your control.

The stark reality is that others have faced similar challenges and have found ways to adjust, change, grow and create overwhelming success going forward. You can too! Failure is a stepping stone to a greater future and provides lessons that can only be learned when you have been knocked down. The correct attitude will assure you get back up and come back stronger than ever!

2. Not Getting the Clients You Want Can Be the Best Thing That Could Happen to You.

Not getting the results you expected is sometimes a stroke of good luck, because it forces you to reevaluate your skills and effort; it can open new opportunities and information you would have otherwise overlooked. Sometimes our efforts fall apart so that better things can fall together.

Failure enables us to see the importance of purging attitudes and techniques that aren’t working and need to be changed. And never forget that, no matter how many mistakes you make or how slow your progress, you are still way ahead of everyone who isn’t trying to improve and grow their skills.

I look forward to seeing you on my next post! Please feel free to contact me. Exchanging ideas with agents and F&I professionals is my passion!

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The Number One Question

The Number One Question

An F&I professional who is committed to consistent growth in their ability to help customers knows that skills are not something to be demonstrated daily but something to be developed daily.

We know the two main ingredients that lead to a successful F&I office are great products and well-trained people. Dealers today demand we help them create consistent improvement in customer satisfaction and profit levels.

We need to take a look at where the F&I department is currently and then consider the question that follows: Where do we go from here and how do we get there?

Evaluation and the Law of Entropy

Each F&I manager should be evaluated as to where they are in their professional development. The numbers are the easy part. However, we must determine what activity each team member is involved in that will increase skill level and how often this activity takes place.

The law of entropy works in thermodynamics and in F&I offices. Simply stated, it reveals that any system or process that does not have fresh energy introduced into it on a regular basis will disintegrate into chaos over time. We must determine if an F&I manager is committed to growing up or just showing up. When “skill entropy” sets in, it will produce an effort that shortcuts the process and blurs the lines of compliant selling, both of which are unacceptable.

Once we know the production level and the current growth pattern of each F&I manager, now it is time to talk about where we’re going and how to get there. The goal should be consistent improvement month after month and a commitment to the activities that will assure that happens. Three elements are crucial to ensure that we facilitate a dealership environment that promotes growth:

1. Growth Must Be Pursued With Consistent Practice.

All professionals practice and F&I professionals are no exception. A training calendar should be developed monthly that clearly shows activities to be involved in on a daily basis. Spending 20 to 30 minutes each day to develop skills should be expected and tracked. Training then becomes viewed as a process, not a one-time event.

Everyone tracks performance. However, to motivate and move people to grow, you must track effort. We have seen numerous examples demonstrating the top performer in a dealership is the one who has the highest commitment to training. It reveals more than just completion of assignments. It’s a mindset that says no matter what level of success I obtain, there is always more to learn.

2. Growth Must Be Compensated.

Training activities on a monthly basis must be part of the F&I compensation plan. There are two ways to grow your skills: by instruction or by consequences. Including expected training activities in the monthly compensation plan provides consequences for those that want to demonstrate, more than develop, their ability.

We provide an online training program to dealers that incorporates a weekly training module which takes from 20 to 30 minutes to complete. Many dealers tell their F&I teams, “If you complete 100% of the training each month, I will pay for it. If you do not complete 100%, then you will pay for it.” If it’s important to the dealer, it will make it into the compensation plan. Including training in the compensation plan will let every F&I manager know there is the expectancy of growth and a commitment to the activities that make that happen.

3. Growth Must Be Celebrated.

When training milestones are reached, that should be celebrated. Many dealerships have a Saturday sales meeting where cash is handed out for accomplishments during the week. It not only provides instant gratification for a job well done, it tells everyone in the room that individual did a good job.

To many individuals, the recognition is as important as the money. Make Their Day, an employee motivation firm, recently surveyed 1,200 American workers. Among the study’s highlights: 76% found peer praise very or extremely motivating and 88% found praise from managers very or extremely motivating. And the reward of recognition in front of their peers was rated higher than monetary rewards. Growth that is celebrated is repeated in others.

If the growth of the F&I team demands daily practice, is tied directly to their compensation plan, and success is celebrated in front of their peers, then the question of where are we going and how we will get there has officially been answered. That is a recipe for success and a win for the dealer — and for the agent!

Rick McCormick is the national account development manager for Reahard & Associates Inc., an F&I training company providing classes, workshops, in-dealership and online training.

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So God Made a Farmer …

So God Made a Farmer …

These words summarized what was arguably the best commercial of the Super Bowl XLVII in 2013. I have been a longtime fan of the man whose words graced the two-minute ad: Paul Harvey. Here is a short section of the ad:

God said, “It had to be somebody who’d plow deep and straight and not cut corners. Somebody to seed, weed, feed, breed and rake and disc and plow and plant and tie the fleece and strain the milk and replenish the self-feeder and finish a hard week’s work with a five-mile drive to church. So God made a farmer.”

Like farmers, independent agents must continually adapt and change to moving markets to succeed. I have many relatives in Alabama who are potato farmers. To adapt to new challenges, they became creative. They now utilize a GPS system that will plot the tractor’s course, allow it to drive itself and never waver more than an inch in planting row after row of potatoes. In doing so, they lowered their production cost and increased their overall profit.

The challenge for agents is to look for the most innovative products that appeal to a multigenerational market of customers. F&I managers must be trained to integrate technology into their presentation to provide customers a time-efficient and value-building process. Like farming, cars and customers’ buying motivations are changing at breakneck speed. Farmers that previously harvested cotton now grow another crop because conditions and markets changed.

The ability to recognize market changes early and pivot to more innovative products and training to support their sale gives you a competitive edge. Each year, every farmer and agent has to ask the same question: What do I need to change, update or adjust to yield a better outcome?

The training product you provide for the dealer is as important as any product they offer to their customers!

Growing profits for dealers depends largely on growing their people. Agents are strategically positioned to facilitate growth opportunities for their teams. The quality of the training you provide has a direct impact on F&I profits just as the quality of the seed affects the yield per acre of a farmer!

Providing product insights, consistent training and something as simple as monthly role-playing sessions providing input on strengths and opportunities for improvement will help grow the skills of each F&I manager.

Dealerships need an independent agent who can vet and update product offerings, provide monthly training for their staff, track performance, grow product sales and profits while maintaining high employee and customer satisfaction. Someone who can help motivate their staff, bring out the best in them and see that they are consistent in their production. That requires someone who works long hours, drives many miles and doesn’t cut corners. So God made a farmer … and independent agents. Thank God for both. Sell on!

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The King of Consistency!

The King of Consistency!

Hank Aaron is not the home run king. His most significant achievement is that he was great every single year from 1955 to 1973. That’s 19 consecutive seasons. There really isn’t a record quite like it in baseball history. He was the king of consistency.

Breaking Babe Ruth’s home run record was merely a side effect of two decades of brilliance. But Aaron was more than a home run hitter. He hit the baseball as hard and for as long as anybody in the game’s history.

The balls that went off the fence were doubles. The balls that went over were home runs. It was all the same to Aaron. His job was to hit baseballs hard and whatever followed, followed. Two key commitments were consistent throughout his career and those same commitments will make any career successful:

1. He arrived at the ball park each day prepared, with a plan and a purpose.

Hank Aaron focused on the right thing. He admittedly never focused on hitting home runs; instead he spent all of his energy working to make every time at bat a success. He arrived at the ballpark each day prepared, with a plan and a purpose.

As an agent, you have the opportunity to ask a simple question of the F&I professionals you train: What is your purpose in the F&I office where you serve?

For many F&I managers, their mantra is “I have products. How can I sell them to my customer?” Working with masters of this process for over 10 years, I can attest to the fact their focus is completely different. Their mantra is “I have customers, how can my products help them?”

A great paradox in F&I is if you focus on producing the highest profits, you will do well; but you will never reach your highest level of success until you focus more on helping each customer make the best decisions in connection with their purchase. Just like with Aaron, record numbers will come when you focus on what matters most.

In a 2012 commencement address at Marquette University, Aaron said, “If you want something bad enough, you have to make the necessary sacrifices to get it. You learn to navigate the circumstances and accept the fact that failure is not an option for you.”

2. He was great year after year because he was committed to consistent improvement in his skills and practiced to make that happen.

Professionals practice and actors rehearse. It doesn’t matter how successful or famous they are. The truly great ones are always challenging themselves with new goals because they know it will demand working harder than ever and the effort to improve is as rewarding as the end result.

Champions are made in the training room! Every great F&I manager I know is committed to consistent improvement. When I walk into their office I am greeted with “I had a great month. Let’s get started. I have a couple of things I need help with.”

The best years in the F&I world are ahead of us, more customers are waiting to be helped and more records are waiting to be set. A great month or a great year is a good thing. A great career will make everyone around you be amazed at how you did it. We don’t need a home run king in F&I. What we need are more consistency kings! Batter up!

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The Five ‘T’s of the F&I Process

The Five ‘T’s of the F&I Process

The general agent is tasked with assisting dealers on two distinct levels: The first responsibility is to help each dealership develop a profitable sales process as it flows into and through the F&I office. The dealer needs to be assured that they have the right (1) people who are well-trained, a professional F&I (2) presentation, a customer-focused (3) process, quality (4) products that offer real customer value and fair and consistent (5) prices. Guiding a dealership to implement strategies focused on these five “P”s can yield higher profit and customer satisfaction levels.

While the five “P”s are fundamental to a successful and profitable dealership, the second focal point for agents is what actually happens once the customer is inside the F&I office. F&I managers that focus on the five “T”s of the F&I process are seeing record acceptance levels of products. Let’s examine each one individually and how it affects the desired end result.

1. Trust

Low levels of customer trust in the F&I process come at a high cost. The level of profit will rise and fall based on the level of trust established. Each part of the process must be filtered through the measure of whether it is building trust. When the F&I manager should first engage the customer, the wait time to get into the F&I office, utilization of an interview or more of a conversational uncovering of needs and, finally, how objections are overcome must all be evaluated in light of the new era of customer service in which we operate.

When the F&I manager is involved early in the transaction, they are viewed as adding value to it. Complete transparency throughout the process causes the customer to open up and share freely when questions are asked and a true and telling needs discovery process takes place.

Today’s sales environment demands we concentrate on getting the customer to open up early in the process rather than focusing our efforts on how to “close” them at the end. When high levels of trust are built it takes less effort and time to move customers to buy. Trust is the “holy grail”; it scores an 11 on a scale of importance of one to 10. Once we become a trusted advisor, we can help customers make good decisions about protecting themselves against future issues. Without a commitment to this foundational concept, maximum levels of production can never be reached.

2. Talk

Every great F&I professional I have ever met is a great listener! They have mastered the skill of talking 30% of the time and listening 70%. Knowing when to talk and when to listen paves the way to high levels of production. Effective use of questions and listening skills is necessary to uncover what each unique customer needs. The focus should be on helping customers, not selling customers. If you are trying to sell, you can go ahead and do most of the talking. However, if you are focused on helping customers you will listen much more than you talk and customers will buy more than you could ever sell them.

The secret to having a genuine conversation is to ask questions, and the quality of information received depends on the quality of the questions asked. The bigger secret is waiting for — and listening to — the answers! Customers don’t want to be talked at. They want to be heard. If the F&I manager has established a good measure of trust, the customer wants to talk and they are more apt to buy when they are talking than when the F&I manager is.

3. Transition

The most important part of the F&I process is how to re-engage the customer after they decline products the first time through and therefore how to transition the conversation back to the customer needs uncovered earlier. We have to make the customer want to talk more about the products. To do this we have to get them to ask us for more information.

We need to use statements that will make the customer “thirsty” for more information. For example, “That surprises me. You said something a few minutes ago that I never expected you to say,” or “That is unusual, especially since you are buying a vehicle built since 2010.” Either of these will make the customer curious to know more. More importantly, this turns the process around. We are now responding to a request for more information.

Great F&I managers use a variety of techniques. The one I hear most often is a direct statement, such as, “I am surprised you are not interested in the service contract.” While this may lead to more VSCs being sold, it also leads to low levels of packages being sold.

The bottom line is that even the best F&I managers can see an increase in overall production with a shift of focus. Make the effort to first turn the discussion around, not to sell a particular product, and you can sell more VSCs and packages.

4. Target

The effort to move a customer to buy a product/package must be targeted and personalized based on the unique needs of each customer. Today’s informed customer will not buy products because others buy them. It has to meet a specific need that they have or solve a future problem they can foresee happening.

Our task is to help the customer see how a future problem can be best handled by taking action today. When an F&I manager runs out of reasons the customer needs a product before the customer runs out of objections, an opportunity to sell that product and help a customer is lost. When the focus is on uncovering needs throughout the process, a more targeted effort is used to overcome customer objections and more customers buy!

5. Tell

Once the process is complete, it is imperative that the customer know everyone at the dealership is committed to making this the best ownership experience this customer has ever had. The F&I manager is in a strategic position to tell every customer the dealership is a resource for all their needs concerning the vehicle they just purchased. This continues the dealership message that we are there to help them not just sell them. This can develop loyal customers that are less likely to cancel any products they have just purchased.

Managing chargebacks is a result of building trust from beginning to end. Telling the trust-building story again as the customer finalizes their purchase enables them to leave with the confidence that they just purchased a great car from a great dealership. It’s a great story and great F&I mangers tell it well!

An F&I process that builds trust, has a balanced talk/listen ratio, transitions seamlessly after the initial no, utilizes a targeted response to overcome objections and ends by effectively telling the story of the dealerships commitment to a great ownership experience will produce record results. Profits and customer satisfaction levels will rise while chargebacks fall.

Some of the record numbers we are reading about are the result of great F&I professionals being open to the changes demanded by today’s more informed customer. They are adjusting their processes to be more targeted and build high levels of trust. The results have been amazing for them and will be for all that are willing to adjust and assure their process is focused on the five “T”s of F&I success!

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