There are a few ways dealerships lose profit, which they can fix right now. Here’s a look at some of the biggest offenders.
It’s the same every week: Monday morning you walk into the office, get your coffee and look at the stack of deals that are piled up on your desk from the weekend. By the end of the day on Saturday and Sunday, everyone just wanted to hurry up and get out of there, so this is how you start every week. The last thing you want to see on a Monday is a customer in the showroom when you have paperwork piled high from the weekend. Thank goodness there are only four Mondays in a month! You have to be more administratively sound so you can handle those deals quicker on Monday mornings, because you have a Monday every week. If we don’t deal with things quickly and efficiently on Mondays, then it can have a trickle-down effect into the rest of the week and can be a big way to lose profit.
Next we have CITs or Contracts in Transit – in other words, the money is not in the bank yet. And again Monday is just the start of it. CITs are like bananas: they start out nice and ripe, but then they just get riper, and then next thing you know you have to throw them away. It’s the same with CITs – the longer they sit on your desk before they get to the bank, the more the dealership is losing. That’s why at UDS, when we refer to a CIT, we call it a “Cash It Today.” If you can change your thinking on this, and get CITs cashed the same day, that will be one more way you won’t be losing profit.
There are several ways you can cash a contract today: self fund, eContracting, fax funding or overnight enveloping. If you want to get a deal cashed right away, utilize the most up to date processes, and use the checklists in deals. There are always checklists, but no one ever seems to utilize them – they just throw the list in there. That’s like flying without gas in the plane.
In F&I, you should be ironing out the most difficult challenges first. It’s human nature to have a tendency to save the worst for last, but that’s a terrible strategy in F&I because as those deals are waiting, the difficulties are getting worse. You have to go over the worst first, and only once they are handled can you move on to the easy ones. It’s the exact opposite of the way you did things in college when you would do the all the easy problems first on a test and then go back and save the hard ones for last.
Heat sheet meetings are important to ensure everyone is working for the same, common goal: to get the deal funded. This way, everything is not just riding on your shoulders; everyone has the same goal in mind. Depending on the size of the dealership, you should have meetings every day or every other day.
Internet, Credit Unions, Cash and Lease Deals
F&I managers have a tendency to work the deal if the customer is at the dealership, but if the customer is away from the dealership, an Internet or phone deal for example, the F&I manager will tend to take that deal and throw it on their credenza until the customer comes in. Unfortunately, what usually happens next is that when the customer does come in, they come in with pre-approved credit, a check or they may have already done their financing, leaving the F&I manager pretty much locked down. You have to be proactive, not just be reactive. You have to be out in the trenches, every day before you go to work, talking with management teams and sales consultants to find out what’s going on.
F&I has not really embraced the Internet shopper yet. Statistics have proven that in the last couple of years, 80-85% of customers are coming to us from the Internet. As a result, we’ve got to change our mindset. The Internet customer is probably more important to you than the ones on the floor. In fact the Internet customer has expressed an intention to come to you to buy that car, and the problem is we’re not ready to sell it to them. Instead we take them through this whole process and it just bogs them down. We are not Internet-savvy enough in F&I; we have to embrace those transactions. The biggest problem is that we don’t have a process for Internet customers – no one calls them and everyone waits for them to come into the dealership. That’s going to cost you tons of money. Get smart and use the phone, and be ready when they arrive; that’s what they want. Make it a big event when they arrive. You will sell more cars and make more money. It’s the same with credit union, cash and lease deals – we need to embrace those deals too.
We often ask the customers, “What’s the rate?” when we find out they are going to a credit union. Stop asking that question, and instead ask why they are going to the credit union in the first place. If they say it’s because that’s where they do all their business and they are loyal to them, then you’re not going to beat that, but if they say it’s because they are getting a great rate, then you’ve got something to work with. If you just ask them what the rate is, they aren’t going to tell you the truth; they are likely going to tell you they are getting a much lower rate than they actually are getting from the credit union.
Learn to embrace credit union, lease and cash deals the same as you would finance deals; they come with the territory. Remember, everyone faces the same perils of the road whether they are a lease, cash or finance deal. Slow down the deal and allow the process to drive your profits.
Attitude: YOU are the greatest challenge
Your attitude can make money or can displace money. If you have a really good attitude about every deal, then you’re going to make money. If you think you can, you probably will; if you think you can’t, you probably won’t. It’s all about attitude. Look in the mirror and ask yourself, “Am I part of the pitfalls of F&I? Am I a DO-er or a do NOT-er?”
Our attitude is usually dictated by the kind of deal we get in F&I. You have to look at every deal you have as an opportunity whether it’s a finance deal, cash or lease deal. We know that 80% of our money comes from a finance deal. So you have to set your menu up properly; I’ve witnessed F&I managers use the same menu whether it was finance, lease or cash and they will have products on their menu that the customer simply doesn’t qualify for. For example, they will have GAP on a menu where the customer is putting 50% down. Or they will have a service contract for 5 years or 75000 miles on a lease for only 3 years and it makes no sense! You have to tailor the presentation to the type of deal it is as well as the customer’s driving criteria, which you will find out during the introduction.
Lost Opportunities in the Service Drive
A lot of F&I managers are relying on the service managers to do their job for them. It is the F&I manager’s job to hold the service manager accountable to send them referrals. Instead of going in the front door, they should go in the service walk every morning and ask, “Hey, what’s going on? Have you got any deals today? Do you have any customers who are almost out of their factory warranties that I can talk to?” Instead of relying on the service manager to bring you the deal, you need to be proactive.
Mysteriously Appearing Deals, or Dude Where’s My Car?
Form an alliance with the sales staff. Go out and really talk with them and find out what kind of appointments they have going on. You have to have a willingness to manage deals, even if the customer isn’t at the dealership – that is the biggest challenge. Utilize your CRM, Customer Retention Tool. You have to have access to that tool and use it consistently, because it’s the eyes and ears of the sales and sales management staff, in order for you to be proactive and know what’s going on.
Multiple Product Sales
F&I managers don’t really follow a menu process that allows them to get multiple products. Often times they rely on the banks’ call back, and the banks frequently limit their callbacks to the number of products they can sell. They rely on how the deal was structured at the desk, and if the desk cuts them out then they feel that they can’t sell any more products. This is a lost profit opportunity because you can offer every product to every single customer – it’s in the manner in which you do that. Sometimes you may be locked out, but you can tell the customer, “Look, we are making these products available to you. Some of them we can finance and some of them we can’t. If you are interested, then we will find a means to get you into those products.” We should always tell them this because there are all sorts of ways you can do it, such as repayment plans. You can’t allow the call back or the sales desk to dictate your destiny in F&I.
Follow the 300 Rule, which is this: Present 100% of the products to 100% of the customers 100% of the time (assuming they qualify). Every customer must have the opportunity to at least know the products available to them. Consider the ABC’s of F&I: The A is always ask permission. When I was a kid, I was taught to say, “may I.” If you said, “can I,” then the adult would tell you that you couldn’t, but if you were polite they would respond, “Yes, you may.” So you learned to be polite and ask permission. The B is for break down the options. Instead of breaking down products on a menu, or any type of presentation you have, break down the options and narrow the choices. You have four columns on the menu – you might have six or seven products on the first column, that’s six or seven choices. You want to make that so that it’s one option. You break down the options, and therefore you only have four choices that the customer has now, instead of six or seven. C stands for close on the options, don’t close on individual products. When a customer says, “I’ll take GAP; I had it on my last car.” You respond with, “Great, which option would you like it in?” rather than just saying okay.
Utilize a final disclosure. The menu should be used as a disclosure, and the final disclosure should be your waiver. If you look at the F&I menu as a selling tool, then you are looking at it the wrong way. It’s nothing more than a disclosure after you give a presentation.
Finally, tell your story, don’t sell your story! Tell your story as you expose your products on the menu. Sell your story after you’ve exposed all your products on the menu. There’s a difference between a feature and a benefit. The feature is the tell, the benefit is the sell. You want the feature presentation initially, then after you do the feature presentation, you do the benefits presentation. That would be the sell.
Don’t let excuses get in the way of your strengths. The bottom line in avoiding lost profit opportunities is to consistently use effective processes, proper procedures and to always have a positive attitude. A bad attitude is like a flat tire; it will never get you anywhere. Remember these tips and soon you will be busy counting your profits and not thinking about your lost opportunities!