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Build Your Agency With Powersports


2016 marks the end of an uptick cycle with vehicle sales in the retail automotive market. This year, we can expect vehicle sales to slow down and plateau. Combined with increased regulatory pressure, 2016 will be a year in which many agents will need to stretch their capabilities and their market base as they prepare for potential economic challenges in the years to come.

The good news is that new opportunities are not out of reach. In fact, there is an often overlooked opportunity for agents seeking to expand their business volume, as well as increase their footprint in the marketplace, in the powersports industry.

Revving Up Product Sales

Now, it is understandable that discerning agents might be concerned with branching into a market they know little about. However, given that the powersports industry is still in the early stages of F&I development, agents might find that they know more than they give themselves credit for.

Your knowledge, particularly in the F&I space, can have immediate and dramatic impact on powersports sales and profitability. Most powersports dealers do not fully understand the F&I process, how to implement a strong F&I department or how to measure its success. Strong agents who have worked with dealers in this area have a wealth of knowledge to provide immediate benefits. This makes the agent value proposition that much larger and more tangible in the powersports space.

Beyond the potential ease of differentiating their services in the powersports market, agents with automotive industry experience may not realize that there is actually a shorter sales cycle and faster revenue opportunity in the powersports space. Think of it this way: You can spend 18 months going after one new-car dealership, all the while competing with 50 administrators. Or you can acquire several powersports dealer partners in that same time period with only seven competitors. That’s right, seven.

So what does it take to make the leap into this brave new world? When contemplating expanding into the powersports market agents need to take the following steps:

  1. Change your mindset from working in a “need to have” industry to a “want to have” industry,
  2. Do your research and
  3. Apply what you’ve learned in auto to the powersports space.

It seems simple when put on paper, but taking the time to really delve into these three steps can go a long way toward ensuring success in the powersports market.

Step 1: Mindset

One of the biggest learning curves for any agent will be operating in a space where the vehicle purchase is a “want to have” rather than a “need to have.” Most powersports owners buy motorcycles and four-wheelers for leisure activities, not for their daily commute. This means that, while powersports demand might be high, the number of people willing to invest in the purchase of a powersports vehicle tends to filter down to those who can afford both a car payment and a motorcycle payment, along with the required insurance payments.

Typically, powersports enthusiasts, who still have to put food on the table, will focus on paying off their car or truck before making a powersports purchase. This filter is the industry’s biggest challenge right now, especially with the rising price tag of new powersports vehicles.

That is not so say that powersports consumers are not heavily invested in their ride. In fact, powersports owners often show more care and concern for their motorcycle than their car. They tend to see the bike as more of an extension of their personality, whereas the car just gets them from one place to another. And as the economy grows, we can expect more powersports enthusiasts returning to dealerships to make a purchase, meaning there will be more opportunity for dealers to increase their profitability and for agents to expand their footprint in the space.

In addition, in this want vs. need space, many powersports dealers extend their thinking beyond pure profitability metrics to the brands they choose to sell. While they can be just as strategic and sophisticated as an automotive dealer, powersports dealers can often base decisions on emotion as much as logic. For example, a staunch Harley-Davidson dealer who is heavily invested in the Harley brand is much less likely to open an Indian store than a Ford dealer is to open a Honda franchise.

Beyond the fierce competition and sense of stewardship between brands, powersports dealers are highly sensitive to being compared to the automotive space. The last thing they want to hear is how they are less sophisticated or versatile than their automotive brothers. This means that while agents can provide powersports dealers with quite a bit of knowledge gleaned from the automotive space, they have to be very careful in how they broach the subject.

In essence, both consumers and dealers operate in a sense of “want to have.” A good comparison to this mindset is the luxury vehicle market. Their purchase decisions are not based on getting from Point A to Point B, but rather on how the vehicle reflects their personality.

Likewise, highline dealers take their sense of brand stewardship seriously, which is reflected in the level of customer service they provide and expect from their agent partners. They believe in the benefits of the luxury brands and shape their dealerships to further cement in customers’ minds that buying from their dealerships comes with a care and attention to detail they cannot get anywhere else.

Powersports dealers operate in the same fashion. They take pride and ownership in the brands they chose to sell and they take care to ensure excellent customer service within a tight-knit community where word spreads fast. In turn, they need the same level of service from their agent partners.

Step 2: Research

Just like in retail automotive, it is important that agents perform their due diligence by researching the dealerships they want to pursue as well as their competitive landscape. They need to perform the groundwork to investigate each dealer’s current provider. It is also a good visual aid to develop a report card, providing a comparative analysis of the current provider’s services. Find out if they provide training, rate comparisons andprocess development, for example.

Be a problem solver. Most agents are probably already used to this when maintaining their relationships with dealer partners. However, it is just as important to research areas dealers can improve upon and provide insight before active engagement, especially in the powersports space. Taking this one extra step can put a strategic agent miles ahead in winning dealer business. You will demonstrate a level of service most powersports dealers are unaccustomed to — but would take advantage of in a heartbeat.

A strong presentation should include:

  • An online and in-person mystery shop,
  • A comprehensive website and online inventory review,
  • Online reputation assessment,
  • Demographics and surrounding area overview and
  • A comparison with the target dealer’s competition.

Lastly, it is important to look at each dealer’s inventory and compare it to the coverage offered by their current provider. Often, anywhere from 40% to 50% of their inventory does not qualify for coverage from most powersports providers, which means there is ample opportunity for a strategic and forward-thinking agent to earn their business with one of the few providers that maintains expanded coverage levels.

With this research in hand, you should be well-prepared to present dealers with something interesting — or at least a new perspective on their dealership operations. The powersports dealership personnel should be more intrigued and interested in how an agent can make them more successful.

Step 3: Application

Agents already accustomed to fierce competition in retail have the potential to easily win powersports dealers by maintaining the level of service they already know how to provide. You do not need to be timid about branching into a new market as long as you trust and use the processes you have relied upon for so long to build relationships and increase a dealer’s reliance on the agent model.

In fact, agent success in the powersports space relies more on understanding F&I than on understanding the space itself. Agents positioning themselves as F&I specialists and helping dealerships implement successful and compliant F&I programs have ample opportunity to materially grow their footprint at a faster pace in this space.

Remember, just like in retail automotive, providing a constant flow of solutions that keep dealers thinking about increasing market share and profitability deepens and strengthens your overall relationship with your dealers. Agents looking to make the transition into the powersports space will also need to look to partner with a solution provider that understands and can support and help execute their powersports strategy.

Providers that already operate in the space often have a better understanding of the products and services most dealers find beneficial, as well as a strong ability to cultivate relationships and make introductions, giving agents a resource to lean on to ensure successful market expansion.

Because the powersports space has so little agent competition, you’d be surprised how much more effective agents can be. Dealers in this space are not used to someone outside the dealership being invested in their success. By building a relationship with them, understanding their objectives and hurdles and educating dealers on the intricacies of F&I, agents can provide an immediate and exponential impact on their business. Remember, this all stems from adjusting your mindset, doing the homework and research on each prospect and determining how to apply lessons learned from automotive retail.

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Leveraging Prepaid Maintenance


2016 marks the end of an uptick cycle with vehicle sales. Starting this year, industry experts expect vehicle sales to slow down and possibly plateau with little to no growth in overall unit sales. For dealers, this means customer retention and brand enhancement will become more critical to gain market share. Agents, in turn, can expect dealers to rely more heavily on them to help drive more service customers and expand in a stagnant market.

Meanwhile, the Consumer Financial Protection Bureau (CFPB)’s influence will continue to grow among lenders. As more lenders implement flat-fee models or caps on dealer markup, agents will feel pressure to help dealers reduce their reliance on finance reserves. However, adding products to the already crowded F&I menu can be tricky. Balancing CSI, the speed of the finance process, and providing products that make sense for the customer, as well as the dealership, is a difficult task.

One way to address current dealer needs is through a cutting-edge, customer-centric maintenance program designed to increase F&I profitability and service drive retention. Yes, I said maintenance programs. We have all heard statistics around prepaid maintenance driving higher customer retention rates — and it remains true. According to J.D. Power, maintenance packages help drive higher repurchase rates among owners, with 72% of those who have a complimentary or prepaid maintenance package repurchasing the same vehicle make on their next purchase.

A Powerful Tool

Even with statistics to back it up, this category of F&I products is one of the most overlooked and underutilized profit drivers for dealerships. But with the right foundation, it could be one of the greatest customer-retention tools at a dealer’s disposal. So rather than discuss the benefits of prepaid maintenance, let’s discuss how to effectively utilize it, starting with evaluating your dealership partners’ current prepaid maintenance programs.

The next time you visit your dealership partners, assess how successful each dealer is in offering prepaid maintenance on the sales floor, in the F&I office and in the service drive. Ask them the following questions:

  • What is their profit per retail unit (PRU) on maintenance contracts? How many are sold compared to the number of cars sold in a given week or month?
  • Does the dealership give away any maintenance contracts as a brand-enhancing value proposition? If so, how many?
  • Do they offer different levels of maintenance coverage? Of the contracts sold, how many are upsells?
  • Where on the F&I menu is the program positioned and how it is it sold?
  • What benchmarks does the dealership use to hold its team members accountable for selling maintenance contracts?

The answers to these questions will give you a clearer picture of whether a dealer is utilizing prepaid maintenance to meet their profit goals. Use the answers as a baseline to determine where you can plug in to help your clients achieve greater results.

Not Just Any Program Will Do

Next, evaluate the maintenance program itself. Underutilization could be due to not having the right maintenance program in place, poor handling of claims reserves, negative customer service from the administrator, lack of training within the dealership or ineffective compensation incentives.

Review the dealership’s top-selling inventory, customer demographics and surrounding geography, and ask, “Does the current maintenance program cover the required maintenance for the types of vehicles sold and the conditions in which the vehicles are driven?” If not, customers might not find it valuable, which could be another significant reason for a product’s underutilization.

Beyond looking at the product itself, it’s also important to partner with the right administrator to equip the dealership with tools to sell it.

Is the administrator backed by an A.M. Best rated underwriter/insurer? This signifies the administrator’s ability to pay claims and create products beneficial to both customers and dealerships.

How does the administrator benchmark customer service excellence? The claims process must be incredibly efficient for the service department. Is their current process automated? If not, what is their average speed to answer claims calls and average call handle time? How quickly do they pay claims?

Dealers benefit more from an administrator with strong customer service standards and happy customers in a couple of ways: First, it signifies that the products the dealer sells will be better received and seen as more valuable by customers. Second, those happy customers who bought a maintenance program from your dealer partners will be more likely to return to the selling dealership for their next vehicle because of the positive ownership experience the dealership delivered.

Does the administrator provide ongoing training and engagement to ensure the program’s success? No F&I product is successful without the right support, training and dealership buy-in. Seems obvious, but when we are all honest with ourselves, we know ongoing training is sorely lacking in many dealership environments. And as an agent, there’s only so much training you can provide without the in-depth knowledge of an administrator. With that in mind, selecting the right maintenance product for your dealership partners also comes down to the engagement model of the product administrator. Ask whether they do any or all of the following:

  • Conduct formal product installation and market launches
  • Implement quarterly account planning and performance tracking
  • Work with dealerships to develop incentivizing pay plans
  • Provide ongoing F&I development and one-on-one training

Successful prepaid maintenance programs are backed by dealerships equipped with ongoing training and development. Solid programs are priced for both effective claims management and dealership profit, and they are deemed valuable by customers.

Creating a Supportive Culture

To further ensure successful dealership utilization, work with your product administrator to focus training on the differences of selling prepaid maintenance compared to other F&I products.

While it is common practice for dealerships to maximize profit on an F&I product like a vehicle service contract, this approach is not effective when selling prepaid maintenance. When developing F&I pay plans, and in training, it’s important dealerships don’t apply the same markup rules they do for other products. In fact, it’s better to almost give the product away for little margin. This will help F&I managers demonstrate the value to the customer and how the dealership is working to save them money, making it very easy for managers to sell.

Prepaid maintenance programs are designed to be sold for a small margin upfront, for the purpose of gaining customer loyalty and attaining a larger, long-term margin on repeat business in both sales and the service drive.

Now, at this point, most dealer principals and general managers might think, “That’s well and good for my dealership, but my guys won’t sell it if they can’t make something on it too.”

This is a very valid point. In fact, the No. 1 reason most prepaid maintenance programs are underutilized is because dealership employees aren’t motivated to sell it. You can overcome this obstacle by creating a supportive culture around the program.

Cultivating this culture starts at the top. General managers, sales managers, F&I directors and service managers must buy into the idea of making prepaid maintenance central to their operations. Sales and service-drive teams must be trained on when and how to tee up the conversation about prepaid maintenance during the sales process. F&I managers need in-depth product knowledge training. Everyone needs training on asking questions to help position the program as relevant and valuable to customers. Lastly, tie the program to the dealership’s values. If they tout being family-oriented, then train team members to position the program as another way the dealership takes care of its customers like family.

Beyond training, one motivating factor in any dealership is pay plan development. Review the pay plans for your dealer partners and walk them through a retooling process for F&I, sales and the service drive, all geared specifically toward prepaid maintenance programs. Have them consider paying F&I managers on the number of programs sold versus the margin increase.

Another alternative is pay the same flat dollar amount derived directly from the markup. This ensures consistency and prevents managers from trying to mark the product up to maximize a percentage of the gross profit payout, resulting in a lack of value for the customer. Use this same approach with pay plans for sales, paying them for every handoff to F&I where they proactively informed the customer about the program during the sales cycle and when the customer bought the program prior to leaving.

On the service side, it’s important to remember that the dealership isn’t looking to make a huge profit on the individual sale of each program. This gives dealerships the opportunity to empower service managers to sell the program to their customers outside of a vehicle purchase. This further cements in the dealership’s customers’ minds the value they can receive from the dealership, as well as the dealership culture of putting customers’ needs first. To motivate service managers to sell the programs, it’s important to pay them on the number of programs sold. However, it’s even more important to make it easy for them to get paid.

If dealership team members have to verify the number of programs sold in three different ways — and work with accounting to get paid — the service drive simply won’t do it. While sales and F&I might have more time in the day to complete extra paperwork, the service drive doesn’t. The average service drive manager handles five times more transactions than anyone else in the dealership, and is working at a much faster pace. They don’t have time to jump through hoops to get paid and won’t do something that makes their job more difficult. So more important than determining what a service manager will be paid, focus on making the process to be paid easy for successful deployment in the service drive.

As dealers place higher demands on their agent partners, we will see agents become more efficient with their clients. If you’re looking for a deep and long-term relationship, consider providing a solution that keeps dealers thinking about how to increase market share and profitability, like successful implementation of prepaid maintenance.

The topic of prepaid maintenance repeatedly comes up because it has a lot of potential. While industry insiders can probably list the benefits of prepaid maintenance off the top of their heads, very few know how to actually implement it effectively. Those agents who use it to differentiate their service offering will better position themselves in a crowded market.

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Empire Dealer Services Awarded Top Agent Award by EFG Companies


DALLAS, Tex. – EFG Companies, the innovator behind the award-winning Hyundai Assurance program, recently hosted its 7th National Agent Council, and honored Empire Dealer Services with the Annual Top Agent Award. This marks the second time the Principal Owners and Founders of Empire Dealer Services, John Kane and Edward Adamson, have won the award.

“This award underscores the collaborative relationship between EFG and Empire Dealer Services,” said John Kane, Cofounder of Empire Dealer Services. “By working with EFG to implement effective dealer solutions, as well as proactively train our people and our dealership clients, we’ve increased PRU by $200 to $250, with a VSC production increase of 10 percent and an appearance protection production increase of 25 percent.”

EFG Companies’ Annual Top Agent Award is determined by overall product production performance, effective training, and comprehensive achievements throughout the year.

Hosted in the spring and fall of each year, EFG’s National Agent Council is designed to provide a collaborative environment in which agents can formalize their strategies to better serve their dealer clients, improve F&I performance, and increase dealer profit.

This year, EFG’s premier agents from across the United States attended a two-day hunting excursion at the High Lonesome Ranch in Melvin, TX, owned by renowned dealer – Nyle Maxwell, to discuss current industry trends and challenges, share best practices and discuss new product innovation.

“Our agent council emphasizes our core support of our agents’ long-term strategies,” said Eric Fifield, Executive Vice President, EFG Companies. “By stepping back to dissect market trends and map agent progress on hitting their goals, we can effectively evaluate how to better contribute to their success and build their business.”

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EFG Companies Sole F&I Provider Named Top 100 Call Center by BenchmarkPortal


DALLAS –  EFG Companies, the innovator behind the award-winning Hyundai Assurance program, announced today that it is the only F&I product provider to be named to the BenchmarkPortal “Top 100” call centers for 2016 – and is ranked in the Top 25 quartile for call centers with 5-50 staff members. The BenchmarkPortal “Top 100” competition compares the performance of contact centers throughout North America by evaluating their key metrics against industry peers.

Based entirely on statistical comparison to the world’s largest and most respected database of call center metrics, the BenchmarkPortal “Top 100” competition can objectively identify centers who are achieving superior results both in financial and qualitative terms. Throughout its nearly 40-year history,EFG has continually demonstrated their commitment to exceed customer expectations. The company’s average claims call speed to answer is less than 30 seconds, 67 percent of total claims are one call claims, and 96 percent of all claims are paid within one hour of receipt of invoice.

“Our clients rely on our expertise and quality customer service when it comes to administering customer claims,” said John Pappanastos, President and CEO, EFG Companies. “We operate knowing that our claims administration reflects back on our clients’ business and brand. By demonstrating our high level of expertise with this certification, we are giving our clients the highest confidence that all claims will be handled expertly, efficiently and respectfully, promoting a positive overall customer experience and driving greater customer loyalty for their business.”

“The EFG Companies contact center is among the best in its industry,” said Bruce Belfore, CEO of BenchmarkPortal. “This award was granted on the basis of objective, metrics-driven performance. EFG Companies stood tall against its competitors according to the world’s largest database of call center metrics. This is not easy to do, and we congratulate them on their accomplishment.”

EFG believes longevity and success is ultimately measured by a simple premise: keeping a promise to a customer at a time when they need it most. EFG prides itself on being a claims-honoring third-party administrator and this certification only enhances the company’s commitment to fulfill that promise.

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EFG Companies Names Richard Christensen as New Vice President of Product Development


DALLAS – EFG Companies, the innovator behind the award-winning Hyundai Assurance program, announced today the addition of Richard Christensen as Vice President of Product Development. Christensen offers a wealth of direct experience in initiating and launching corporate strategic initiatives with companies like Hyundai Capital America and Nissan North America. In his previous roles, Christensen has overseen the launch of global strategic alliance formations with product, brand development and rollout, in conjunction with development of sales processes, reinsurance models, and regulatory and compliance practices. This experience will be well utilized as he leads the strategic efforts of EFG’s product development team, including product lifecycle and relationship management.

With over 25 years of retail and wholesale automotive and reinsurance experience, Christensen most recently served as a Senior Director at Hyundai Capital America (HCA), where he was responsible for launching and managing a captive insurance subsidiary of HCA. He also served as President, Nissan Global Reinsurance, Ltd based in Bermuda, and functioned as a Sr. Manager of Vehicle Service Contracts for Nissan North America, in Los Angeles.

“Today’s dealers are under an immense amount of pressure, from undertaking stringent compliance initiatives to incentivizing new consumer groups to enter an automotive market with ever higher entry-level price tags,” said John Pappanastos, President and CEO of EFG Companies. “Dealers need agile partners who are constantly looking ahead to see where the industry is going and to look at new challenges as opportunities to increase dealer profitability. At EFG, we consider ourselves one of those partners. The addition of Rick to our leadership team strengthens our position in leading the industry in terms of product innovation and administration of quality consumer protection products that benefit consumers, dealerships and the industry as a whole.”

“Dealerships and lenders need better ways to connect and retain purchase behavior with a more informed and demanding consumer,” said Christensen. “We’re doing very progressive work that is aligned with our goals of leading the industry in focusing on customer service and consumer benefits, with an eye towards compliance and sales process for the dealers and I’m excited to be a part of it.”

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EFG Companies and F&I Express Expand Digital Solutions for Automotive Dealerships


DALLAS – EFG Companies, the innovator behind the award-winning Hyundai Assurance Program, and F&I Express, the largest automotive F&I aftermarket product network, announced today a partnership to better serve their dealership clients by fully integrating their eContracting capabilities.

“At EFG Companies, we understand that no two dealers are the same,” said John Pappanastos, President and CEO of EFG Companies. “Each dealer operates with different goals, success metrics, and systems, and we pride ourselves in acting as a strategic partner in their success. In our effort to further that initiative, we partnered with F&I Express to augment our growing list of e-contracting solutions with one of the most utilized eContracting platforms in the market.”

“For almost 40 years, EFG Companies has been leading innovation within the automotive industry,” said Brian Reed, President and CEO of F&I Express. “We have been eagerly anticipating their addition to our F&I eContracting network and look forward to bringing their products to our dealer customers.”

Currently, F&I Express works with many auto retailers across the U.S. to improve F&I processes. The company has aggregated a network of more than 100 automotive aftermarket insurance providers in an online portal accessible by its dealers.

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