Tag Archive | "Great Lakes Companies"

Whatever Happened to Credit Life?


There was a time when credit life and disability insurance was the No. 1 product sold in the F&I office. In fact, for the better part of the 1970s and ’80s, it was the only product. When John Braganini, principal at Great Lakes Companies in Kalamazoo, Mich., entered the auto retail channel in 1986, credit life was still king.

“At the time, dealers here in Michigan limited their F&I product offerings to credit insurance, service contracts and appearance products such as rustproofing and paint sealant. Some accessories and other related products were offered at various dealerships, but the three mentioned above, along with bank reserve, provided the F&I landscape,” Braganini recalls. “The service contracts and appearance products were often priced and administrated in a manner that led to performance issues, so credit insurance was often the primary income source for F&I.”

Since their inception, credit life policies have been designed to continue making payments on an auto loan if the car buyer dies or becomes disabled or seriously ill. Braganini describes them as a “simple value proposition” for customers. For a modest premium, which can be financed along with the loan amount, customers who opt for credit life coverage, disability coverage or both are relieved of what could be a major financial burden when disaster strikes.

Credit life began to lose its luster at the turn of the 21st century, when regulatory changes limited its income potential in some states and dealers and agents began to see more value in products such as vehicle service contracts, GAP coverage and appearance protection. Several large providers, including Zurich and JM&A, pulled out of the segment.

But many others remained, and advocates say credit life still represents a tremendous value to dealers and end users and deserves a seat at the F&I table.

Licensing and Rates

“As one of our people likes to say, our industry put the ‘I’ in ‘F&I,’” says Richard Kizer, chairman of Central States of Omaha (CSO) in Omaha, Neb. “In the early years, the F&I department would help people secure loans and present them with credit life insurance. They needed to borrow money and needed protection on their loans. So the product was offered a high percentage of the time and our penetrations were very high.”

Today, sellers of credit life and disability insurance must be licensed by the state or states in which they operate. Some states allow the dealer to establish an entity and maintain the license; others mandate that everyone involved in the sale be licensed. Kizer doesn’t take issue with licensing requirements but says they have restricted sales in some states.

“There are a handful of states, including California and New York, where they have made the licensing of that employee in the F&I office very difficult,” he says. “They may have to get fingerprinted or take a test or have continuing education. And we know there is a fair amount of turnover in F&I.”

The commissions dealers earn from selling credit life and disability are determined by “prima facie” rates set at the state level. Sellers can go below the established rate but may not exceed it.

“Back in the ’70s and early ’80s, the rates for credit insurance ranged anywhere from 70 cents up to 90 cents per 100,” says Arden Hetland, president of The Woodlands, Texas-based American Financial & Automotive Services (AFAS). “Louisiana was at 110% for joint life. So the rate was high and commissions were high.”

Things began to tighten up, Braganini says, beginning in the late 1990s and continuing through the early 2000s.

“The landscape changed. One by one, states began reducing the price that could be charged for credit insurance. Many states reduced the price to the point where commissions had to be reduced to 10%.” As a result, and in combination with the emergence of competing F&I products that did not require licensing and could be marked up, Braganini adds, “credit insurance started getting lost in the shuffle.”

At Pekin Insurance in Pekin, Ill., Jay Holloman brings more than 30 years of experience in the credit insurance field to his position as director of financial products. He says credit life’s decline was accelerated by a regulatory change in the housing segment.

“In the early 2000s, the federal government decided to treat single-premium credit insurance as points and fees in its definition,” Holloman says, so banks were no longer able to finance credit life and disability in mortgage-backed loans. “A lot of people were using a second mortgage to buy a vehicle. We couldn’t offer the credit insurance, so our business was greatly reduced.”

Determined to stay in the game, Holloman and his management team decided to expand their geographic footprint. With the help of a network of agents, Pekin rebounded. The company now offers services in 21 states and counting.

“It has been a rocky road,” Holloman admits. “We went from writing as much as $20 million down to $8 million. Last year, we turned $19.2 million. There is a huge need for the product in our society and for our economy.”

Sales and Reinsurance

Not everyone agrees that the arguments listed above are strong enough to make room for credit insurance on the F&I menu. By the time Brian Crisorio, vice president of marketing for United Development Systems Inc. (UDS), joined the company on a full-time basis, the role credit life would play in the company’s future was already in doubt.

“As the young blood in our organization at the time, I was the one pushing to cut ties with credit insurance,” Crisorio says. “It’s a generational shift. I wasn’t around when it was one of two products available and one of the main sellers and profit contributors. When I looked at the total landscape, I saw that we had all these other products that made more sense.”

In Crisorio’s home state of Florida, he adds, the numbers just didn’t add up. He agrees that the product represents a good value to some end users but says the company had to make a business decision based on the needs of its dealers.

“It didn’t seem like the smartest thing to be pushing it for sales. I think what it all came down to was that a lot of our business is done in Florida and the pricing was too high, the profit was too low and there were too many other good options to take up real estate on the menu.”

Kizer points to Texas as one state in which the sale of credit life and disability can produce “substantial” income for dealers. Using a hypothetical loan amount of $25,000 at 6% interest over a 72-month term — and using round numbers — he calculates the cost of credit life at $450 and disability at $950 for a total premium of $1,400, assuming the car buyer opts for both types of coverage. Texas has a “floating cap” on commissions, meaning the selling dealer would earn somewhere between 30% and 45%, depending on the loss ratios they have generated.

“Texas is on the low side as far as rates are concerned,” Kizer says. “They have good penetrations. Some states have hard caps and some have floating caps. It all comes down to loss ratios but it’s still good income for the dealer. What can be so confusing from state to state is regulation. But if a dealer and the folks in the F&I office are committed to presenting the product, then it does generate significant fee income. If a state makes licensing difficult or makes the commission rate extremely low, the dealer loses the incentive to sell it properly.”

He acknowledges that a portion of the income dealers make from credit insurance goes toward the cost of the F&I manager’s time and compliance training, but the more policies sold, the more those per-deal hard costs are defrayed. And then there’s reinsurance.

“Some states, like Nebraska, have a hard cap,” Kizer says. “Our commission cap is 30%. What dealers in such states will frequently do is invest in captive reinsurance companies and take underwriting risk on their product.”

Dealers who elect to offer below-rate credit insurance are following the lead of credit unions, as Kizer and Hetland pointed out, many of which subsidize the sales of the product to protect their own interests as well as their members’ ability to obtain credit in the future.

“It’s a different mindset,” Kizer says of credit unions. “They will sell it at a lower rate and take a lower commission.”

“Despite all the changes, we continue to produce significant sales volume with credit insurance,” Braganini says. “One of the primary reasons is that we are one of the few agencies that have providers, licensed sales executives and a compliance department to fulfill the regulatory requirements. Most of the national F&I providers outsource everything but service contracts, GAP and tire and wheel. As a result, providers that have focused solutions can consolidate their market opportunities.”

“We still provide credit insurance because, if it’s on a menu, that’s a great value,” Hetland says, particularly for car buyers who are 40 and older. Consumers in that age group have a higher risk of death and illness, but the rates set by the state don’t vary with age, and the policies don’t require a physical exam or a lengthy health assessment. “There is very little underwriting. You might have to say you’re not having a heart attack or fighting cancer, and that’s it.”

Kizer points out that, if every car buyer walked into the F&I office with a robust life insurance policy in their back pocket, credit life would be a harder sell. At the moment, on a nationwide basis, that is not typically the case.

“Four out of 10 Americans do not own life insurance,” Kizer says. “Only 35% of low-income households and 54% of middle-income households have whole or term life insurance.” He recalls a story told to him by a banker about a young woman whose recently deceased husband had, unbeknownst to her, added credit life to his auto loan. “The husband was the primary breadwinner and he got in a wreck and died. His wife came in crying to the loan officer, thinking she was still responsible for the loan. The banker told us, ‘I can’t tell you what a great experience it was to tell the widow that the loan was insured.’”

Compliance Issues

If nothing else, our experts said, credit life and disability is a product that has been through the regulatory ringer so many times, it’s practically unassailable.

“When I started, there was no disclosure of any of the F&I products on the buyer’s order, bank contract or vehicle registration documents,” says Braganini. “All incremental products were rolled into the selling price of the car and it was ‘convenient’ to include life and disability into every loan quote. Consumers would get a loan that ‘included protection.’”

Clearly, thanks to the nationwide campaign against payment packing that began more than a decade ago, that is no longer an option. Another challenge was mounted by class-action attorneys who went after dealers for failing to refund the premiums to customers who canceled their credit insurance policy or traded their vehicle.

“A lot of them just didn’t do it,” Hetland says. “The class-action attorneys went after lending institutions and insurance providers. What they found is the lenders would not let the insurance company — because of privacy laws — tell them when cancelation took hold. Now the language has changed to say it is the responsibility of the policyholder to notify the insurance company.”

As indications that the Consumer Financial Protection Bureau (CFPB) will attempt to regulate the sale of F&I products continue to pile up, our experts said, credit insurance — with its state-mandated rates and commissions — stands out as an F&I product with a rock-solid pricing structure.

“You really hedge your bet against the CFPB with credit life on the menu,” Hetland says. “How can they say the state is wrong? And you can justify loss ratios because a lot of the ancillary products don’t have high loss ratios.”

“The way the CFPB is trying to back-door dealers, when you look at most of the products, they’re being insured based on debt protection like GAP. It’s a debt waiver,” Holloman adds. “If a dealer is really worried about compliance and the financing arms of their operations, credit insurance is one of the natural ways they can improve income on each vehicle. With credit life, you have a product that is out of the reach of the CFPB from that standpoint.”

“Price controls may become a reality with other F&I products,” Braganini adds. “If that happens, those who are positioned to execute an effective credit insurance strategy will have an advantage over those who cannot or will not.”

Crisorio remains unconvinced. “Here in Florida, almost all our products are regulated by the state. The only ones that aren’t are paint, GAP and key, which our dealers regulate internally. It’s in the operations manual.”

The Value Proposition

Asked whether demand from dealers would change his mind, Crisorio says he’s simply not aware of any. The only dealer on his roster who sells credit insurance was already doing so when UDS captured the business.

“There are certainly parts of the U.S. where credit insurance is viable, and there may be small pockets where we operate,” Crisorio says. “But it’s not rewarding enough to pursue.”

Those who remain in the credit life and disability business say the rewards are better framed in terms of the dealer’s value proposition than income potential. As Kizer points out, protecting the customer’s financing ensures future business.

“We feel this protection is very important and should be offered. You’re protecting the life and health of your customer,” he says. “Isn’t that more important than key replacement or dent and ding?”

Holloman points to a 2012 study by Thomas Durkin and Thomas Miller that made the case for credit insurance, particularly among older borrowers who are underinsured, and stressed the need to allow consumers to make their own decisions.

“The individual should have the opportunity to decide whether they want to purchase it or not,” Holloman says. “They don’t want it? So be it. But if you look at the Durkin study, they see the value and would purchase if they were offered it.”

“Credit life and disability is an exceptional value to the customer,” Hetland adds. “It’s good underwriting because the dealers are in reinsurance. And it really helps safeguard against the CFPB. We can’t knock that. It’s a good value.”

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The Agent’s Guide to Hiring Effective F&I Managers


Among the many facets of the value proposition agents bring to dealers is their ability to help recruit F&I managers. But this is no small task. Real talent is hard to find, and the agent should also therefore ensure that new talent is not wasted or lost by a dealer not having a process in place to train and continually motivate new hires.

To learn more, we turned to the experts. Shelley Boggan-Kirchner of GSFSGroup, Great Lakes Companies’ John Braganini, Brian Crisorio of United Development Systems Inc. (UDS), Harlene Doane of DealerStrong and Automotive Development Group (ADG)’s Bill Kelly all weighed in to help answer three key questions: Where should agents look for candidates, what attributes should they look for, and how can they help put them on the path to success?

1. Where to Look

Most of our experts agreed that although the traditional path from the sales floor to the finance office continues to yield excellent results, agents and dealers would be remiss in failing to expand their search. With that in mind, we discussed a few primary sources to focus on, each with its own pros and cons:

  • Internal candidates: Do not overlook the employees already working in the dealership, particularly especially those who make known their intentions to move to F&I. In fact, this remains one of the best sources to start with, the experts say.

“Top-producing salespeople and sales managers are good candidates,” says Braganini, principal of Portage, Mich.-based Great Lakes.

“We always like to look within the organization first, as there are often a number of qualified candidates itching for their shot at being the almighty F&I Manager,” says Brian Crisorio, vice president of marketing for Clearwater, Fla.-based UDS.

In fact, Crisorio adds that he advises dealers to invest in F&I training for promising salespeople — even before a job becomes available. This strategy demonstrates a commitment to the individual on the dealer’s part, giving them a clear path to advance. It also creates a roster of qualified workers who can step in when needed, be it for a particularly busy afternoon or on a more permanent basis.

  • External candidates: Agents should be constantly on the lookout for experienced F&I managers who may be looking for a change of scenery. One good way to do that is to make sure every dealer client has a career portal on their website. But Shelley Boggan-Kirchner, the executive in charge of the Hiring Winners platform for Houston-based GSFSGroup, says dealers may want to make their intentions known in a number of ways, including asking customers for candidate referrals and conspicuously posting recruiting materials in the store.

“When we go into a dealership, we bring in marketing and recruiting materials,” Boggan-Kirchner says. “We give them signage they can put up — be it at the receptionist desk or customer waiting areas — saying, ‘This is just to inform you we’re always looking for great people. Feel free to visit our career portal.’ We also give it to them electronically. So if they want to take that link and attach it to a community job board, they can market it directly to community colleges and vocational schools.”

This strategy allows the dealership to constantly evaluate and recruit new talent, she adds, so there is never a crisis when someone decides to move on to another opportunity.

  • Outside-the-box candidates: Our experts agreed that smart, ambitious, hard-working professionals in other fields can become effective F&I managers — if you can find them. For all the time and money dealers spend marketing to find new customers, for many, the idea of creating a similar campaign to find outside-the-box candidates remains foreign. For dealers who are focused on the day-to-day operations, taking the time to actively and continuously recruit can be a daunting task. Agents who can weed through and identify the next potential stars — of F&I, sales, customer service or any other part of the dealership — can become invaluable partners. They just have to know where to look.

“Qualified candidates can come from a variety of sources, and those sources often vary from market to market,” stresses Harlene Doane, COO of DealerStrong, based out of Evansville, Ind. She also notes that other sources, such as local job boards, and social media sites like Facebook and LinkedIn are also good places to hunt for candidates.

From traditional sources, such as the local newspaper, to online resources like Monster, CareerBuilder and Indeed, dealers have a number of opportunities to advertise their stores as friendly, productive work environments with the potential for a six-figure income. The downside, of course, is managing a presence on multiple job sites and sifting through the reams of applications that result.

“You will have to look at many more candidates and applications if you’re only recruiting via the Internet than you will if you’re collecting referrals,” Boggan-Kirchner notes.

Agents can help by managing this process on their dealers’ behalf and making sure the ads paint a realistic picture of life in the box, including the long hours and weekend shifts. That description can prove attractive to graduates of colleges and technical schools, who may be willing to sacrifice personal time in order to enter the workforce in a high-paying position.

Of course, like other outside-the-box recruits, recent grads will come in without the benefit of relevant training and experience. That’s where screening for aptitude, ambition and a willingness to learn and follow a process take on added importance.

“What we look for are people that have certain characteristics that we feel will be the most successful,” says Kelly, a partner at Bloomington, Minn.-based ADG. “Oftentimes, they are people with a proven track record, but sometimes we do come across the right individual that we believe we can train on our trademarked Proactive Selling System.”

2. What to Look For

It is not enough to simply look for any candidate that walks through the door. It takes a certain blend of skills and attitude to be a great F&I manager, so agents focused on helping dealerships recruit the right people need to ensure they are identifying certain key traits.

  • Coachability: One of the first traits to look for is a willingness to learn the F&I process and stick to it. Every dealership will have its own set of rules and procedures that F&I managers will be expected to follow. New hires need to be willing to learn and adapt to that process, whether they are green peas or seasoned professionals.

“With all of the compliance laws and moving parts, a business manager has to have structure and be able to work in a very structured environment,” Kelly stresses. “We are not looking for an individual to go out and create their own way. When the proven path is followed, we have the best results.”

  • Professionalism: Even the most knowledgeable F&I manager will struggle if they do not look, walk and talk the part. They need to be able to put consumers at ease and be capable of guiding them through the entire process. If the F&I manager doesn’t inspire trust, they will not get very far.

“We are always looking for someone that not only possesses the general knowledge, but also has the look,” explains Crisorio. “The ideal F&I manager will present himself as a trusted advisor who is qualified and prepared to help the customers navigate the details of a vehicle purchase. They should also demonstrate a team-first attitude and strong leadership qualities.”

  • Intelligence: F&I managers must build a working knowledge of terminology, deal structure and federal, state and local regulations, often in short order. Does your latest recruit have the brainpower to guide customers through the F&I process and keep the dealership out of trouble?
  • Character: F&I managers assume a powerful position in the dealership. They will regularly face situations that will test their ethics, and ensuring their level of morality matches that of the dealership is a key trait. This can be screened for with examples of real-life situations that came up in the hiring dealership, and then having the candidate explain how they would have handled it. This gives a good baseline for how well they will fit into the dealership’s expectations of its F&I managers.

“Some dealers are more comfortable with the gray lines than others, so the character needs to be in the same circle as the dealer’s expectations,” notes Doane. “Character also comes out in reference checks, if conducted properly.”

  • Chemistry: This is perhaps the hardest trait to screen for. The F&I manager will be working with every member of the dealership staff on a daily basis, and it only takes one bad apple to disrupt the entire culture. Agents rarely have the opportunity to work with new personnel on a daily basis, so the dealer’s expectations must be perfectly clear. The dealer principal should have the final say in all new hires, and, assuming the agent has brought them all highly qualified candidates that meet every other criteria, this should be the one trait they focus on the most when making the final decision.

“You want to be sure the person you’re hiring is oriented to the culture,” Boggan-Kirchner says. “You’ll get a lot of information about their character during the due diligence of the hiring process. But once the dealer has made that decision, the work they do needs to be reflective of the culture. I think it’s important that, from the moment people enter into the dealership, it should be emphasized that it’s a career, not just a job.”

One thing all of the experts agreed on was that, while finding someone with previous F&I training is always a good thing, it isn’t necessarily a requirement. Many of them stressed that either going the internal route, hiring experienced sales people who are looking to move ahead at the dealership, or young graduates just out of school who are blank slates, can both be very compelling options. The first comes with knowledge of the industry, the vehicles and the customers that the dealership serves, putting them one step ahead of other candidates. And hiring graduates means not having to undo training or bad habits picked up somewhere else. They can be taught exactly how this dealership does it, right from the start.

“I like both,” says Boggan-Kirchner. “If you hire experienced personnel, that usually means less down time and acquiring a person with a proven track record. Hiring inexperienced requires utilizing broader recruiting methods, having a commitment to training and utilizing performance assessment tools like Hiring Winners.”

Crisorio agrees, noting that an openness to training is, in the long run, more important than previous F&I experience. Although, he says, having automotive experience of some sort can certainly help. “The experienced individual must prove to be coachable in order to adapt to the processes and procedures that a dealer group has in place. Someone new to the F&I office must share the same trait and welcome the guidance that a reputable F&I company and dealership management will provide. That will give them the best chance at a successful career.”

“We all want to think we’ll get the guy who’s going to come out and run $1,200 per copy,” says Boggan-Kirchner. “But what are the characteristics that will make that person able to do it? You want somebody who’s got drive and ambition. You want somebody who’s motivated by their own performance.”

3. How to Prepare for Success

It doesn’t matter if it is the perfect candidate, or whether they are brand new to F&I or seasoned pros, every F&I manager should get the education they need to start strong and commit to regular, ongoing training to ensure they always perform at the top of their game.

Braganini might look for candidates who have a proven track record in either F&I or automotive sales, however, he notes, that doesn’t stop him from training them. “Both [experienced and new hires] need to complete our basic and advanced FSM schools, complete a development specialist assignment with one of our trainers and maintain strict adherence to our sales process and core competency system.”

“An experienced F&I manager must become familiar with the products being offered, as well as the selling system utilized to offer those products, so menu training and product knowledge training is a must,” stresses Crisorio. “Regarding the inexperienced F&I manager, additional training would be necessary in the areas of compliance, lender relations and objection handling, to name a few.”

“You are never too experienced to receive training,” says Kelly. “We emphasize weekly training for everyone. Someone that is newer to the job will require offsite, multiday F&I development training. All of the offsite training is followed up with in store one-on-one and online classes. Every week, the best business managers make time to improve themselves.”

It is important for the dealership to set expectations early in the relationship, and then give the F&I manager the tools and knowledge they need to meet and exceed those goals. It is not, however, enough to simply have a list of vague statements that are only pulled out when it’s time to do the annual evaluation. “Once the expectations are set and goals are formed, a daily action plan needs to be followed and a six-month trend report should be implemented to track the progress,” Kelly says.

“It depends on the store and market, but goals should all be written, tracked and have consequences,” agreed Braganini. “Assigning a development specialist to the store to ensure performance compliance will ensure the candidate can succeed.”

It is important for agents to manage the dealer expectations, as well. No matter how experienced a new F&I manager might have been before joining the team, there will be a learning curve when it comes to the exact processes and products the dealership uses. This is another area where training will make a big difference. If the dealer is willing to let the agent get the new hire all the training they need prior to their first day in the office, the chances of their success — and the dealer’s — goes up exponentially.

“While it may be understood that a learning curve will exist, especially with someone new to F&I, the targets established are, well, the targets,” notes Crisorio. “As the chosen F&I partner to our clients, we accept the challenge to ensure an individual is ready to succeed on day one. Realizing success immediately is certainly not guaranteed, so I would encourage any dealer to lean on their F&I company to provide dedicated support, giving that new manager the best chance at success.”

In fact, Kelly believes agents play a critical role in this entire process. “Be a coach and always have a game plan when working with a finance manager,” he advises. “Set the objectives and always bring something of value to each session. I very much believe that it is an agent’s responsibility to develop the finance managers. Contract count is nice, but PVR is the measuring stick.”

The further an agent is willing to go to help dealers find effective F&I managers, Boggan-Kirchner says, the more valuable they will become.

“I think that it behooves everybody for the agent to be involved in the recruiting, hiring and training process,” she says. “I think agents should act as consultants to the dealer for anything F&I-related. I also think it’s a selling point for the agency to have good F&I manager development. And I think that when you have an agency that does that, it stands out.”

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Plugging the Leaks in F&I


Unrealized opportunities for profit occur all too often in the F&I office. At the recent Industry Summit in Las Vegas, John Braganini, principal, Great Lakes Companies, and Steve Veldkamp, director of training, Great Lakes Companies, faced the issue head on and shared their tried and true methods for turning opportunity leaks into profit.

The quality of a dealership’s overall sales efforts is determined by the combined transactional yield in each area of the dealership – F&I, sales, and service. From the moment the customer enters the dealership to the point of delivery, opportunities for profit can be missed anywhere along the way. To illustrate, Braganini began with the following example:

A sales manager’s front-end profit for the month (excluding lease and fleet deals) was $1000 dollars. If everything were to occur perfectly – each involved person following every step to the sale – the maximum front-end gross profit could be as high as $1500. Making considerations for the staff, competition, etc., a realistic sales goal could be $1200. Given this scenario, Braganini asked the audience where the $200 difference between front-end profit of $1000 and the established sales goal of $1200 leaked out for the month. The first step for effective remediation, he explained, is tracking and identifying the leak(s).

“If I came to your store every Monday,” said Braganini, “and told you what each sales person could have done differently to earn those $200, there would inarguably be great value in that. The targeted performance is worth a ton of money. Having the correct remedial solution would be valuable to any dealer.” To accomplish this goal, Braganini and Veldkamp developed a data driven management system to replace other commonly used methods for analyzing sales profits, such as throughput analysis.

Throughput Analysis

Braganini described throughput analysis as the traditional and most commonly used method for analyzing retail sales.¬ Throughput analysis examines the overall profit at the end of the month. If the results are not acceptable, changes are made in hopes of increasing future profits. Braganini explained, “A finished production period is examined and broken down by gross, units and/or per retail unit (PRU). The data is reviewed and a decision made as to the acceptability of the yielded results. A remedial solution is then implemented.” The problem with this method lies in the determination of the remedial solution. Since the only data considered in throughput analysis is the end of the month profit, it is impossible to know where the breakdown occurred. Braganini said the implementing remediation boils down to guessing. “Making a guess about where the leak is and making changes in attempt to remedy the problem is, at best, taking a stab in the dark.”

Though commonly used, Braganini and Veldkamp said throughput analysis is NOT a recommended form of management. “It is not capable of providing the detailed data necessary to identify a problem and come up with a solution. Whenever I guess,” said Braganini, “I am never right more than half the time. Using throughput analysis, you might adjust pay plans, implement training, or replace people in an attempt to improve profits – but if you guess wrong, you could destroy careers, the profitability of the store, or damage moral. You could ruin everything if you don’t have any data.”

To comically illustrate throughput analysis, attendees viewed a black and white clip from an episode of “I Love Lucy.” In the clip, Lucy and Ethel were beginning their first day of work at a candy factory where they were tasked with wrapping individual pieces of candy as they passed on a conveyer belt. At first it was ridiculously easy, but as the process sped up, candy after candy was missed and Lucy and Ethel frantically stuffed unwrapped candies into their mouths, hats and dresses in hopes of hiding their inability to keep up from their boss. Veldkamp described the clip as the perfect example of managing the end result.

Process Analytics

The management system Braganini and Veldkamp recommend is process analytics. Process analytics identifies all of the sub-processes, or “drivers” throughout the entire sales transaction. It is driven by data gathered on each step in a transaction. Parameters for driver performance can be predetermined and managed in order to meet objectives. It also allows for targeted driver remediation.

Top Five Profit Drivers

After years of consulting with dealers, Braganini and Veldkamp have identified the most common drivers of profit in a sales transaction. Using process analytics, each driver is easy to define, simple to track, and easy to measure. The remedial methods are also easy to define, track and execute. To track the process, they developed five simple yes or no questions for the F&I manager to respond to after the completion of each delivery. The questions address five different areas and responses are tracked using technology. They refer to the process as “Five Driver.”

“The first thing that has to be done when we go into a dealership,” explained Veldkamp, “is data collection; get those five questions answered at delivery 100% of the time. Getting the process established can be a struggle for the first few months.”

Braganini and Veldkamp described the five most common drivers of profit and offered remediation strategies for each:

1. Desking
The sales department typically controls desking compliance. It is easy to identify and is inarguable since it is listed on the sales worksheet. After each deal, this information is used to determine if the deal was closed using the standard dealership participation rate with fair terms and conditions. For example: A customer wants to purchase a $50,000 car for $200/month. The sales person gives the green light and turns them over to F&I. The F&I manager then has take over the role of sales and close the deal; either by asking the customer for a down payment of $20,000, taking the loan out to 84 months, or lowering the price of the car.

Remediation Strategy:
A predetermined, acceptable threshold for closing deals in F&I should be determined by the sales manager. Ideally the F&I office should not be used to close more than 10% ¬– 15% of deals. This requires collaboration between the sales team and the F&I department, which can be a challenge. If this continues to occur too frequently, making the dealer principal aware of the situation may be the needed catalyst for reducing this practice.

2. Turnover
Customers should be physically introduced to the financial service manager within 30 minutes of the sale.

Remediation Strategy:
If turnovers are not being done properly, the point of break down in the process must be determined. Is the F&I department too busy? If so, scheduling could be modified. Is it due to online sales ¬– customers who are not present at the dealership at all? It could be how the sales person handles customers who have secured their own financing. Word tracks can be provided for the sales team to use in these instances. A procedure for handling deals that do not take place on the floor needs to be implemented and employees need to be trained to follow the established procedures.

3. Delivery Conditions
The finance manager should receive the customer within ten minutes after their arrival for delivery. This also tracks whether a vehicle delivered was before noon. Generally, morning deliveries are better because customers are at their best, rather than tired after work at the end of the day; which leads to higher product acceptance rates. The dealership needs to be properly staffed and operate in a manner that focuses entirely on the customer once they walk in the door.

Remediation Strategy:
Evaluate the scheduling of deliveries. Deliveries need to be scheduled at reasonable times to allow for a proper delivery. If one delivery is already on the books, make other customers aware they will have to wait if they arrive at the same time and offer an alternative time. Schedule deliveries so they are not rushed and a proper presentation can occur. This typically increased product acceptance rates.

4. Menu
A needs-based menu with products and services specifically geared towards each customer’s needs should be professionally prepared and presented for every transaction. The menu should be included in every deal jacket. Deal jackets are checked for the inclusion of the menu through random audits.

Remediation Strategy:
If menus are not being used on a regular basis, training on the proper way to prepare and present a menu could be the answer. If a dealer doesn’t have a process, one needs to be established and employees trained on the procedure. The menu design and product placement may need to be modified. Braganini and Veldkamp recommend breaking products down into categories: debt, mechanical and non-mechanical categories. The menu presentation can also be reviewed using video recording and managers can be coached on improving presentations. Different menus should be prepared for lease customers, cash customers and finance customers, as each type of customer brings their own set of risks and needs.

5. The 300 Rule
Offer 100% of the products to 100% of the eligible customers, 100% of the time.

Remediation Strategy:
Customers should be offered and presented every optional service they are eligible for or express interest in. This is monitored through video recording. Videos are randomly selected and reviewed – ideally once per week, per producer, but at a minimum, twice per month per producer. If managers are not following the 300% rule consistently, training on products and product selection, and objection handling could be the answer. Make sure products that are offered are a good fit for customers’ needs – both individually and based on the demographics of the dealership’s customer base.

Setting the Stage

To maximize profits, Braganini and Veldkamp recommend scheduling time to sit down with the dealer and set driver performance parameters in each of the five areas described above. The five drivers are used to determine where the money is leaking out of the store so that the remediation can be set up to target where the leak is occurring. The PRU can be calculated when the system was followed and when it wasn’t. Examples taken from actual stores were given showing significant increases in profitability when the Five Driver system was used consistently.

The video review objectives should be specific to each dealership and should consider culture and demographics of that dealer’s customer base. Performance should be tied to compensation; having a pay plan that takes into consideration the five drivers can be a very effective tool. Pay plans should focus on product, not reserve.

The bottom line from Braganini’s and Veldkamp’ presentation is that missed opportunities can be turned into profitable transactions with the use of a data driven management system. Identifying and focusing solely on the areas in the transaction that are not capturing potential profit can effectively be remediated to maximize profits. Ultimately, Veldkamp says, “If you don’t track what is occurring, you don’t know what to attack. Manage the drivers to the objectives and throughput will follow.”

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Making the Most of Time in the F&I Office


The average time consumers spend on purchasing a new vehicle is almost four hours from start to finish – and most customers agree this is way too long. Once the customer has chosen a vehicle and negotiated the sale, they proceed to the F&I office. There, the F&I manager has numerous products to present, and a growing number of forms and disclosures to deal with due to increasing state and federal regulations. Without unnecessarily adding to the total transaction time, F&I managers must go through all the steps from securing financing and presenting products to the signing of paperwork in a very limited amount of time. We spoke to top trainers and agents and asked them how to achieve customer satisfaction while facilitating an efficient and productive transaction.

The Bigger Picture

Tony Dupaquier, director of training for American Financial’s F&I University, says in most cases the problem with the transaction being too lengthy starts well before the business manager is ever involved. He estimates that 80% of the time, required information is left out of the deal when it arrives in the business office. He says the front end – not the back end – is the biggest contributing factor to an excessively lengthy transaction. “The issue is not the time it takes for the F&I manager to complete the transaction, it’s all that leads up to that,” says Dupaquier, “The F&I manager has to spend a lot of time running around getting information and correcting things that are wrong on the paperwork before they can even start their product presentation.” He says this still happens around 20% of the time with some of the best, most well trained sales managers.

Ron Reahard, president, Reahard & Associates, Inc., agrees. He believes the issue is not the time a customer spends in the finance office; it’s the time they spend waiting to get in the finance office that creates customer dissatisfaction. “The other issue is whether or not the customer feels the F&I process is adding value or aggravation to their purchase experience. If the customer feels the F&I person is genuinely trying to help them, they don’t care how long it takes. If the customer feels the F&I person is merely trying to sell them products they don’t want and don’t think they need, ten minutes is too long.”

So what kind of information is it that the business office has to spend time waiting for, looking for, or correcting? An example would be information that was either not obtained or was recorded incorrectly by the sales department, such as copying a customer’s address from their drivers license and failing to ask if they still reside at that address. In this situation, when the customer arrives in the business office, the F&I manager has to reprint and correct all forms that contain the customer’s address – wasting time that could be spent on far more valuable tasks. Other items that are often missing are the new and trade-in vehicles’ mileage, payoff amount, and the loan holder’s information. “So much time in the F&I office is spent correcting inaccuracies coming from the sales department! And it is a problem nationwide,” says Dupaquier.

In addition, if a customer simply has not been made aware of the required paperwork that they must provide – such as title, registration and proof of insurance – having to obtain it when they arrive in the F&I office adds significant time to the deal.

Putting the customer in the right car from the start – one that fits with the amount they wish to pay monthly – can also save an hour or two of what Dupaquier feels is often unnecessary negotiation. “Say the customer says they want to spend $400 dollars a month but the sales department puts them in a car that will cost $550 dollars. Then they begin negotiating the deal and it takes an hour and a half to do this. It drives me crazy!”

At a one-price dealership, with fully transparent pricing, the transaction time is significantly less than at a traditional dealership where price negotiating is the norm. According to Dupaquier, at a one-price dealership, the entire transaction could be done in the amount of time it takes to print out the paperwork!

Planning and Managing the Time Spent in F&I

Before the customer arrives in the F&I office, Steve Pearl, president, The Oak Group, says there are a number of time-saving maneuvers that the business manager can and should engage in. “The deal should be input to the computer for one thing. Another is the F&I manager needs to have a conversation with the salesperson and sales manager about how the transition was structured. The customer needs to be briefed ahead of time on what forms they need to provide, such as title and registration. Finally, the F&I manager needs to ensure the car is being prepared for delivery.”

Bill Kelly, partner/owner, Automotive Development Group (ADG), added that ideally, though it is not always possible, the F&I manager should be prepared with a structured, approved deal and a complete menu. “Title paperwork and other forms that don’t affect the numbers can be pre-printed prior to the customer arriving in F&I, so that the time spent in the office is used most efficiently.”

“It’s not secret agent spy stuff we are doing in the F&I office,” says Reahard, “The customer needs to ‘see’ what that F&I manager is doing – that he or she is preparing their paperwork as quickly as possible. The F&I manager needs to have time to discover the customer’s needs by asking questions as the paperwork is being prepared.” Reahard says the F&I process has to be totally transparent. “The F&I process should be viewed by the customer as expediting the delivery process, not prolonging it, and this requires F&I professionals to have the ability to multitask.”

The actual appearance of the F&I manager’s office is not something to be overlooked pointed out Gerry Gould, director of training, United Development Systems, Inc. (UDS). “Many F&I managers don’t get their office ready for business and it is in disarray when the customer enters it.” A clean, comfortable office environment sets the tone for a smooth, relaxed conversation with the customer. A chaotic office does not lend itself to making customers feel at ease.

Pearl believes that 45 minutes should be the typical time a customer spends in the F&I office. However if the customer has already been held up for a significant amount of time prior to arriving in F&I, he says it is the responsibility of the F&I manager to complete the transaction more quickly.

Menu Presentations

Presenting products using a menu offers numerous advantages. According to Pearl, Menu selling is a must – and not the old fashion paper menu. “With all the quality menus on the market, it not only makes the sale less confrontational but it also increases the speed.”

Kelly points out that the menu is just a tool; proper use of the menu is what makes it work. During their menu presentation, Kelly says the F&I manager should review the deal structure and then present up to eight products.

Kelly says that ADG has developed a two-step method to present up to eight products and deliver a complete menu presentation in five to seven minutes. If a customer has concerns or objections, he trains F&I managers to address those concerns in an additional five to ten minutes. Based on customer surveys, Kelly reports that some manufacturers are guiding dealers towards a 50-minute total transaction – this is from the moment the customer says “yes” to the sales person until the moment they leave the F&I office. However, once a transaction reaches F&I, he thinks the transaction can be completed in even less time. This includes all the necessary steps from credit approval, menu presentation and product sales to the completion of paperwork.

Reahard also believes that the proper use of a menu is key to a well given, succinct presentation. “A menu allows an F&I manager to present multiple products in a brief amount of time, and makes it easier for a customer to buy more products. The fact is, in the F&I office you can only sell two or three products before the customer has had enough, but a customer can buy six or seven products if they’re in a package on a menu. That’s why the manufacturers offer option packages, and McDonald’s has value meals.  Grouping products into a package makes it easier for a customer to see the value of buying a package.”

John Braganini, principal, Great Lakes Companies, says trying to present too many products to a customer can take up too much time if not done properly. Ideally, he says four to seven products should be presented using a personal, pre-printed menu.

Keeping the F&I presentation to 45 minutes or less is what Gould recommends as a best practice. He describes step-by-step how to deliver a presentation in just more than a half hour: “First, review each DMS screen in front of the customer. It should take no more than three to five-minutes to verify and gather information from the customer. Printing paperwork should take no more than eight to ten-minutes. A product disclosure/menu presentation should be no more than three minutes. This should be precise and to the point – no selling or lengthy descriptions. Handling customers concerns over purchasing products should be less than ten minutes. Finally, signing the paperwork should take no more than eight minutes.”

Gould emphasizes the importance of delivering a feature presentation without including the benefits statements. He says an initial focus on selling, rather that telling adds unnecessarily to the time spent in F&I and wears the customer out. Developing a presentation that presents each column of the menu as one complete option narrows the customer’s choices and allows the presentation to be done more swiftly. “Each product should be described in no more than two or three sentences and the description should only point out what the product does. For example, to describe a tire and wheel product, you would tell the customer, ‘Tire and wheel coverage pays to replace or repair tires damaged by a road hazard for the next five years. A road hazard is anything that’s not supposed to be in the road.’” A simple, yet concise explanation of coverage works best.

Advice from the Experts

The most often repeated advice Braganini gives to F&I managers is: “personalize everything and project confidence.” He emphasizes good presentation skills, having a prepared menu and loading the deal in the DMS before the customer’s arrival. By doing all of these things, you will be ready for an effective conversation with the customer.

There are several sayings that Pearl has used many times through the years.

  • “No one has the right to say no for a customer. Be sure the customer is presented all the products available.”
  • “If a customer says no the answer should be ‘ok’. This totally diffuses the customer’s barriers. You can then circle back at a later point.”

And this leads to his last piece of advice…

  • “Conversation not confrontation.” Be able to discuss the pros and cons rationally and logically without putting it in the customer’s face.

Gould says rather than waiting on a customer to be dropped off in the F&I office, F&I managers should be proactive. “Get off your axle and meet the customer in the showroom!” Then, when giving the presentation, he advises F&I managers to “tell” initially and “sell” once you have the customer’s attention.

Take it from the pros – incorporate these tips and time saving tricks, and you will find a great starting point for improving efficiency, and streamlining transactions. The result? Satisfied customers and profitability in the F&I office.

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Overcoming Dealer Objections to Technology


The technology used to facilitate the F&I sales and contracting process is constantly evolving; what worked – or didn’t – yesterday could be completely changed tomorrow. From eContracting and eSignatures, to menu and other F&I product quoting and contracting systems, agents have their hands full when it comes to convincing dealers to adopt new technologies. Some dealers are comfortable and don’t want to change, while others are resistant to change, no matter what that change may be. The challenge for agents is convincing those dealers that while there will be some initial frustration while their staff adjusts, the long-term benefits will lead to a much more profitable, efficient and successful process.

Agents and providers often view technology as an ongoing source of developing solutions to make the processes that make up the F&I office more accurate, efficient and profitable. And they are eager to get all their F&I managers on board. Human error is eliminated, contracts are submitted quicker and the customer experience is smoother – everyone in the F&I process, from the provider, to the agent, to the dealer, to the end consumer benefits from new technology. The problem is that the F&I manager does not always see it that way, and as obvious as the benefits may seem to the agent, the F&I manager resists with every objection they can think of.

Some managers, particularly those who are experienced in the F&I office but did not grow up with technology, may see new technology as a commentary on their job proficiency. Others object simply because it changes the way they are accustomed to doing things. Change in any form can be painful, particularly for those who have experienced success without technology for decades.

“It is not always the easiest process to convert a dealer who is not using technology,” said Jim Maxim, Jr., president, MaximTrak Technologies. “People usually take the path of least resistance, and if the dealer allows them to continue paper rating and putting the forms through the impact printer because it has worked for 25 years or more, they just will not change. But you have to embrace change, because if you don’t, you’re going to get left behind.”

To be effective, agents must be comfortable using the technology themselves. They need to be educated on how it benefits everyone in the F&I process. Only then can they effectively convey this to the dealer principal and then adequately convince and train the F&I manager.

“Agents need to be up to date on all the technology available,” said Steve Pearl, president, The Oak Group. “The agent needs to know all of the positives and negatives of every piece of technology, as well as how it will assist the F&I manager and dealer principal.” But, he went on to say, it is an uphill battle at times. “You can’t say that dealers in general are falling short with technology adoption. It is a very specific, dealer-by-dealer process. What we tend to find is that with the dealers who are falling short, it tends to be an age-based item; not everyone reacts that way, but certain people are resistant to change. They have always done it one way, and they don’t want to change; that’s not the case every time, but it tends to be one of the bigger issues.”

“I’m not sure I’ve ever heard the words ‘switch and easy’ used together to describe any technology transition,” said Patrick Donahue, president and CEO, Agents Management Group. “Regardless of the potential or immense upside, this is change, and human nature rarely deviates. Those that seek change reach a comfort point faster than those who feel they are being unfairly penalized or compromised by the structure that comes with technology.”

Mick Rabley, agent, Great Lakes Companies, categorized dealers into two types: “Those who embrace technology and others who pretend they embrace technology. The dealers that embrace technology are positioning themselves to make the technological transition. There are challenges, but they are meeting those challenges and finding the way to succeed. The dealerships that don’t embrace technology use every excuse created to circumvent the transition. The difference between these two types of dealerships is the ones that embrace technology have an individual with authority driving the technology through the dealership, and have the commitment from the dealer and department managers to succeed in this endeavor.”

Overcoming the Objections
There are a few ways to handle some of the top objections dealers offer for their resistance to new technologies. The first objection is that they tried it once in the past and had a bad experience, or have heard horror stories and are hesitant to make the leap; this is where the agent can point out that what might have been an issue even a year ago has drastically changed today. “I have seen more change in the last five years than in the previous 20 in technology in the automotive world,” said Bill Kelly, partner, Automotive Development Group.

“We are better off than we were even five years ago, but we’re not where we need to be,” noted Pearl. “The cost of new technology is coming down, and there are good providers with good solutions across the board working on getting the technology to a place where it is easy to use and at an affordable price. At the end of the day, for the agent, convincing a dealer to use a new technology comes back to the basics of selling. No matter what type of sale it is, the customer – in this case the dealer – will buy when they perceive that the value they’re receiving exceeds the price they are paying. There is value in the new technologies, but that value has to exceed the price; as providers are increasing the value, adding more bells and whistles, they are also decreasing the pricing, and I believe if we keep crossing that threshold, what will occur is more technology will be used. And that is an extremely important thing.”

Another objection is the lack of a common point of entry among the various technology solutions. “Technology comes at F&I departments from every compass setting,” noted Donahue. “Product providers, service providers, lenders, software firms, regulators, manufacturers and DMS providers all have some technology to offer. Unfortunately, very few of these systems talk to each other and even fewer have an open architecture that encourages use in concert with other systems.”

There are several solutions on the market today, however, to help address that problem. These third-party systems act as a single point of contact for the F&I manager, streamlining the process and simplifying data entry, and agents should educate themselves on what those solutions are, and what benefits – and drawbacks – each one brings to the table. A good agent can overcome this objection by knowing the system they believe is the right choice for that dealership – and be able to explain it in a way that makes the value clear. If the agent cannot explain how their chosen solution is different from the rest, then it will be a hard sell to convince a dealer of the benefits.

Another challenge for agents is that the dealership has hardware that is not capable of running the more advanced technologies. Today’s software programs require more computing power and faster Internet speeds, and for some dealers, that is a barrier to entry.

“Dealers are slow to adapt because it usually means that they will need to increase their Internet speed and get better computer equipment in the finance office,” said Kelly. “The efficiency and speed, along with the added benefit to the back office, should push every dealer to have the best computer equipment in the finance office.”

Rabley listed the top objections he has come across from dealers who don’t want to change their F&I technology:

  • Resistance to change – we’ve always done it the old way and it’s difficult to learn the new process.
  • Double entry – due to the lack of integration, the cost or reluctance to purchase the integration option, information has to be input multiple times.
  • Different processes – the F&I sales process is intricate and detailed enough without adding four or five different protocols for different products.
  • Lack of training – dealers get the new technology but have no idea how to use all the features to their fullest.

The Value of Training
Once a dealer has been convinced of the benefits of a new technology solution, and has implemented it in the F&I office, the agent’s job is not done. Effective training on how to properly use the technology is a key element in getting the F&I managers to embrace the changes and realize the full potential the agent promised.

“There has to be extensive training in order to get the dealership personnel comfortable with the change,” said Rabley. “This cannot be a ‘one size fits all’ training process; everyone learns differently. There are visual, audio or kinesthetic learners, and the training needs to be suited to impact each type. Again, the ‘one size fits all’ training creates a struggle for the dealership and the technology provider.”

Maxim agreed that training is necessary, but he believes in a more unified approach. “At the dealer level, it is important to develop a standardized training practice that your reps can become very good at in the field. Too often, what we see is that there are different processes all over the map for every single dealer, and if you have a new rep come into the territory, the process and/or business practice may be very specific to that dealer. So what agents need to do is get one common business practice across all dealers and all reps, so they really leverage their time and efforts.”

No matter which approach an agent chooses to go with, the content is ultimately what matters. “We monitor our dealerships to make sure the new technology is used 100% of the time,” said Pearl. “What we find is that, inevitably at large dealership, 2-3 embrace it, and the rest don’t. So we work with them, talk to them, teach them how to use it. That is one of the major pieces that we do when consulting with the dealer.”

“Today’s technology training we perform is one of facilitation,” agreed Donahue. “We have providers that all offer helpdesk-type resources and tutorials that demonstrate benefits of an individual product or performance driven technology. We make certain our F&I managers have been prepared to excel in the use of new technology. And we are in active discussions with our providers to become certified in the use of their equipment, which would allow us to provide seamless resources for all technology within our offerings.”

“We incorporate the technologies right into our weekly training visits as well as during our F&I workshops,” said Kelly. “We also use the technology tools as often as we can to help solidify our training initiatives.”

Success Stories
There were many encouraging success stories from our experts, where a resistant dealer finally realized the value in switching to a new technology, which in turn resulted in processes becoming more efficient and accurate, which led to increased profits.

Donahue shared one such story about five experienced finance managers in a large dealership, who were not well versed in the use of technology. They were suddenly required to use a touch screen solution in their presentations, and not only were they resistant, they seemed to view the requirement punitively – as if prior to that point, their performance had not been up to par. Over a two-year span, all five of these original managers were replaced, and the new employees came in with the expectation that the use of the technology was nonnegotiable – it was simply the way business was to be conducted. The new managers also happened to be on the more youthful side, and were naturally more comfortable using the required technology. The end result is that productivity, accuracy, efficiency and yield all are up at that dealership. The volume increased as well, yet they did not have to expand their F&I department because of the newly increased efficiency, thanks to the technology, now securely in place.

Rabely had his own story illustrating that sometimes, no matter how great the system is, it takes buy-in from the whole dealership to effect the change. “One of our dealer’s F&I departments did not want to take the technological plunge with a provider because of the myriad of reasons we usually hear: It takes too long; I have my process I don’t want to interrupt; it’s double entry; I would rather print the contract on the DMS than online; the dealer cost sheet is easier to use; and my dog ate my term paper. After a few months there were so many rating errors, it was decided we needed to train the support staff on how to use the Web site to rate and submit the contracts to the provider. Finally, the support staff said, ‘how come F&I doesn’t use this portal? It is really easy to use and it’s idiot proof.’ Guess what motivated the Financial Services department to start using the portal?”

At the end of the day when the agent is able to clearly articulate the value and the dealer embraces the change, new technology can catapult the dealership into the next level of sales and profit. Change is never going to be easy, especially with how quickly technology is changing, but the agent who knows the objections and is ready to counter them, and has the skills and knowledge to guide the dealership through the process, will be well prepared for anything the future might hold.

“Finance people and dealers that accept and push for new technology, and listen to their agents, will be the dealers who continue to thrive,” said Pearl. “They will be at vanguard of what is going on in the future. People who resist the technology will be a step back. They won’t make the income that’s necessary, won’t be compliant, will sell less cars at less gross, and they will expose themselves to much more litigation in the future.”

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Tips For 2013 From Top Industry Trainers


When it comes to ways agents can find more success, there are a lot of tips and tools out there to choose from. We asked a few of the top industry trainers to give us their take on what they see as the most important things agents should focus on going into this new year.

It may come as no surprise, but most of them listed training — the training agents offer to their F&I dealer clients — as one of their top pieces of advice. They noted that when it comes to being successful, the agents who create and maintain strong training programs are the ones who rise to the top. But it’s not just chatting about a new product and calling that “training.” There needs to be, the experts noted, a solid program that uses a wide range of techniques.

Luis Garcia, vice president of sales & business development, Safe-Guard Products International LLC, noted that one thing he finds a lot of value in is walkaround training. “The art of the ‘walkaround’ has been lost,” he said. “The walkaround is a perfect place to start planting the seeds for F&I products. For example, salespeople can point out features such as the tires, noting that those can be covered with tire and wheel protection. It creates an environment where customers are already starting to think about F&I, whether they know it or not, before they even sit down with the finance manager.”

Steve Veldkamp, district sales manager, Great Lakes Companies, believes agents need to have a structured system in place. “Today’s agent needs to have a monthly schedule of classroom training workshops. I have found classroom training is more effective than in-store training, mainly because there are no interruptions. The workshops can be product-specific, such as vehicle service contracts or credit insurance; topic-specific such as objection handling or presentations; or general knowledge such as a three-day F&I school.”

For Gerry Gould, director of training, United Development Systems Inc. (UDS), one of the real problems is F&I business managers who never practice their skills, outside of being in front of a customer. And then they wonder why they aren’t closing the sale. He advocates that agents train these managers using role-play techniques.

“Without role play and the critique that accompanies it, the only time the business manager gets to develop his talent and improve his skill is in front of a customer, and when they miss a shot, screw up a throw or strike out, the customer is not going to tell them what they did wrong, or right for that matter,” Gould said.

Beyond offering training directly, Tony Dupaquier, director of F&I, American Financial & Automotive Services Inc., suggests that agents encourage all their business managers to attend an F&I school at least every two years. Some things he notes an agent needs to be aware of before suggesting a specific school? “Ensure the legal compliance of the F&I school,” he advised, “and ask for documentation of legal compliance, not just a ‘yea, its legal.’”

Dupaquier also advises agents to make sure the school will focus on what they, and the dealer, want to accomplish. “Most F&I school focus on pure gross profit and not product penetration,” Dupaquier noted. “But product penetration spreads the profit around and assures keeping the profit. Focusing only on gross and making the money in rate is very dangerous in today’s market.”

Garcia cautioned though, that agents can’t just do a few training courses and call it a day. “Persistence wears down resistance. Training isn’t a one-time thing. It has to be a regular occurrence, and by being persistent, you will start to see a rise in your profits and realize the value training brings to the table. You just have to stick with it.”

Beyond Training
But training programs are the only things agents can be doing to help their dealers — and themselves — be more successful this year. One tip Ron Reahard, president, Reahard & Associates Inc., offered, was to be aware of pricing.

“Studies have shown most people tend to start rounding up at 45, so keep your prices under that number. If you charge $995 for a product, the customer mentally rounds that off to $1,000, so in the customer’s mind it’s a $1,000 anyway. They round up. If you charge the customer $1,041, they mentally round the price down to $1,000. They round in your favor, and you make more money,” he noted.

All in all, the key for agents is to not be complacent. Continuing to learn and grow, and then taking that knowledge to ensure your dealers stay ahead of the competition, is a key trait to cultivate. It will help you go from being a good agent, to a great, successful one.

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