Tag Archive | "Industry Summit 2013"

Industry Summit 2013 – Learning from the Keynote Speakers

Industry Summit 2013, held last month at the Paris Hotel and Casino, in Las Vegas, held a wide range of sessions that touched nearly every facet of the F&I industry. One of the big draws of the show were presentations from two powerhouse keynote speakers, who looked at the industry from very different angles – David Westcott and Charles Robinson.

David Westcott, chairman, National Automobile Dealers Association (NADA), was up first, and focused on dealer-assisted financing, why it’s so important for a vital industry, and what the NADA is doing to help educate federal agencies such as the Consumer Financial Protection Bureau (CFPB) on what it is and how it works. “We all know it’s a great system,” Westcott noted, “but some people in Washington just don’t understand.”

He noted that customers do have the option to go directly to banks or credit unions, but 80 percent choose to finance through dealerships instead. It is more convenient, and is a very competitive model, he noted, reducing the cost of credit for millions of customers – “it helps people buy cars,” he said.

The biggest threat to that system, which has been in place for more than a century now, is the CFPB’s guidelines, issued this past March, which give vague orders based on, Westcott noted, a wholly inappropriate foundation – disparate impact theory. The theory focuses on pricing disparities, and uses information such as U.S. Census data and surnames to try and assign race to loans after the fact, and then create policy around those assumptions. But discrimination, he noted, is determined through rigorous statistical analysis. “There is a right way and a wrong way to do it, and they choose the wrong way,” he noted.

And by trying to change a system that works well, for dealers and consumers, Westcott stressed, the CFPB runs the risk of forcing a system that doesn’t just hurt dealers in the long run, but consumers as well, making it more difficult and more costly to obtain credit, and potentially shutting some consumers out of credit altogether.

He also attacked the talk of forcing a flat-fee model on dealer-assisted financing, noting that he believes it will weaken competition and ultimately hurt consumers as much as no access to credit at all. It eliminates the incentive for dealers and lenders to help consumers find the best loan at the lowest rates. It will do just the opposite he contends – driving dealers to push consumers toward loans with higher flat rates, and higher payments. “It doesn’t help us, our customer, or anyone,” Westcott noted.

Attitude Determines Altitude
The second keynote speaker was Charles Robinson, president and COO, Resource Automotive. He focused on how the automotive industry as a whole, and F&I in particular, have changed and continue to change.

The first significant change to the auto industry, Robinson noted, was the introduction of F&I into the mix in the 1960s. The second two, he noted, are both happening now, and revolve around the rapidly changing technology effecting every aspect of the dealership, and the increasingly strict regulatory statutes that dealerships have to understand and be compliant with. “We’ve come a long way in how we [sell products],” noted Robinson, but what we do hasn’t changed.”

He believes there are still core values for success that were true when F&I was still young, and are still true today. First, determining who the end user is – the consumer. The focus has to be on them, on what they want from the product and how it will affect them long-term. The second core value Robinson highlighted is recruiting – the need to have the best people and the best processes. Finally, he noted, “we need to educate the outside world on how great this industry really is.”

To achieve those goals, he noted, communication is key. “There is nothing that can’t be solved by communication,” Robinson noted. That means it needs to be transparent to everyone in the process, as well as sincere. He believes that as long as an F&I manager is confident without ego, has respect for others and does what he or she says they will do, they will have won half the battle.

But there also needs to be training – and not just a one-time event, but an ongoing process that involves not just the F&I managers, but the sales force as well, since they are part of the sale. He even went so far as to say he believes menus are coming for the sales desk – precisely because he believes the battle between the desk and the F&I office over price quotes needs to end – it needs to be a streamlined, transparent process for the consumer. Pay plans, he said, should also be balanced and fair, and should promote balanced selling.

As for the products, he advocates that dealerships choose three core products, with just 3-4 ancillary products to offer. Consumers, he noted, are most affected by what they see first, and overwhelming them with product isn’t going to increase the sales. It’s also important to have a clear, state- and federally-compliant process in place to sell them, he noted.

At the end of the day, he doesn’t suspect the industry will change all that much, even with new regulations to contend with, or new technology. “You can’t buy into the latest widget all the time,” Robinson noted. He said that 10 percent of products are really good, 10 percent are really bad, and 80 percent is the reality of where most products fall today. It’s the attitude of the F&I manager, with good training and good communication skills, that gets them sold. “Life is 10 percent what happens to me, and 90 percent how I react to it,” Robinson said. His tips?

  • Make your career fun;
  • Fill in your educational gaps and always seek to improve;
  • Do what’s right versus what’s easy;
  • Set your sights high – you can have what you want, and what you’re willing to work for;
  • Organize and reorganize – it allows you to accomplish more;
  • Be fair and honest;
  • Empathize and sympathize;
  • And treat whomever you’re with as the most important person at that particular time.

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Using Disclosure to Your Advantage

Those of you I have worked with, or who have attended our training, have heard me say over and over again that we use honesty and full disclosure as a strategy with the Package Option method. And the more I work with the top performers, the more I realize that this approach is more than just a concept. In fact, it has turned out to be one of the most effective F&I techniques we have ever identified.

First, a little background. Back in the early 1990s, when we were developing the first F&I menus and experimenting with, and testing the F&I menu concept, one of the areas we spent a lot of time on was making sure the menus and processes we developed, and the training we provided in their use, stayed well within the FTC and the Attorney General’s compliance guidelines. Since there seemed to be a lot of differing opinions from the “experts” on what those guidelines actually were, we went directly to those enforcement agencies for advice and clarification of the rules. We then applied their recommendations to the Package Option process.

Because of that, we designed the Package Option process to work with a “bare” payment quote from the sales department. Then, to insure there was no “payment packing”, we built a step into our process, whereby the F&I manager, in the first 30 seconds with the customer, makes sure that the terms of the deal are fully disclosed and understood, then, immediately verifies that the base payment was properly quoted using the exact “written disclosure” that the sales department used to quote the payment.

As you can imagine, we initially met with some resistance from some sales departments to this approach. Many of them had been trained in the old school method of starting the customer with an inflated payment, allowing them to negotiate it down, getting an agreement based on payment, and because the payment was “loaded”, they negotiated away F&I products, not gross profit.

But once we began doing that up front full disclosure, measuring the results, and using this approach in dealerships around the country, some very interesting and surprising things started to happen.

First, we found that as the sales process and the presentation of the F&I manager became more honest and up front, the customers were choosing more products and the F&I departments were making more money. And the increase was significant. And today we tell F&I professionals to, not only begin the F&I process by disclosing the base payment and terms, but to put an emphasis on that disclosure.

You see, when a customer is buying a vehicle, they are understandably wary, skeptical and on the defensive. Why wouldn’t they be? What have they been told by every media source out there is going to happen to them in a car dealership?

Sales professionals have learned how to deal with this natural resistance by developing rapport with the customer, using a feature benefit presentation, and justifying the price of the vehicle by showing value to the customer.

However, F&I is a completely different process than selling a car. If they stay in that frame of mind during the F&I process, the job is much tougher. What we have learned is that to allow the F&I process to evoke the positive, security driven motivators that get people to buy F&I products and create top performance, the F&I process must be perceived by the customer as a separate, isolated function from the sale of the vehicle.

To create that atmosphere, there must be a systematic process and sequence of techniques, the first of which is the disclosure. You see, when the customer starts to view us as someone who is making sure they know what they are paying for the vehicle, are openly and transparently reviewing their options, and has their best interests in mind, they begin to shift from a resistant mindset towards a more receptive and less wary view of the F&I manager and the process.

The result is that the customer doesn’t feel threatened and will take a more open and receptive look at the options we present. This also leads to a completely different view of the F&I process in the customer’s mind. One of the things dealers comment on when they start using this process is that customers actually compliment them on the F&I process rather than complain about it. And this certainly reflects itself on their CSI questionnaires.

Using full disclosure, right up front, is an integral part of the process because it makes the whole thing easier for the F&I manager, and produces, by far, more income, enhances the customer’s experience and, as an added bonus, you never have to worry about someone saying you weren’t honest or that the proper disclosures weren’t being done. You’ve got it in writing in every deal jacket. Not because you have to, but because it’s part of your strategy.

Using Eye Contact
How else can we develop credibility given those preconceived notions? Eye contact. Why is this so important? The connection between eye contact and credibility is well established. A University of Miami study, specifically designed to measure the impact of eye contact on credibility, found that, “Eye contact enhanced both listener comprehension and speaker credibility. Posture had little effect on either credibility or comprehension; varied or limited vocal inflection had no significant effect and differences in vocal inflection did not affect listener comprehension. The only factor that showed to be significant in establishing credibility was eye contact.”

Obviously, this is an important technique that we want to remember.

During the initial disclosure, ask the customer, “Is that correct?” or “Is that what you agreed to?” While you wait for their answer, make eye contact. What’s important here is that you not only wait for their acknowledgement of each of the elements of the sale, but that you make eye contact with the customer, or each of them if there are more than one, as every element is agreed to. Now you don’t want to give them some ogling stare that looks weird, just establish normal eye contact. The way I suggest you work on this is by doing a little practice with a fellow F&I manager or even your spouse or someone that is familiar with your natural way of speaking.

Be sure they tell you it looks natural.

Incorporating these simple techniques into the first minute of the process produces an amazing difference in how the customers react to the rest of the presentation.

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Reahard to Return to 2013 F&I Conference

Las Vegas — Voted a “Best in Class” speaker by attendees of last year’s F&I Conference, F&I trainer Ron Reahard will return as a featured speaker at the 2013 F&I Conference. He will deliver “Crank Up the Value of F&I,” a workshop that will center on how F&I offices can update their processes.

Reahard, president of Ron Reahard & Associates and longtime contributor to F&I and Showroom, has focused heavily in recent years on how the F&I office can better connect with today’s consumer. At last year’s F&I conference, he delivered “Make the Internet Your Ally,” a session that focused on how F&I managers can prepare for today’s Internet shopper. This year, he’s continuing that messaging by focusing on the F&I process.

“If you’re still using product brochures and evidence manuals with three-year-old repair orders enshrined in plastic sheets to pitch product, you need to be at this session,” said Gregory Arroyo, editorial director, F&I and Showroom and Auto Dealer Monthly magazines. “If you’ve heard Ron speak before, you know he’s not a fan of pressure sales techniques and forcing customers to listen to sales pitches for products they have no interest in buying. Well, he’s going to show you how a well-designed process can drive that interest so customers can make more informed decisions.”

Last year, attendees of the magazine’s annual conference voted Reahard a “Best in Class” speaker, an honor he shared with F&I trainers Tony Dupaquier, Luis Garcia and Gerry Gould. Reahard has conducted numerous seminars and management workshops for the National Automotive Dealers Association’s annual conference, as well as a host of other industry events. He’s also a member of the Association of Finance and Insurance professionals.

The F&I Conference is one of three shows being hosted at Industry Summit 2013, which is being held at the Paris Las Vegas hotel Sept. 16-18. For more information, visit www.industrysummit.com.

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‘Father of F&I Menu’ to Take on Dodd-Frank Act

Las Vegas — George Angus, referred to as the “Father of the F&I Menu,” will return to the F&I Conference and Expo to address the threat of limited finance reserve. He will offer new approaches designed to help F&I offices maintain performance levels in today’s highly regulated environment.

Angus, who spent 17 years in dealership management positions before becoming a trainer in 1993, will take a look at two compliance threats impacting the F&I office during his session, scheduled for Wednesday, Sept. 18, at 9:10 a.m.

“Our industry is being watched, and there’s a real threat that the rules of the road for the F&I office will be altered once again,” said Gregory Arroyo, editorial director, F&I and Showroom magazine. “Angus is going to take those threats head on and will show attendees how they can make compliance work for them. This is a can’t-miss session.”

This year, the industry has witnessed a vigorous assault on the indirect financing model by the Consumer Financial Protection Bureau, a new regulator created by the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act. In March, the bureau issued a warning to finance sources regarding their dealer participation programs, telling them that they can be held liable under the legal doctrine known as “disparate impact.” It states that lenders can be sanctioned for actions that have a discriminatory effect — even if the discrimination was unintended.

Industry insiders took the CFPB’s actions as a sign that the bureau is out to eliminate lender policies that allow dealers to mark up interest rates on retail installment sales contracts. Angus, who also serves as a key contributor to F&I and Showroom, will offer an approach designed to help dealers maintain dollars per-deal averages if the CFPB eliminates or sets new limits on finance reserve.

Angus will also address another threat posed by the Dodd-Frank Wall Street Reform and Consumer Protection Act, which, aside from creating the bureau, gave new enforcement powers to the Federal Trade Commission and state regulators.

At the state level, the law gave Attorneys General the power to enforce the act’s prohibition against unfair and deceptive acts and practices, as well as other federal consumer protection laws such as the Truth in Lending Act and the Fair Credit Reporting Act. Angus will share an approach to disclosure being employed by some of the top F&I departments in the country, and will show attendees how to make disclosure work to their advantage when dealing with today’s more sales-resistant consumer.

The F&I Conference is one of three shows being hosted at Industry Summit 2013, which is being held at the Paris Las Vegas hotel Sept. 16-18. For more information, visit www.industrysummit.com.

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F&I and Showroom Names 2013 F&I Pacesetters

Torrance, Calif. — F&I and Showroom selected its six F&I Pacesetters of the Year. These operations are now in the running for the F&I Dealer of the Year award.

Profiles of each F&I Pacesetter will appear in the September issue of F&I and Showroom magazine. Each winner will be sending a representative to the Paris Las Vegas this September for the F&I Conference and Expo, where one of them will be named the 2013 F&I Dealer of the Year.

“Selecting the six finalists is never easy, and this year was no exception,” said Gregory Arroyo, editorial director. “Each of them had a great story to tell and clearly demonstrated their ability to balance performance with customer satisfaction.”

The F&I Dealer of the Year award, sponsored by The Warranty Group, is handed out annually to a dealership with a highly profitable F&I department that demonstrates a commitment to regulatory compliance. This year’s winner will be announced on Tuesday, Sept. 17, during a special lunchtime ceremony.

Past winners of the F&I Dealer of the Year award include Dick Hannah Dealerships, Tuttle-Click Automotive, The Suburban Collection and Lithia Motors. Here are this year’s F&I Pacesetters:

  • Cable Dahmer Automotive Group, Independence, Mo.
  • First Texas Honda, Austin, Texas
  • Ken Garff Automotive Group, Salt Lake City, Utah
  • Kings Toyota, Cincinnati, Ohio
  • Serpentini Chevrolet of Strongsville, Ohio
  • Star Dodge Chrysler Jeep/Hyundai, Abilene, Texas

The F&I Conference and Expo is one of three shows being hosted at Industry Summit 2013, which is being held at the Paris Las Vegas hotel Sept. 16-18. For more information, visit www.industrysummit.com.

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Top F&I Trainer to Address Process, Hard-to-Get-Done Deals

Las Vegas — Gerry Gould, director of training for United Development Systems (UDS), will return to the 2013 F&I Conference this September to deliver “Raiders of the Lost Profit,” a workshop in which he will reveal areas of lost profit and the steps F&I teams need to take to capture that profit.

Scheduled for 2 p.m. on Tuesday, Sept. 17, Gould will show attendees how to construct a proactive F&I process that gets F&I teams involved in deals early and often. The session will look beyond standard finance deals, and will offer insights on how F&I teams can make a positive impact on cash and lease deals, as well as sales that originate online. He will also offer advice on driving a better connection between the F&I office and service.

“Gerry is a dynamic presenter and one of the top F&I minds in our industry,” said Gregory Arroyo, show chair and editorial director for F&I and Showroom magazine. “If you’ve heard him speak or read his articles, you know he’s big on getting F&I managers out from behind their desk and into the action. And with leasing and Internet sales testing tried-and-true F&I processes, that’s exactly what’s needed. So we asked him to help our attendees devise a plan for capturing the full F&I profit potential of all deals.

Last year, attendees of the annual conference voted Gould a “Best in Class” speaker, an honor he shared with F&I trainers Tony Dupaquier, Luis Garcia and Ron Reahard. Gould spent 15 years of his 33-year industry career in retail and became an F&I trainer in 1996.

The F&I Conference is one of three shows being hosted at Industry Summit 2013, which is being held at the Paris Las Vegas hotel Sept. 16-18. For more information, visit www.industrysummit.com.

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