Tag Archive | "Millennial"

From the Boardroom: Digital F&I and the Millennial Boom


From their thoughts on what is an acceptable per-copy average to how their companies aim to address the online F&I push, four F&I product provider reps weighed in on a host of top-of-mind topics during Industry Summit 2016’s “From the Boardroom” discussion in late August. The main takeaway for general agents is they’ll play a key role in helping to close the digital divide.

The panel featured Tim Blochowiak, vice president of dealer sales for Protective Asset Protection; Greg Oltman, director of business development for Dent Zone; David Pryor, chief marketing officer for Safe-Guard Products International; and Matt Trudeau, director of national sales for Dent Wizard. Their diverse industry experience and roles within their companies offered attendees a unique perspective on the future of the F&I office. The following is an abridged version of that discussion.

Arroyo: We’ve seen public groups like AutoNation and Group 1 posting some impressive per-copy averages. Where do you think the national average sits?

Blochowiak: We’re typically seeing anywhere between $1,200 and $1,400. AutoNation and Group 1 typically are the bell cow and they seem to be leading the pack.

Oltman: I’ve seen it at $1,150, $1,200, but not quite $1,400.

Pryor: I would agree. We do see what AutoNation does. They’re a partner of ours, so we see what they do. They have a very strong process, and that’s what’s driving them to those numbers.

Arroyo: What about penetration rates?

Trudeau: For PDR [paintless dent removal], when people have a good process in place and they’re consistent with their offerings, we see it in the upper 20% range on new and at about 6% to 7% on pre-owned.

Oltman: I think penetrations for all ancillaries are probably 20%, service contracts at about 50%.

Arroyo: David, what about tire-and-wheel protection?

Pryor: Well, again, the mix out there has shifted toward leasing, which puts pressure on the service contract side. So we see tire-and-wheel penetration going up. In a highline store, you could see 30% to 40% penetration.

Arroyo: Without turning this into a commercial, Matt and Greg, can you get us caught up with what your companies have been up to lately? I’ve seen a lot of activity from you guys of late.

Oltman: Well, first of all, it’s our 25-year anniversary and, to Greg’s point, we’ve got a lot of things going on. We were the first PDR service contract and then the first company to have a nationwide technician network. Recently, we purchased a chemical company and a paint-and-fab company. We also just purchased a new odor eliminator that’s going to be added to our suite of products.

We also developed AutoBodyguard, a new division offering a complete line of appearance program and vehicle protection products. It’s where our new bundle is coming from. It has eight products, including PDR, paint-and-fab and an odor eliminator.

Trudeau: At Dent Wizard, one of our newest additions this year is Ding Shield One. It encompasses PDR with hail damage repair and unlimited cosmetic wheel coverage. It also comes with an option for bumper repair and interior protection. One of the things we take pride in is we service what we sell. We have over 2,400 employees now throughout the United States and Canada, which helps us be good stewards of our program in that we can manage our claims. But it’s adding those different things, especially with the amount of leasing we’re seeing right now.

Arroyo: Let’s move to the service drive, because it remains an untapped source of additional F&I product sales. Matt, Dent Wizard is doing something different in that area, correct?

Trudeau: We do a few different things. There’s the side of our company where we go out and consult with service departments on doing walkarounds and how to receive a customer. We come in and do some training clinics. And we have a program where you can sell dent-and-ding coverage, but it comes with preexisting damage so that advisors can sell it.

But it is like pushing a freight train uphill getting these advisors to sell product, especially if you approach it from that side. What we do is work with them on selling our service, where guys come out and repair a car. And they’re able to mark that up, so they’re interested in doing that. So we work with them on selling our service, not our service contract, and there’s definitely a revenue pickup there.

Arroyo: What about service contracts?

Blochowiak: Well, it’s definitely a challenge. A lot of that has to with the alignment of things. The service writer sells service, and they’re really trying to help the consumer. And when you get into service contracts on used cars, you’re talking several thousands of dollars, where the Dent Zone, Dent Wizard-type products are a lot more palatable for the consumer and a lot less expensive.

The problem with selling service contracts on cars that are already broke is it doesn’t do a whole lot from an underwriting perspective, because rates become so high that you have to price for that. So it’s been a real challenge selling service contracts in the service drive, but there are some dealers who have the right compensation plan in place for their service writers and have experienced success. But it’s minimal, to say the least.

Pryor: There just aren’t enough dealers who are really focused on it. We all see the opportunity, but it’s a process change, a pay plan change. And you have to have the right commitment at all levels of the dealership to make that work.

Oltman: You also need to consider whether there’s enough meat on the bone. I mean, after you pay a service writer and then you pay F&I, you can’t overprice that service contract to that customer if F&I is involved in the service drive. Next thing you know, there’s what? A $50 profit?

Blochowiak: And we may see those types of sales not so much in the service drive going forward, but through technology — apps, phone alerts. If consumers have an app on their phone from either the product provider or the dealership, that gives them opportunities to send out alerts to the consumers and, frankly, offers. And I think catching multiple consumers at the right time makes more sense, because you have a broader consumer base to hit in the course of the day as opposed to the one customer on the service drive at that given time.

Arroyo: Let’s shift to this digital F&I talk. At the magazine’s Dealer Summit this past May, we were having an open forum-type discussion when a compliance and F&I trainer said she didn’t believe much about vehicle sales and finance had changed over the course of her 35-year industry career. She felt that people still want to drive the vehicle, smell it, and be sold on the deal. Do you agree?

Pryor: I would disagree. I think the way consumers are buying cars has changed. They’re doing their research online or looking at social media. They’re looking at dealer reviews. I think they still want to touch and smell the car, but their decision is 90% made before they walk in the door. And I think the F&I industry hasn’t necessarily kept up with that. So I think there is a huge opportunity to start educating consumers earlier in the process by getting more information out there about the products, to focus on the social side and what people are saying about these products.

Oltman: One thing I’ll add to David’s comment is that when we get to that stage — and I’m going to go back to pay plans — you have to make sure that finance wants to get involved. You’re changing their world. So I think the pay plan is a big part of this.

Blochowiak: That’s a really good point. I also think we have to encourage dealers to diversify their interaction with the customer, because not everyone wants to buy a car or interact with the dealership folks in the exact same manner.

Arroyo: So what tech tools are you personally excited about?

Oltman: If you haven’t seen MakeMyDeal, you’ve got to go see it. It’s fabulous. Pearl Technologies’ ShowroomXpress is as good, but MakeMyDeal is here to stay.

Blochowiak: I agree with Greg. I had an opportunity to sit through a demonstration of the MakeMyDeal platform, and it’s nice, because, as I said earlier, it’s about interacting with the customer how they want to be interacted with. And that platform really allows the consumer to start and stop anywhere they want. They can go all the way through to F&I, or they can stop along the way and just use it to shop.

Pryor: I would echo those sentiments about the MakeMyDeal model. What’s interesting about it is it doesn’t take the dealer out of the equation, which I think was the problem with some of the other efforts to kind of push F&I online.

Arroyo: So there are no concerns about production declining?

Oltman: You’re selling a car. And anytime you do that, it’s an opportunity. So there should be no fear.

Arroyo: David, your title, chief marketing officer, is a little unique in this industry. Is it a reflection of this need to address this online push?

Pryor: That’s part of it. When we talk about educating consumers, it’s about generating content and it’s about creating ways for dealers and consumers to share their experiences with these products. And we’re just starting to kind of crack the surface on that, but it’s something we’re looking at. How do we enable it on our websites? How do we enable it in social media channels? And how do we enable it on dealer websites? These are all places customers are going before the purchase, and we want to lower as many barriers as we can so they walk into the F&I office and they’re educated, they’re knowledgeable, and so they’ll buy more.

Arroyo: I’ve always wondered why we’re not using some of these great objection-handling lines or techniques as the basis for some of this content. They’re all designed to build value, to make that product mean something to the customer’s situation. So, to the rest of the panel, what discussions are taking place in your offices about this online marketing stuff?

Blochowiak: We’re really making a push to make it more, as you said, objection-overcoming or really just creating a need. Because if you just list information, that’s all it becomes. But if there’s a picture of a car broken down on the side of the road, that becomes real and that helps create the need for the product.

Oltman: The other thing is, and I know David knows this, you have to know what the dealer’s business plan is, how they market online, what they can stomach, and what they can’t. Once you know that, then you become a partner with them and then it’s all about the people in the store. Because, ultimately, they’re the ones who are going to make it happen.

Arroyo: But what about F&I product pricing? Should we go that far?

Blochowiak: I think you can. And what it could ultimately do is create MSRP-type pricing for our products. Or it could create per-month pricing for the products online. So if you’re advertising a certain car for $399 a month for 60 months and here are your disclaimers, well, you could tack on a service contract for $27 a month or something like that. I think that’s understandable to the consumer.

Oltman: But if you’re going to price online, everybody in the dealership needs to know that price. And there has to be a business plan. So, once again, it’s training and education, because there’s a whole lot more involved than just transparency.

Arroyo: Do you think Millennials will be good F&I product buyers?

Oltman: I definitely think so. I was talking about this with one of my teammates. We both have older children, and they’ve been brought up where every time we bought them anything electronic, we always bought a service contract with it. So they don’t know anything different. So I think Millennials are going to be huge buyers of products.

Pryor: I read something recently that said Millennials are the most protected generation that we’ve ever had. I mean, they all wear bike helmets and they all wear helmets skiing — things that you would have gotten you laughed at when I was growing up. So I think Millennials will be as good as or better than today’s buyers of our products.

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Dealertrack: Millennial Stereotypes Aren’t Entirely True


LAKE SUCCESS, N.Y. — The perception that millennials — consumers ages 18-34 — are content with a carless, ride-hailing life may not be true after all, at least according to new data from Dealertrack.

In 2015, a record-setting sales year, millennials accounted for 34.6% of all auto loans originated through the Dealertrack platform, according to the software firm. Through the first eight months of 2016, that segment’s share of auto loan originations has grown to 36%.

“What we found was that millennials were kind of pigeon-holed into this category as lazy, young and entitled, and I think there were questions as to how they would transition when they became adults and had jobs,” said Jason Barrie, Dealertrack’s vice president of market performance, lender, sales, and F&I solutions. “I think the auto market is an important variable to show if millennials are in the market to buy larger assets, and I think, from the data that we’re seeing, they are in the market for cars.”

In the past five years, Dealertrack has seen millennial loan originations grow at a significant pace. In 2011, the age group accounted for 24.8% of all auto loan originations. They now account for more than a third of all loan originations.

Barrie attributes some of this growth to natural generational shifts. In 2011, consumers over 64 accounted for 13% of all loan originations. Now they account for 8.6%. Generation X represented 44.3% of all loan originations in 2011, but now account for 41%. However, there are also other factors contributing to the rise of millennial loan originations, including the growth of incentives targeting the demographic.

“Many of those incentives were pointed at recent college grads, and many of them were designed to drive upstream customers that weren’t necessarily in the market. And it did help drive sales in 2015 as well as in 2016,” Barrie said. “So you’re seeing some demographic shifts here, you’re seeing some activities that are showing the largest demographic group in the history of the United States, this millennial group, they’re players in the market and they’re going to move cars and influence how and what is actually purchased and leased.”

Another factor that has helped the growth of millennial loan originations, Barrie noted, is the rise in finance sources targeting the subprime market. Many sources, Barrie added, are buying deeper in the subprime segment and are looking at millennials as a key growth opportunity.

Many millennials are still working to establish credit, are at the beginning of their careers, and are living on limited budgets. That makes the monthly payment a major consideration for this car-buying demographic. For the older, more established millennials, stretching terms or leasing is a great option.

According to Barrie, the average new-vehicle loan term for a millennial was 70.4 months, up from 70.2 months last year. The average new-vehicle loan term for Generation X was 70.1 months, while the average term for baby boomers was 68.8 months.

Because of their credit standing, leasing doesn’t account for a lot of transactions from this age group. Barrie noted that millennials take out 19 auto loans for every one lease transaction. However, from 2012 to 2016, millennial lease transactions have grown by 49%.

“As millennials gain better credit, you’re going to see leasing continue to be a solution for that younger demographic looking to get into the car of their choice to match their budgets,” Barrie said.

Barrie also addressed a perception that millennials want to exclusively buy their cars online. He said Dealertrack has found that that’s only partly true.

Millennials do, in fact, want a digital retailing experience, but they still want to be able to test drive their car at the dealership. They want to go to a dealer’s website to pick a car, configure it, get finance options, get a trade-in offer, and fill out a credit application so their deal is structured by the time they reach the showroom. This online-to-showroom experience is part of why Barrie believes in the effectiveness of Dealertrack’s iPad menu.

“To be able to present F&I products with video and graphics and descriptions, it’s more in line with the interactive experience that consumers are looking for online. So when they come into the physical dealership, they’re engaged with tablet technology to continue that experience, so it’s not disjointed,” Barrie said. “Think about the experience, that you’re online, you structure a deal. You got all these great tools, you got financing options, fill out a credit app, you can research F&I products online and then you come into the dealership and they hand you a photo copy brochure of a vehicle service contract.

“And that’s where we see the use of dealer-controlled technology in the showroom, that enables the sales process, enables the F&I manager to do a more effective job of telling the story,” Barrie added. “This isn’t to replace the F&I manager. We do not see the technology replacing the individual who’s educating the consumer. F&I departments add so much value to the car-buying experience to educate a consumer.”

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Millennials: Recruiting, Training and Retaining them is Key to Dealerships’ Future


We tend to group people into generations to better understand their collective point of view. Millennials are no different. As the largest generation, out numbering Baby Boomers in size and, arguably, influence, understanding their point of view is increasingly important to cultivating successful dealership employees.

There are three distinct areas to consider to be successful at recruiting, training and retaining the millennial generation. The first area is to understand them. This is your key to developing a successful plan going forward. Second, how are you going to interact with millennials during the hiring process and into their employment? This is the execution of your plan. Third, how do you retain them? This will be your measure of success going forward with your newly hired millennials.

  1. Understand Them.

Who are millennials and why should you care? As a generation, they surpassed baby boomers as the largest generation in early May of 2016[1]. Their buying power will far surpass any previous generation.

For a better understanding of millennials, let’s compare and contrast the current generations in the workplace.

Baby boomers are currently ages 51 to 69 and number around 74.9 million[2]. They tend to put family first, value job security and have concerns about retirement. Boomers are IT adopters and prefer to communicate face-to-face or on the phone.

Gen X, which numbers around 66.1 million members[3], is sometimes referred to as the Lost Generation or “latch key kids”. With ages between 35 and 50 they are more concerned with maintaining a good work/life balance than their parents. As digital immigrants, they prefer to communicate via text and email.

Now, on to millennials. Aged 18 to 34, they number around 75.3 million[4]. Millennials are the most educated generation and typically have higher levels of debt. Additionally, they are slower to make major purchases such as automobiles and homes. Millennials are considered digital natives, having grown up with their technology. Not surprisingly, they are tech-dependent. They just expect their tech to work and are generally not savvy as to how the tech actually works. Their communication preferences are online and mobile.

  1. Recruit and Hire Them.

Now that we have an understanding of millennials, we can look at some ways to recruit them and how these might differ from the traditional recruiting methods. One thing to be aware of when recruiting, is the millennial generation is quite unfamiliar with traditional recruiting and hiring practices. Additionally, you can expect them to enter the job market many years later than previous generations and often be more highly educated.

When you are recruiting, be prepared for candidates who are entrepreneurial in nature and looking for rewarding careers that will have a broader impact, not just for their employer but society in general. As part of your interviewing process, you need to make sure they understand their role in the company’s success as well as the role of the dealership in their customers’ lives.

To assist you in your recruiting efforts, consider hosting “learn about the car business” meetups. You should also reexamine the careers section of your website and make sure you are not just listing the job requirements but also providing career benefits and a look at how the role impacts the bigger picture; how your dealership affects people’s lives for the better. You may also want to develop some educational pieces that can be shared across multiple recruiting and social media platforms.

  1. Train and Retain Them.

Now that you’ve hired someone, it’s time to review your training processes. If you are still sitting new employees down in the break room and having them watch hour after hour of VCR tapes starring sales trainers from the ‘70’s & ‘80s, you will lose millennials. Your training needs to match the times. Train like the year in which you are hiring. You need to take a look at when the last time was you updated your training processes and materials. Granted, in the basics of sales or F&I hold true. However, your training materials and the way you deliver training need to be current. You may want to consider using more one-on-one training. This is something that goes a long way with the millennial employee. It gives them a sense of belonging to a greater organization than just selling cars.

Here are a few additional points to think about when training millennials:

  • Use coaching – not telling
  • Realize that they want to feel unique
  • Incorporate lots of confidence-building tools and techniques

Last but not least, make sure your training materials are available across multiple devices such as physical job aids, tablets, computers and smartphones.

Okay, you’ve recruited them, you’ve trained them and now you need to retain them. Here are some tips for making sure millennial employees stay with you for the long run.

As noted previously, you are going to need to show millennials how their role at the dealership benefits others, such as how they are helping the entire operation succeed and what role the dealership plays in the community. Remember, you want to provide examples of positive impacts to this generation because, to them, it’s not just about the paycheck. Research has shown that many millennials will take a job that impacts the greater good rather than its higher paying counterpart.

You are going to need millennials working in your dealership. You can expect new car purchases by baby boomers to decrease. GenX purchase growth is beginning to slow. Millennials’ new car purchases are beginning to rapidly increase to the point that by 2020, 40% of purchases in your dealership will be by millennials[5].

Who better to sell a car or F&I product to a millennial than another millennial, someone they know, like and trust. Just like it has been for generations.

[1] Pew Research Center

[2] Pew Research Center

[3] Pew Research Center

[4] Pew Research Center

[5] Forbes Research

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5 Smart and Easy Ways to Motivate Millennial Employees


Bashing Millennials has become quite a sport in recent years, reports Inc. But as a father to two of them, and employer of nearly 500 people–many of whom younger than 35–Christopher Cabrera says it’s not fair to make nasty generalizations about the age group. In fact, the founder and CEO of Silicon Valley-based Xactly, a SaaS company which offers tools for sales performance management and employee engagement, says his company has flourished by embracing the characteristics that make Millennials unique. Here’s his advice on how you can do the same.

1. Give them the recognition they crave.

Yes, it’s true these younger workers grew up receiving awards, trophies and certificates for every little thing. Now that they’re grown, there’s no getting around the fact that Millennials expect to be recognized for their achievements. Instead of bucking this reality, Xactly changed the structure of its sales organization to allow employees to get promoted or make more money every six months, depending on their performance. “That worked out tremendously,” he says.

2. Don’t worry about them checking their phones.

Millennials have had devices in their hands since they were little kids, and there’s an upside to this reality. They’re really good with technology, are bosses at social media and capable of paying attention to multiple things at once. Exploit this fact and cut them loose to become brand ambassadors, assuming they like and respect your company enough to say good things on whatever platforms they frequent.

3. Let them work from home.

The fact that Millennials constantly have a phone in hand means they’re on-call after hours and on weekends to respond to calls, emails and texts. Reward them for this dedication by being a flexible employer which recognizes people for achieving goals, not clocking time. “If companies aren’t embracing the new ways of working including working from home and having flexible time then Millennials are going to be miserable and won’t stick around,” he says. “You will miss out on these very bright young people.”

4. Give them the opportunity to do good.

Millennials want to do work that matters and make a difference in the world. Tap into this desire by providing opportunities to volunteer on the company’s dime. Xactly’s foundation does this by encouraging employees to work on Habitat for Humanity projects or participate in races which raise money for good causes. “They’re very moldable and I think with the right role models these people can be great leaders who embrace more than just working like a slave to your company,” he says.

5. Give them credit for being different in good ways.

Cabrera says it can’t be denied that Millennials are collaborative and creative, due in large part to growing up with social media. Instead of bashing the age group, he’d like to see more people celebrating their strengths. “I’m so tired of hearing ‘When I was in little league only the first place team got an award,'” he says. “That’s missing the point of what these folks are all about.”

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