Tag Archive | "tablets"

The Light at the End of the Tunnel

After spending a week in New Orleans for the American Financial Services Association (AFSA) conference and the National Automobile Dealers Association (NADA) convention, there is no doubt in my mind that the future is bright for the success of the F&I office. There was plenty of talk, recommendations and insight concerning the federal oversight looming over the finance reserve issue, and the buzz for inside the F&I office is and will continue to be technology. According to the “experts”, the industry saw changes in the market; some were good and some do raise concerns. Depending on your view of the impending changes in our industry, the light at the end of the tunnel may be one of two things – however there is a third.

If you have been in the automotive industry for any length of time, you know the one constant of our industry is change. Things change. The product, the customer, the dealerships, the owners, the laws, the credit, the finance companies – regardless of the changes, we adapt and overcome. We are now seeing the changes in real time. In the past the change would happen and it would filter down into the dealerships and then into the F&I office. Today we see it coming by reading it, hearing it and seeing on the news. Being able to see the changes in real time gives us the opportunity to make adjustments in our processes, so when we have no choice in the matter, we are already prepared.

If you have not started preparing for the loss of finance reserve as we have known it, the time is now. It is happening with some finance companies already, and soon all will be required to comply. This is not an option for the finance companies. I heard it directly from the Assistant Director of the CFPB: discretionary pricing at the dealership level should not be allowed. The good news is that dealerships will continue to be compensated fairly for the work and effort to secure a loan for the customer, as long as it is not based on a discretionary form.

There were several recommendations given to compensate the dealership:

  • A flat fee – With factory-incentivized rates, many dealerships are accustomed to this already.
  • A percentage of Line 5 (amount financed) – Many of our finance companies
    already offer this model.
  • A hybrid – This was the new one. A mix between a basic flat, a
    percentage of line 5 and compensation based off of the term of the loan.

The last day of the NADA convention, there was a workshop that handed out a Fair Credit Compliance Policy & Program. It outlined the recommendations from NADA on how dealerships may want to handle finance reserve for the time being. This is a fantastic initiative encouraging a written process at the dealership level. This sends a message the federal agencies that we, as an industry, want to do what is right to discourage any type of discrimination.

In my opinion – and I hope I am wrong on this – the federal oversight hammer will come down, and the ability to negotiate the sell rate from the buy rate will no longer be an option. My advice: take the flat and focus on your product sales. I know this is not the most popular position, however, for the dealerships that focus on reserve the light at the end of the tunnel will be a train.

The Changing Face of F&I
Technology is a major focus by the factories on the sales floor; more and more factories are requiring the sales team to be equipped with a tablet to assist in the sale of the vehicle. We know many of our customers are becoming accustomed to technology in their everyday life as well, and the retail automobile industry is responding. When it comes to the F&I office, the move to more technology is not always embraced at the same level as the sales floor. Do not be afraid of the technology: it can help, and as time moves forward, it may make our lives, as F&I managers, a bit easier.

Many companies have introduced tablet-based F&I presentation tools and solutions, and these have come with mixed emotions, with good reason. One thing is clear though, the customers want to be involved, and tablet technology facilitates that involvement, but how involved is the business manager? This is where many F&I managers have a severe disconnect.

As a dealer, general manager, finance director or business manager, you may be looking at a tablet or digital piece for your F&I office and I encourage you to look; however, you need to find the right fit for situation. The wrong tablet or digital technology has proven to be as detrimental to the success of the F&I office as the right technology is helpful.

Many of the tablets are almost designed to be a digital F&I manager, reducing the amount of interaction between that person and the customer. This is the primary objection of many F&I managers. If you have an F&I office that is struggling, and the talent pool available in your dealership is shallow, this is a viable option. If you have good or even strong F&I manager, make sure you go with a tool that is more of an electronic menu. I saw a new one at NADA that will be released this month that is a great “split the difference” between something the customer can work with and something familiar enough to the F&I manager that they will be comfortable using it. Do you need a solution or a tool: there is a distinct difference between the two, and you need to find the one that will work best in your F&I office. The light at the end of this tunnel is the glow from a backlight.

The Stats Don’t Lie
There was a fair amount of statistics about the automotive industry from the finance side at NADA. Looking at the numbers, we have to be prepared for the direction the industry is moving: longer term loans, the popularity of leasing and the amount of disposable income are all factors that directly impact our industry and, more specifically, the F&I office.

All of the economic indicators show another strong year for 2014, with an increase of disposable income. What has helped this is less debt per household, less debt overall and more money, which allows for more cars sold and customers able to afford more F&I products.

A few interesting numbers: 84.8% is the finance and lease penetration on new vehicles, while that number is 54.6% on pre-owned. This shows that the finance companies have the money to lend and, more importantly, are willing to do so. This is being pushed by higher credit scores averaging 716 for new and 648 for pre-owned; the increase comes from less debt and more disposable income. This is a double bonus for our industry.

The average loan amount for 2012 was $26,685 with an average payment of $459, and an average term of 65 months. The interesting point here is that the average loan amount and payment stayed about the same for 2013 however the length of term increased, and now 72 months is normal for new car loans.

With longer-term loans more accessible, 19.3% of all new car loans exceeded 72 months last year. For the sales department, this increases the length of time to have a customer come back into the buying cycle, however for the F&I office this generates plenty of need for GAP and service contracts. From a statistical outlook, the light at the end of the tunnel is a bright and shiny opportunity for the F&I office.

2014 has all the indicators for a strong year in the automobile industry. The factories are producing fantastic products with the marketing behind them to drive customers into the dealerships. The credit scores are up, the finance companies have money to lend out and the customers have more disposable income. Drop in some technology, and the F&I office will have a strong – if not another record breaking–year.

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Tablet Technology: Gimmick or Key to the Future?

AE Magazine occasionally receives questions from readers, and recently we got one that we felt needed an expert answer. We reached out to four experts in the field seeking their take on the matter: John Vecchioni; Matt Nowicki; Jim Maxim, Jr; and Shawn McCool. Below, each of them tackled the same question:

“Do you believe tablet technology really adds value to the F&I office, or is it just another gimmick?”

John Vecchioni
National Sales Director, United Car Care

The idea of utilizing a sales menu in the finance office has many merits, but for some, it poses many obstacles in their comfortable sales process. Some will say there is data suggesting increased product sales as a result, and it is hard to dispute that product sales do increase just for the asking, or in this case, for the showing. But if the menu can increase product penetration so dramatically, then why do we need a finance manager? The incontrovertible fact is that menus don’t sell products and never were designed to sell products. People sell protective products on the merit of need and value. It’s always been that way and will continue to be that way. Now, don’t be foolish and look at a resource as something that can’t be utilized. The menu can and will assist you in building value in protective products.

It seems the conversation about today’s technology in the finance office regards the utilization of an iPad for product menu presentations. I suppose there is an argument to be made for iPad usage. One specific argument for using an iPad is ensuring that everyone is able to see every product every time and, of course, any electronic menu can facilitate that. We talk about the menu so much that it has become a daily topic in many stores. Some stores have even gone to the point of having third parties review files to ensure a menu has been presented.

Let me make this perfectly clear, menus, whether electronic, paper or introduced with on an iPad will never sell protective products in the finance office. They will never take the place of integrity and transparency. There is no magic technology that will do the work necessary in building value for the customer and create honesty among those who look for angles to get something for nothing. There is no technology that will build credibility and rapport between the finance manager and his or her customer. In other words, there is no magic bullet. However, the iPad presentation has some merit in that it engages the customer in choosing which product fits their needs. If this is what it takes for a commissioned finance person to present all of his or her product all the time then, so be it.

Keep in mind that the job of sales professionals is to find and fulfill a need with their customers. Technology allows us to present features and benefits in a variety of ways, but it will never perform the act of selling. It will never be able to enhance features in the product that appeal to the customer. In fact, to be honest, the menu is here to stay because of the inability of some to sell product, and to discourage the dishonest practice of payment packing. It also eliminates customers claiming they never were presented protective products when circumstance arose; because the legal community solicits consumers of auto purchases to bring them the paperwork so they can find liability to initiate a lawsuit. Because of the success of these suits, the need to hold the customer and the finance manager accountable has become a necessity for dealers to protect themselves, ironically, from their employees and their customers.

In today’s “gadget” driven world, the use of an iPad to introduce protective products to our customers can create some fun and take the anxiety out of the initial sales pitch. A customer can review products prior to entering the finance office and determine if they have a need, or simply look products over out of curiosity. There are some who would say this is introducing product without knowledge of need. The first step in sales is determining a need before describing features and benefits; to do otherwise would enhance the probability of missing the need of the customer and make closing the sale difficult.

Whether it’s an iPad, electronic menu or a printed menu, the fact remains: never does a sale occur without the customer seeing a need in the product. Need drives value, and value drives decision when purchasing anything. By utilizing resourceful tools that are available, the finance office can become more efficient and, in turn, allow more time in discovery. In the end, the introduction of a product menu is essential to the business; just keep in mind that customer facts trump technology.

Jim Maxim, Jr.
President, MakimTrak Technologies

The anecdotal and observable evidence substantiating the popularity and acceptance of tablet and smartphone technologies for personal and business use is hard to miss. Their mobile advantages help consumers search for restaurants while on the go – and post selfies to Facebook while there – and enable businesses to break free of the PC and take needed data into the field or showroom.

Tablets and other mobile devices are not gimmicks, but rather are valuable production tools for F&I. Using them helps F&I be more flexible. Their use makes consumers feel more comfortable with the sales process, as more and more consumers today use these tools and rely on them to make their life simpler.

If we perceive using tablets as giving away control, we’re still selling in the ‘90s. Once we recognize that consumers today have more control over the car-buying process than many of us would like to acknowledge, we’ll realize that trying to control the sale by managing the information flow and using canned closes simply loses money and customers for the dealership.

Instead, using tablets and other mobile technologies to present F&I options gives customers more control – and consumer studies say that’s important to consumer retention. Tablets put F&I information in consumer’s hands, where they want it and in an understandable format. They are familiar with these tools. They use them and trust them – and perceive businesses that do likewise as businesses they’re more likely to patronize.

We analyzed this concept quite a bit before investing heavily in our new mobility solutions for dealers. Henry Blodget, CEO and editor-in-chief of Business Insider, has posted his research and findings publically for a few years now. He draws several conclusions, but the most insightful that has an impact on our discussions today is this: “Mobile devices will dwarf the number of PCs in the market in the next 24-months and based on global shipment data. Tablets are already cannibalizing the PC market… quickly.”

Matt Nowicki
Vice President of Retail Software, IAS

F&I tablets are as helpful in the F&I office as they are useful keeping young kids engaged! Dealership tablet technologies are very broad and can be used in several ways that range in value from dealership to dealership. The IAS tablet technology, SmartPad, is used everywhere from the sales process to the service drive. But what most of our customers like to use it for is the transition from sales to finance. In addition to creating more sales opportunities, tablet technology shortens the F&I process by gathering and presenting a customizable array of information while the customer is preparing to be transitioned from sales to the F&I office. It goes beyond the typical survey and interview by using dynamic video and multimedia presentations designed to engage the customer in additional sales opportunities once they are turned over to F&I.

Tablet software is also easy to customize because the configuration is often Web-based, meaning dealers can tweak presentations on an as-needed basis and their tablets are updated immediately. At their core, technologies like SmartPad can be used to provide the simple CSI survey style of old, but also have the capabilities of presenting and gathering information in an engaging way that has never before been done in F&I.

Dealers can also go one step further with technologies that offer controlled menu presentation via tablet. These technologies allow F&I mangers to present all of their products in a manner similar to a traditional menu, but also include a host of electronic sales tools, product videos and electronic brochures, as well as other materials which would normally be shown via a paper evidence manual.

If an F&I manager is using the tablet as a simple presentation tool and not utilizing a customer software program like SmartPad, then perhaps it could be considered a new way of looking at the same information. As for IAS, we see tablet technologies as a powerful tool at the finance office’s disposal, which will only increase in popularity in the coming years.

Shawn McCool
Co-founder, iTapMenu

If you think it’s a gimmick, then it’s a gimmick. An example: if you think the pre-delivery interview is a gimmick, then you aren’t going to be successful implementing it into your process. Tablet technology is no different.

Does it add “real value?” If that’s the actual question, and it’s a good one, then of course it does. It provides more content about the products, supports the presenter’s credibility by displaying the cause-and-effect of the transaction to the consumer and speeds up the process. A primary goal at iTapMenu is to take the deficiencies of a paper menu and fill in the gaps. There are some things you obviously can’t do on a piece of paper.

You can’t re-configure a menu column in real-time. You can’t change the term and/or interest rate. You can’t adjust a product price. You can’t choose when to display information about the product. If designed with this in mind, an iPad menu will correct some of the deficiencies of a paper menu; these aren’t features you’ll use every time, but when you need them, at that moment, it’s nice to know you have them available.

To fully answer the question, I would compare a completely committed F&I manager who uses a paper menu with an F&I manager who hasn’t bought in and feels an iPad menu is a “gimmick.” The results will prove this: It has – and always will – come down to the person. But what’s really great to see happen, is the successful F&I manager who thinks bigger. Their CSI is off the charts and their PRU is great, while still using a paper menu. Then they see the tablet technology and they can’t wait to implement it into their dealership. 100 percent of the time, there are improvements, literally every time. The person and their attitude are vital.

How are tablets being used today? I can speak only for iTapMenu: and the answer is a variety of ways. There’s no reason you can’t simply replace your existing menu with tablet technology. You can set up tablet menus with a three-column structure, and fit it into a paper menu process rather easily. But, there are also a large percentage of users that make the presentation mobile, and are exploring the limits of what the technology can do.. We love that. It’s not for everybody, but the feedback from F&I managers who use it this way is incredible. CSI and product sales go up instantly. I could talk your ear off about this, because I see it everyday. It’s a fact at this point. The sample size is big enough to confirm it – literally hundreds of users, all of whom were using a paper menu in their office prior, made this process switch and experienced instant improvements.

As to the future of tablets in F&I, there’s no reason to give you a boilerplate answer. I don’t know. If I did, I wouldn’t make it public anyway! Is it here to stay? That is a fact. But there are still many unanswered questions, such as “what will it do,” and “what will it look like?” It’s going to be really incredible, and the category is going to evolve well into the future.

So, the question is, what will shape the future of tablets in F&I? Typically, the product doesn’t react to a market; the product makes the market react. No one was hoping for someone to create a tablet. Once Apple released the iPad, we all realized how great it was. Hopefully, the same can be said for tablet technology as we continue to innovate it. I’ll give you one hint though – if we don’t have F&I managers, then tablet technology goes out of business. We’re doubling down on the F&I manager. And we feel it’s a great bet.

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