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F&I in Portugal

The 2016 World Shopper Conference Iberian was conducted on May 13th on Lisbon Portugal.   Over 500 participants from Portugal, Spain and Brazil had come to gather ideas that would help  improve automotive world in prospective countries.  I had a privilege to share the stage with some of the top notch Automotive speakers from the United States, Canada and Portugal.  The focus of the conference was on improving customer experience both online and at the dealership.

 

The F&I is fairly young in Portugal.  It was introduced there about 10 years ago.   With that in mind it represents a huge opportunity for dealers and manufacturers.   Here are five opportunities.

 

  1. The primary focus of the F&I is on arranging financing. For as much as it is a great service to the consumer, since it represents a huge profitability for dealers it is still very much self-serving approach.  Reliance on rate markup will not generate customer loyalty in the long run.

 

  1. F&I is viewed as an administrative task. In many ways the F&I is considered as an afterthought. It certainly important to a consumer but it is viewed as a disjointed part of the process.  The goal should be to provide seamless experience.  To do so dealers have to re-focus on the overall consumer experience and begin treating F&I as part of the whole sales process.  This means early consumer education about their options both online and at a dealership.

 

  1. Disconnect between sales and F&I. Sales people do not introduce F&I managers early and bring them to help close deals which is awkward and disjointed for customers. It seems that this disconnect between departments creates more confusion and lack of trust.   To generate seamless consumer experience more work needs to be done in generating trust and seamlessness between both department.  F&I and sales have to work in unison.

 

  1. Limited product sales. With a heavy reliance on rate markup income and the administrative/banker mindset products are not being presented consistently. Since consumers do not see value in the F&I they reject products that are offered.  Available products – credit insurance, maintenance and service contracts represent great value to both customers and dealers.   Study show a much greater dealership loyalty from customers who purchased protection products.

 

  1. Leasing opportunities. Offering different options to customers early in their discovery process will generate more opportunities for dealers. Most sales people are reluctant to speak about matters they don’t understand or know little about. Leasing is one of those opportunities for dealerships to improve on.  New or unfamiliar concepts must be easily explained and presented with confidence.   Overall, training both sales and F&I with focus on value based presentation along with process improvement will create a much better buyer experience and generate greater profitability.

 

Not unlike the US market F&I is evolving in Portugal.  Consumers demand a much more transparent and seamless experience than most dealers are able to provide.  To win, manufacturers and dealers must keep their focus on both the future and the current state of affairs which by all measures is not an easy task.  Consistent incremental improvements made within the Sales/F&I process will generate better outcomes now and in the future!

 

by Tony Troussov

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How Soft Skills Define Your F&I Results

Dealerships have become more adaptable to new technologies that help improve both internal and external processes which have created unprecedented growth in F&I in the past few years. With so much emphasis on high-tech, it can be easy to lose focus and forget about the importance of a high-touch or personal experience your team creates for your customers. Research indicates that even the most technology-savvy block of Millennials, the Digital Natives, yearn for the high-touch in their automotive experience. Winning with today’s and future buyers, dealerships have to strike a healthy balance between high-tech and high-touch. Delivering this top quality experience in F&I requires a greater focus on your team’s soft skills. In their career services study, Davenport University defines soft skills as “a cluster of personal qualities, habits, attitudes and social graces that make someone a good employee and compatible to work with.” These soft skills have a great impact on someone’s ability to provide a high-touch experience. Ultimately, you can teach anybody to be professional, but you cannot teach someone to be friendly and nice, they either have it or they don’t.

During my 2016 NADA F&I Process Workshop, Dealers and Managers were asked to rate their F&I department’s soft skills. They are – managing expectations, sense of urgency, early involvement, being proactive and attitude. The scale ranged from “poor” (1),” fair” (2), “good” (3), “better” (4) to “best” (5). The responses provide an interesting insight about a culture of F&I departments.
Here is how the participants felt about their F&I managers ability to handle their process:
39% rated them as “fair” (2) and another 38% rated them as “good” (3). Thus, the overwhelming majority are not enthused about the ability to execute a process and only 2% (!!!) thought it deserves a rating of “best” (5).

The “early involvement” had received the poorest ratings with 51% saying it is “poor” (1) or “fair” (2).

The lack of urgency is another area that demonstrates the state of affairs is not well in F&I, with 44% rating it “poor” and “fair”.

The findings come as a surprise. As margins on new and used vehicles shrink, many dealers have experienced the best F&I profitability in the last five to ten years. Even though profitability has increased, the survey feedback certainly underlines the notion that the overall F&I process is either broken or mediocre at best. As with the proverbial “chicken or the egg” it is difficult to decide what comes first, a broken process, poor communication or a passive/reactive approach? Creating the best F&I process with the best available technology is paramount to the success of your dealership, but if your team is struggling with people skills, you will get inconsistent results. It’s evident, that even with a mediocre process and less than perfect F&I culture on the showroom, it is still possible to generate fair to good F&I results. Will improving your team’s cluster of personal qualities, habits, attitudes and social graces lead you to the better or best levels of performance? To find out how, contact ADG.

by Tony Troussov

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Monthly Goal = Daily Focus

Have you ever had a month where there seemingly weren’t enough days to hit your target? Can you imagine a professional golfer muttering to himself in frustration “I shot  72 and still have 4 holes to play.”  If you have felt this or can imagine what it must feel like, this article is for you.

In today’s competitive, customer friendly environment, setting a goal or having the appropriate expectation is paramount to the profitability of your stores. This naturally leads to an important starting point: how do you set a goal, and how do you ensure that you will reach your goal? While setting a goal may seem simple or unnecessary, it is the daily focus and discipline that having a goal provides that makes goal-setting a valuable tool-it focuses you on the very things that are within your power to control and provides a clear benchmark when you are not progressing towards your goal.

How do you set a meaningful goal? There are three critical steps. First, goal-setting should be done in a collaborative fashion with the management team. This participation will at once allow the management team to take ownership of the goal so that everyone will understand what he/she is responsible for and will go a long way to prevent the goal from becoming arbitrary or theoretical. This is a very intuitive point, and this concept is similar to someone who is trying to lose weight without even knowing his own weight.  One practical, useful way to begin goal-setting would be to take a look at the ADG Top 30 Report because this will give you an idea of what the top performing stores are producing.

Second, you need to track your production. Some of the tools you will use to do this include the manual logs, vision menu reporting, or perhaps your own measurement tool, such as an excel spreadsheet. Whatever your flavor is, make it easy to measure; you do not want to have onerous hurdles or mental pushups involved in your calculations.

Third, have your ADG District Manager show you the spread of business needed using the Calculator that we have developed. Think of us as a resource; we’ve spent time to make this an easier process for you because we do not want you to wear out your pencils and fingers with your phone calculator.

Now that we have a target, let’s get to the fun stuff!  Here is the list of Daily Actions to ensure you meet your goal/expectation:

1) Hold a morning “Huddle” where the management team gathers for 15 minutes reviewing the prior days deals, negotiations, and follow-up. Be specific on how the deals and menus were presented to the customers. Ask yourself: did your store use the standards you set?

2) Review where you are in comparison to your goal. After reviewing your expectations, ask yourself where are you trending, and (if you are not on your goal pace) what is needed to get back on track?

3) Warmup with your presentation; develop good habits. Do this by practicing your Menu and Objection handling techniques, prior to a customer coming in with you. Review the ADG Online Training site to assist in sharpening the saw. Having a world class presentation is paramount in today’s business environment.

4) Be active and available. Conduct regular flybys with the customers to break the ice.

5) Focus on the customer in front of you. This may be your only opportunity of the day, so make sure they get your best.

6) Finally, close out the day. Before you go home, calculate where you are for the month. Celebrate the victories and contemplate the defeats. Get prepared for tomorrow’s ‘huddle’.

If you follow the 6 steps outlined, you will be on your way to success.

 

by Francis Fagan

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Five Ways to Turbo Charge Your F&I Team

Imagine your CSI is above your regional average, you capture finance opportunities and your F&I income is taking your profitability to the next level. If you would like to get your F&I team from good to great to awesome, there are five steps to turbo-charge your F&I process which will increase profitability, customer retention and satisfaction.

  1. Create great first impressions. The customer interview serves three purposes in the F&I process. Number one, it provides an opportunity to create first positive impressions with your guests. Impressions serve as foundations for rapport and trust. Winning customers over by providing value is critical. What do your business managers do or say to add value? Are they simply selling, or are they consulting and connecting with your customers as professionals? Second, the initial interview resets the clock with a customer. The third and main purpose of the interview is to complete a needs analysis prior to the menu presentation. Once customer needs are established, product presentation has meaning.
  2. Create a sense of urgency. The moment the customer said “yes” to the deal, the clock began ticking. Doing a prompt customer interview creates a sense of urgency in their mind, which ultimately leads to higher customer satisfaction and greater profitability. F&I managers who demonstrate urgency through their body language and verbal communication can automatically raise consumer confidence. A lethargic or uncaring approach can easily destroy the customer experience. Throughout the transaction, it is important to keep the experience factor in the minds of everyone involved, especially F&I. Customer loyalty and CSI are vastly dependant upon the customer’s perception of how promptly their transaction was completed.
  3. Remember your roots. There is a tendency among F&I managers to quickly forget where they come from. When they were selling, it did not matter how the customer paid for the vehicle; they were simply happy to sell a car. Now, as an F&I Manager, to handle a cash or no-markup lease deal can be devastating. F&I managers lose interest, their energy level goes down and they can become extremely irritated. This type of fuss defeats everyone’s spirits and alienates salespeople and customers. The main reason for this tendency is that their jobs are measured by PVRs, and cash transactions can limit their home-run opportunities. In baseball, a pitcher’s effectiveness is measured by his ERA, earned run average. There is a different type of ERA in the F&I office—egos, rivalry and attitudes. By keeping egos, rivalry and attitudes in check, F&I managers will produce greater results and improve their PVR no matter what deal they work on.
  4. Maintain consistency. The word “consistency” can be both good and bad news to a dealer. It is great when positive behavior and top results are consistent; it is bad when it is otherwise. In today’s competitive pricing war, consistent high-level F&I results will make a big difference on your DOC. Expect and demand nothing but a great and consistent performance from your F&I team. Do not buy their excuses and explanations of why results are inconsistent. Consistency is attainable and sustainable during any economy.
  5. Set accurate expectations. No one likes to be in the dark. Think about a time you tried to buy something and had to wait to get it; did you like the feeling of not knowing what would happen next? Most likely not. It’s no different for your clients.  Setting accurate expectations is a must. Keep communications open through periodic updates. There is nothing worse than losing a car deal or an opportunity to make additional profit because of lack of communication. Setting expectations is everyone’s job. This is why it is critical for your entire team to be on the same page and continue communicating with each other. You do not want the sales department setting expectations F&I cannot meet. Once you establish the level of expectations with your customers, it is impossible to realign it without losing some credibility and CSI along the way. Failure to execute properly on a regular basis can cost you current and future sales.    Now, think about your F&I team. How well do they conduct effective interviews, create a sense of urgency and exceed expectations, all the while keeping their egos, rivalry and attitudes in check? Are they consistently improving from month to month? Are they going from good to great to awesome and creating additional value for your loyal customers? If not, it is time to turbo-charge your F&I team!     

 

By Tony Troussov

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Three Ways to Connect Sales and F&I

In the recent survey of sales and finance managers regarding their challenges, the respondents indicated that the issues between those departments have a big impact on customer experience, specifically in the transaction speed and efficiency areas. In many cases disconnect between two department’s influences the process which in turn has an effect on profitability.  If you find yourself struggling with similar issues, here are three steps to change direction.

  1. Establish and communicate the process. Identify what happens before and after customer says “yes” and who does what steps.  This takes a combine effort of both sales and finance managers.  One cannot over emphasize the importance of a well-designed and documented process.  It is one thing to talk about it and another thing to have it in writing.  Your team must take time and outline the process, with all players agreeing on every part.   Once the process is designed and agreed upon it is time to continue communication.
  2. Conduct communication meetings. Most disconnect is based on lack of communication. Your people may be talking, but not communicating.  In most cases they talk in passing.  To get sales and finance on the same page, conduct a daily “huddle” in the morning.  The purpose of this meeting is not to create another meeting for “meeting’s sake”, but rather to establish a habit of communication on all pressing matters. The “huddle” is a 10-15 minutes long meeting.  Items discussed – yesterday’s business, today’s appointments/deliveries, contracts in transit issues, issues with deals, employee concerns, and others.   The goal is to monitor the progress of the established process and make corrections if needed.  ALL managers must attend.
  3. Fix “finance apathy” on your sales floor.  In most stores sales people fall into three categories, the first one endorses finance process and products wholeheartedly, the other group talks their customers out of it, and people in the middle simply do not know how to talk about it with their customers. Most sales people have “finance apathy” because they do not know what’s in it for them when customers purchase additional products.  There are multiple ways to cure this, and it starts with training.  Finance managers need to help connect the benefit dots for sales people.  It takes more than “it is about spiffs and you get to keep your job” approach.

In this complex business environment the dealerships who will thrive are the ones who have mastered the basics of processes and communication.  If you find yourself off road and in the woods, to get back on track follow those three steps, establish or re-establish process, communicate daily and continuously educate your sales staff.

 

by Tony Troussov

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How to increase your lease results.

Having trouble making money on lease deals? Perhaps it’s time to change your approach!

I remember when I was younger, my father use to get a new car every year. I never really thought too much about it until I became a Business Manager, can you imagine having to deliver to people constantly on a one year trade cycle? Well, in a way we do.

Leasing is back but we tend to have the same mind set as cash deals (a topic for another day), bill them and let’s move on. After all, they’re a short term cycle, always under warranty and the factory pays for their maintenance right? I don’t think so. Success starts with a plan so let’s create one for your leases.

  1. First things first – be realistic: The goal is to increase our overall PVR; however, selling a service contract and making $1000 is generally not going to happen on a lease. You need to rely on more products with less gross per item. Making $100 on Maintenance, $250 for Tire & Wheel and/or $100 for Key Replacement. The highest grossing business managers’ average $500-$750 per lease, the key being making something is better than taking the goose egg. Your lease PVR will affect your overall number dramatically.
  2. Plan your work, work your plan: People lease for many reasons including getting a new car sooner without having to worry about what the vehicle will be worth or a payoff, tax or business advantages and lower payments with more car. However, that does not mean these customers are withoutexposure for expense during or at the end of their lease. So, where do the lease customer’s exposures lie? Paint damage, dents, dings, interior burns, tears, maintenance (even on a lease?), windshield repairs and curb damage on wheels.
    Starting with a good interview and open-ended questions is the same on a lease as it is on a purchase. If you’re not sure what’s important to a customer, how can you recommend any products? People are still going to maintain their vehicle during a lease, they are going to have to change the oil and rotate the tires. They will still want the vehicle to look good while they’re driving it, and they won’t want to have any surprise at the end when they turn in the vehicle. The goal is to expose their problems and then solve their problems.
  3. Use a Menu: A lease menu needs to employ another approach to reach the different mind-set of a lease customer. A great lease menu speaks directly to lessees varying situations. Additionally, using a paper or electronic menu allows another sense (sight) to be activated during your presentation of your customer’s potential exposure during the term of their lease and at lease end. Although not intended, the menu is often used for a sales pitch. Instead, think of it as a visual tool for communicating your message and briefly explain the features and benefits of each available item, then ask the customer to make a choice. This is the equivalent to starting a list price. Get creative with the structure of your menu provided.

To take advantage of your lease opportunities and increase your overall PVR, first, set realistic goals for improving your position and write them down. Second, a good plan today is better than a perfect plan next week. Finally, customers will not buy 100% of the products you don’t present.

 

By Jim Devitt