Becky Chernek: Welcome to F&I today I’m your host Becky Chernek and I’m so happy you’re able to join us today. We all know that F&I is vital to the dealership’s bottom line so that’s where I’ve come in. I’ve been in the automotive industry for more than 30 years and in finance and insurance since 1989, I’ve seen a lot. And I know how to get impact that sticks. I’ve worked with hundreds of F&I managers over the years with amazing results. So go ahead and ask the guys on LinkedIn when they think Carvana will go bankrupt and disappear and you’re going to get about 50% who claim Carvana will go bankrupt in the next two years with the way that they’re losing money, 255 million in 2018. The other 50% will tell you that they have plenty of money and nothing is going to slow them down.
Well over two years ago Carvana’s initial public offering was priced at $15 a share but it vets just $13.50 when it opened up on the New York Stock Exchange on April 28th, 2017. The ride since has been a decidedly bumpy one but in 2019 it went over $70 a share, today it’s above $80 a share, a $10 billion company. Think about that, nearly three years and it’s worth that much but make no mistake Carvana has turned heads that’s for sure. Customers don’t have to go into a dealership to buy a car, they can shop and finance their vehicle completely online. People like it because it’s easy but not so fast the naysayers complain, “It doesn’t matter it’s just an idea with a whole lot of fluff.” If you compare Amazon to Carvana well those naysayers cringe and refuse to see the connection.
A lot of the people said Amazon wasn’t going to be successful, people just wouldn’t buy products online, and Amazon lost millions in the beginning the first four years as a public company but that didn’t stop Jeff Bezos. It gradually started making profit as revenues rose. The company grew from selling books to a bevy of other products, shoes, clothes, tools, you name it Amazon sells it. So last year the company posted $10.1 billion in profit. It’s market value is above $950 billion, almost $200 billion more than the GDP of Switzerland. Today, Jeff Bezos is the richest man in the world even after giving his wife 25% of the Amazon stock in that divorce settlement, never say never.
No matter what you believe about whether Carvana becomes a big winner or a colossal loser it will forever change the way a customer buys cars. “You can’t put that genie back in the bottle,” as Steve [inaudible 00:02:53] stated on LinkedIn. Remember that the originator is not always the one that became the household name. Google was not the first search engine, Facebook was not the first social media platform, Apple was not the first to make the MP3 player and Samsung did not make the first smartphone. Carvana may fail but somebody else will make it work.
Remember customers not only shop for vehicles online but they can also secure financing too. This means dealers should be watching their own hen house waiting for that customer to do financing the way that you’ve always done it isn’t a smart move. Customers don’t have to wait, they can click a mouse over to another competitor in seconds one who will be more than willing to do business the way that they want. Other third party providers offer easy financing solutions without all the hassles. Customers will be coming into the dealership with a check made out for the exact amount and trying to convert these customers just won’t be easy particularly if you can’t even have the conversation.
Streamline the process, offer your customer the flexibility to determine payment options in advance online before they step foot in that dealership. Determine budget requirements based on a thoughtful credit analysis or some other credit criteria, create a warmer lead. The BDC in your F&I department must be working in unison and that sales staff must be trained on how to process the customer through the sales funnel.
But most importantly ensure that you’re in dealership work flow is in alignment with your online sales strategies. Customers should never feel as if they have to start the process all over again once they arrive at the dealership. The transaction must be fluid, the salesperson should have the vehicle clean, ready for that test drive and most important the paperwork in order. The only outstanding items may be a trade appraisal and a hard credit analysis, should the customer be financing. F&I must get out of that office and meet the customer on their terms out of the salesperson’s desk. The interview will be a critical component with this one for verifying all the information, fact finding for product awareness.
Product sales is all about the value proposition. The products that you’re offering must be based on the customer needs and not your paycheck. Some dealers will even offer the products online it’s all about product awareness prior to the customer stepping foot in the dealership. So I’ve said this a lot but I think it goes in one ear and out the other get clarity about the deal not so much from the salesperson but from the customer directly. Nothing is better than the customer providing you the details firsthand. I’ve always said get prepared to be prepared, do your homework.
When you introduce yourself to the customer for the first time make sure that the customer understands the steps in that process who you are, your responsibilities, how long is this going to take. Set a time expectation for delivery. Make sure those buying terms have been confirmed titling, vehicle, price, insurance, payoffs, down payment and payments too. The process must be efficient, minimize any downtime. Make sure to let that customer know that you will be finalizing all the paperwork and preparing some options that would be available. Now some dealers utilize Darwin digital menu so this is a great time to pass over the digital menu for the survey questions. This will help us set up the DNA, Dealer Needs Analysis, from that third party provider.
Carvana doesn’t have to mean a death sentence. Look at it as a wake up call. Customers don’t want to spend the entire day buying a car they want the car buying process easy and efficient. F&I get outside that box, explore more opportunities and be willing to meet the customer earlier on and on their terms and when you do watch your business boom. Customers will love you for making their buying experience easier, faster, and more pleasant. And remember a happy customer means a repeat customer and a repeat customer is your best customer.
Well, thank you for joining me on F&I Today. Be sure to come back next week right here on the CBT Automotive Network for our next edition of F&I Today. Also feel free to contact me regarding my consulting services at 404-276-4026. My specialty is providing F&I training helping auto dealers achieve a higher level of performance by improving internal processes that begin the moment the customer touches down on the dealership website and ends with finalizing in person transactions in F&I or later. Start making a difference today. Check out my F&I online platform Turning Consulting Virtual Pro and take your F&I department to greater heights.