The F&I department is often one of the most lucrative profit centers in an auto dealership.
This fact is not lost on the increasingly sophisticated buyers that spend $30,000 or more on vehicles.
Returning customers remember how F&I ‘handled’ them in their prior interactions. The profit motivations of F&I managers is also heavily discussed in many areas of the internet. A simple search on the subject will quickly show the average dealership customer that F&I managers are often the second highest paid employees behind only sales managers or owners.
Distrust Creates Defensive Customers
Unfortunately, all this puts the F&I manager on unequal footing when compared to other departments involved in the car buying process. Distrust creates defensive customers that automatically believe they are receiving a bad deal.
If customers anticipate the F&I step to be the dreaded pain point in their buying experience, it would seem prudent for every dealership to make fixing this a priority.
Increased Transparency in F&I
Many successful dealerships have resolved this issue by introducing increased transparency in F&I. This can be accomplished through the utilization of technology, customer focused training and even changes to F&I manager pay plans and bonus opportunities.
In any sales compensation structure, employees quickly learn to focus on what is needed in order to earn the most income. Thus, if your F&I manager’s income and future employment prospects are primarily tied to product sales metrics, then increased product sales is exactly what you will get.
Protecting the F&I Manager’s Income Regardless of PVR
What happens in situations when a customer turns down all products and requires more work to secure financing due to bad credit? A good F&I manager continues the buying process regardless of how that particular transaction affects their bonus or income PVR. The end goal is moving vehicles off the lot and the F&I manager’s role in this process is critical.
It makes no sense to penalize an F&I manager that works hard to shepherd a deal to closing, only to ding their bonus because they didn’t sell a better warranty.
Implementing increased transparency in F&I can identify potential problems in your compensation structure to avoid this type of situation.
A good F&I manager will:
- Protect both the dealership and the customer in the buying process. If you believe your only job is to protect dealership profits or your pay plan, you need to modernize your thinking.
- Ensure compliance during each step of the buying process to protect both the dealership and the customer.
- Be the F&I expert for the dealership. Your value is increased exponentially by constantly educating yourself and identifying trends in your industry that can help your employer.
- Develop initial trust with customers by making introductions early in the sales process. The more you know about the buyer, the easier your job is when they reach your office.
- Help to guide sales through the dealership, process financing and handle delivery of the vehicle.
A few questions for F&I managers.
What value are you providing the dealership? Do you consider yourself an expert in F&I?
Do you engage, educate and create an environment where your customers leave the dealership with the feeling that they were treated fairly?
Do you focus on maintaining high product sales numbers that only protect your pay plan?
Video Recording Policy
As far as transparency in the F&I process, the introduction of a solid video recording policy in your dealership can provide tremendous benefits:
- Reviewing video of the F&I process can help to identify deficiencies that could be improved with better training.
- Shining a light on improper or non-compliant behavior will protect both the dealership and the F&I manager from potential legal problems later.
- One of the side benefits of video is a tendency to ‘keep all parties honest.’ It virtually eliminates “he said, she said” claims from unhappy customers.
You Should Have Nothing to Hide
F&I managers should be comfortable with a new video recording policy that will help their department as much or more than other areas of the dealership. Video can be an ally if you are fully compliant and following best practices. Watching yourself interacting with customers on video offers many opportunities to improve your skills.
Video also assists dealerships in identifying gaps in the overall buying process while also maintaining compliance objectives.
Trust is Very Important Today
Clearly, there are many changes that can be made to increase transparency in F&I while also boosting trust with dealership customers. Trust is very important today, especially given the ease at which an unhappy customer can take to social media to broadcast their opinion of your business.
Transparency in F&I has the potential to improve so many areas of a dealership. From vastly improved customer experiences to higher profitability. This is something that will benefit any size dealership.
