The Keys to a More Profitable Year in Your F&I Department

F&I department

On today’s show, we’re pleased to welcome back Adam Marburger, F&I Expert and President of Ascent Dealer Services. Adam shares with us, his insight into the latest F&I trends, menu strategies, and how dealers can see growth in their F&I departments in 2020 and beyond.


Jim Fitzpatrick: Hello everyone. I’m Jim Fitzpatrick. Thanks so much for joining me on another edition of CBT News. We’re joined today by a good friend of ours here at the show, Mr. Adam Marburger. You probably know his face and his name from being here on CBT and for being one of the leading F&I trainers out there in the country. So Adam, thanks so much for joining us.

Adam Marburger: Love to be here. As always, love spending time with you, Jim.

Jim Fitzpatrick: So let’s jump right in here and talk about F&I, some of the trends that are out there. There are some dealer groups out there that are doing away with the traditional F&I department as we know it, right? F&I managers and then maybe a lead F&I guy that’s working with the bank and coordinating the office and what have you. And they’re bringing that F&I process right out to the showroom floor. And now either making the F&I managers, salespeople with an F&I twist or they’re hiring salespeople and teaching them some of the F&I process. What is your take on that overall process, first of all? Is that good business? Is it bad business? And then what are you recommending dealers to do?

Adam Marburger: Yeah, and I’ve seen it happen. I’ve got a friend of mine up in Alaska, where she’s the finance director, but she trains their sales staff to do the deal cradle to grave and it works in her store. I think traditionally, I don’t like that idea. I believe the F&I professional is the financial glue that holds the dealership together at some level. And I believe that that job needs to be there to just make sure all the I’s are dotted and the T’s are crossed and to make sure that we maximize and optimize the transaction because I don’t believe if you got a sales staff of 10, 12, 20 salespeople that we can teach all of them to be great F&I professionals that are going to sell more products but most importantly be able to enhance the buying experience for the customer. I think it’s, in my opinion, I think it’s a failed strategy. I don’t condone that strategy. We don’t work with that strategy in any of our accounts.

Jim Fitzpatrick: So what do you say to the dealer that says, the only reason that we did this was to make the experience more enjoyable for the consumer who has complained over the years that you’re getting close with a salesperson and then about the time you got to sign the paperwork, they hand you off to somebody else that tries to sell you all kinds of things in the finance office and the customer feels better about staying with one individual through the entire process?

Adam Marburger: Yeah, and I can see that and hear the salesperson gets optimal time to build rapport, but it comes down to the training and the mindset of the F&I department. You’ve got your F&I manager, you’ve got your F&I professional. Your F&I manager doesn’t get involved early in the transaction is kind of the curtain guy behind the scenes guy or gal behind the scenes. And sometimes it’s a walk to the plank where the salesperson sells a car, they don’t know who they’re going to go see next. So now they’re walking that customer into an office where traditionally these managers are selling them things. That makes the hair on the back of our customers head stand.

Adam Marburger: So the F&I professional gets involved early in the transaction, helps facilitate the deal. The F&I professional’s typically met the customer before they ever said yes to the transaction. So I believe that the F&I professional plays a role in the future because we’ve got to make things efficient. It’s got to be quick. It’s got to be easy. It’s got to be transparent. And most ordinarily we have to serve our guests and the F&I manager doesn’t serve the guests, the F&I professional does. And in the future, we’re going to employ F&I professionals. The F&I managers are going to be leaving.

Jim Fitzpatrick: So what do you say to the people that say, “Well Adam, I hear what you’re saying, but how does a company like CarMax, the largest used car retailer in the country, how have they done it successfully?”

Adam Marburger: Well, they’ve got a platform and they train on that platform. So when you have defined processes and layers of accountability, that system can work. When you’re looking at a traditional dealership though, a single rooftop, somebody not… CarMax is a big conglomerate. We’ve got four dealers that sell 70, 80 cars a month. That doesn’t work for them. That’s why a store like that, we have to maximize the transaction. That’s why the F&I professional, it’s a critical part to the equation. Now in a system in a big group like CarMax, well, they’ve got a platform that works. It’s tried and tested to be true for them and it’s their process and it’s their accountability that makes that work for them.

Jim Fitzpatrick: So are you saying for the dealerships that may have the bandwidth to offer the training to support that model of one person handles the entire transaction, then you would be in favor of it if they could pull it off?

Adam Marburger: I would be in favor if the training, it’s got to be a defined process. There’s got to be accountability and there’s got to be coaching to support that. It can work it. Absolutely. And I would be for that if those measures were in place. But what we’re finding is a lot of dealers, most dealers, we struggle with process and we really struggle with accountability. The accountability is almost nonexistent.

Adam Marburger: So when some of these bigger groups, like the CarMax, the Autonations, I do a little business with the Naples group. Those guys are well oiled machines, they’ve got process, they have structure, they have accountability, everybody knows what to do. Everybody’s rowing in the same direction. So it works for groups like that. But without the structure it won’t.

Jim Fitzpatrick: It’s just unfortunate because the auto industry employs a million people. It’s one of the leading industries out there in our economy. It drives the economy. Although when it comes down to the management side of it, the industry seems to be filled with a tremendous amount of managers that have never been really professionally taught or formally taught how to be a manager of other people. They just happen to be at the top of the motivator board that month when the last manager left for whatever reason. They resigned or they got fired or whatever the case might be. And it’s like, “Okay, Bob or Sally it’s you’re turn up, you’re doing a great job and we want to promote you to become manager of the dealership.” And that Bob or Sally is now going to be responsible for managing these other individuals that they really never had any professional training on.

Adam Marburger: Yep. This topic we’re talking about right now is a reason why, you know, I’m an F&I product provider, I coach, I do a lot of things with the singular services, but we kind of changed gears a little because of this topic, that we don’t feel that sales managers, finance managers, get the adequate coaching. And so we’re putting together online program where we’re going to actually be able to do one on one coaching with sales managers, general sales managers, finance managers. We’re going to be able to do goal setting, actionable steps to hit those goals, mentoring, accountability. So that’s kind of now we want to take this online to make it easy and accessible and affordable because the boat is being missed in coaching with our managers. They are not being coached.

Jim Fitzpatrick: Let’s switch gears a little bit and talk about some of the dealer groups out there that are rearranging, or I should say, cutting back on the products that they’re offering on their menus that are in their F&I offices. And they’re trying to come up with a formula that says we’re going to put together menus that are more customer friendly and give them kind of products that they want rather than what we’d like to just add up on the full line that gives you all of that. Everything that’s available in F&I as one of the options. What’s your take on the whole menu structure today? I mean we’ve been doing it now for probably 20 years in the business, wouldn’t you say, one form or another?

Adam Marburger: Absolutely, and this is a subject that’s dear to my heart. See, I believe less is more, I believe six maybe seven great products, products that your consumers want to buy, consumer products that the dealer understands and they love those products as well, and you sell less. The first column in the menu should be less products. You should work less to more. I don’t believe in the more to less, less to more. And if you give your customer too many options, they’re going to choose not to choose. A customer would rather decline coverage than to potentially make a mistake. And they feel overwhelmed when you show column number one with all those products, so I’m in favor, less is more, it’s more profit and it’s better customer experience, which is the most important thing.

Jim Fitzpatrick: What are your top three ways dealerships can do a better job in 2020 in their F&I department?

Adam Marburger: I will tell you. It’s the pack method. It all starts with your process, accountability and your coaching. Here’s the thing, the defined process is key. That process has to be set in stone and coached and trained on. Every F&I manager within a dealer group should have the same process. Now we have different personalities that go and compliment those processes, but the process has to be followed. The process will never fail. People fail a process.

Adam Marburger: Now the second level is the accountability. The accountability has to be there and we find that’s the link that’s missing. Without accountability, it’s wild West. People do what they want to do or do what they’ve always done. Accountability has to be there. But most importantly, what Paul and I talk about, we sprinkle the professional coaching on top of it. So if you’ve got the process, you’ve got accountability and you have coaching, you win. So it’s that easy. So if a dealer is missing one of those things, if they have a process and they have some accountability but they don’t have coaching, they can’t move the needle. If they have a process with no accountability, the process doesn’t get followed. We’re losing money on the transaction and our customers suffer.

Adam Marburger: So at the end of the day, it is process, accountability, coaching. That is our method. That’s our three tier approach in secular services. It’s tried and tested, true to win and it works.

Jim Fitzpatrick: So with regard to 2020 in what F&I is going to bring, obviously dealers are struggling right now with the notion that, digital retailing looks like it’s coming down the pike. At what speed, I don’t know that we really know that. Some dealers think in five years the majority of cars will be sold online, like they are at Carvana or something like that. And we skip that whole F&I process or it substantially changes the way that we know it today. Where somebody goes in the box and the F&I manager takes over and such. But what are you seeing out there on the front lines with regard to digital retailing? Are dealers embracing it? Are they adapting to it? Are they making the necessary changes that they’d have to make inside their F&I office in order for a true digital transaction to take place?

Adam Marburger: Yeah, I mean, we’re a little slow here in the Midwest. I’m in the Midwest. Things come a little bit slower here. Your coast, I watch and I listen, friend of yours, Brian Benstock.

Jim Fitzpatrick: Yeah. He’s not a friend of mine. He’s just on all the time. I’m just kidding. I’m kidding.

Adam Marburger: Yeah. Well, he’s thinking ahead of the game where he’s bringing the service department to the customer. He’s making things very, very easy. I think in five years, even the Midwest is going to have to step their game up. We’re going to have to have great descriptions of our product offerings online because you can go online even in some of our stores now and select a vehicle, select a trim, work your price, work your payment, get pre-approved for financing, and we can even deliver you the car.

Adam Marburger: Most customers here aren’t there yet. They’re not really. They want to come in and they do want to talk to a human being. They do want to test drive a car.

Jim Fitzpatrick: Sure.

Adam Marburger: In the future though, we have to have great descriptions online on what our products are. Then we have to have a point of contact. Meaning, I would prefer before the transaction was complete that someone like myself or like you, Mr Fitzpatrick, they could call the customer and verify some information, have conversations about some of the products they may or may not be interested in and still facilitate that closing.

Adam Marburger: We have video conferencing available that does work. Now, it’s a lot easier to close the deal with you in front of me in my office. It’s easier to say no to a computer screen. But at least the computer screen is an option to talk to the customer because if the customer is going to do everything on their own, you’re going to sell less than 10% service contract across the board. Mark that to be true. And at 10% service contract penetration, what are our dealers reinsurance positions look like? What are our dealer on warranty coverage look like?

Jim Fitzpatrick: They’re in trouble.

Adam Marburger: That’s the fuel. So we’ve got to think, I think I spent some time meditating on this. I wish I had the solution. I do know that there’s got to be somebody within the dealership is going to be able to communicate with that consumer that is buying online. I mean, there’s going to have to be some interaction for us to sell more products at a higher profit.

Jim Fitzpatrick: Adam Marburger, I want to thank you so much for joining us and giving us all this time on CBT News. Your visits here are always enlightening and very enjoyable. Dealers get a lot out of it. F&I, expert and president of Ascend Dealer Services. If you dealers out there are looking for a great F&I trainer, then give Adam a call because he knows what he’s talking about. You can hear it right from him.

Adam Marburger: I learn every day, my friend. I’m learning every day.

Jim Fitzpatrick: I haven’t met as many people or I haven’t met anybody in the industry that has more passion about the industry than you do, so thank you for that.

Adam Marburger: We love what we do. We love it, and we love hanging out with you. You guys as CBT are awesome. We’ll get back down to Atlanta sooner than later.

Jim Fitzpatrick: Well, thank you for that.

Adam Marburger: Thank you.

CBT Automotive Network, the number one most-watched network in retail automotive. This has been a JBF Business Media production.