On this week’s episode of F&I Today, Becky Chernek asks the question, “Are you using menu selling for compliance?” and goes over other ways to present products at your dealership.

Video Transcription:

Welcome to F&I Today I’m your host Becky Chernek. Today we’re going to be discussing Are You Using Menu Selling for Compliance? No, Really?

When I am invited to speak at a 20 group on F&I practices, I ask the moderator to have the dealers bring a copy of their menus. I add a questionnaire and ask the dealer what method they use to present products, if they tell me a menu, my next question is why? What is the objective?  I’m not asking the question to be a smart ass every dealer has a different reason why they use a menu. Is menu selling mandatory in your dealership and is it being used for best practices is it a CYA or for profit or both?

As you know (or maybe you don’t), the menu is not something that is required by law in any state that I’m aware of. So why do you use a menu? One of the biggest reason is that you don’t want to prejudge your customers by not offering 100 percent of the products to 100 percent of your customer 100 percent of the time. You also don’t want a customer to claim they were unfairly taken advantage of discriminated against by not being offered certain products.

Another reason we use the menu is for “CYA” purposes: to ensure the customer understands the terms of the sale prior to being presented with products.

If you aren’t familiar with the term UDAAP, you should be. It’s the Unfair Deceptive Abusive Acts & Practices. I mentioned it a few times on F&I Today episodes. I’m not sure what’s going to happen with the CFPB (Consumer Finance Protection Bureau), but sources tell me they aren’t going away – one of the ways attorneys will attempt to sue a car dealer is with this regulation. If the attorney or worse yet the attorney general can prove that the dealer confused the customer during the negotiation process, and that the customer was unclear to how the products were included in the payment or that you took advantage of their bargaining power, you have a serious problem on your hands. We use a menu not only because it is easy to present 100 percent of the products to the customer in less than 5 minutes, but also because it leaves a paper trail that can save your behind in situations like these. Especially if those aftermarket items haven’t been properly itemized or disclosed and stuffed into line one of your Retail Installment Contract!

Step selling, although not illegal, is a long-winded process. It can take up to 20 minutes to present products.  Many times, the F&I manager will not present 100 percent of the products in fear of losing the customer’s attention—raising their sales resistance -thus lowering product sales and opening you up to potential legal scrutiny.  So, when I ask the dealer to bring in the menu to the meeting, it rarely surprises me when I find out that the base payment or buying numbers are missing from the menu.

Many F&I people don’t even put product prices on the menu because they worry the customer will lose interest at the sight of the added dollars. The declination or waiver is hardly ever included. This can cause a huge issue especially itemizing hard adds. So why do you have a declination menu? Think paper trail! It confirms the sale with the customer, the products the customer took advantage of, and the ones declined. The new payment and all buying terms are itemized and disclosed, matching the finance contract. If you have all of your ducks in a row, the chances are that no attorney will bring a UDAAP violation against you. At least the odds are in your favor!

Dealers need to ask themselves why they want to implement a menu in the first place. What is the objective? If it’s to increase product sales and cover yourself against lawsuits, it’s a matter of inspecting what you expect. Contact your menu provider and lock down the software so that the feisty F&I manager can’t make revisions to the menu unless you authorize those changes. The menu company is not enforcing best practices – policy and procedures in your dealership. In fact, you are likely signing an agreement that the menu provider is not responsible if you are in compliance or not. They will recommend how most their dealers operate, best practices, but if your F&I manager tells them to change the menu, they will likely accommodate the request.

This menu is something you will need to implement in all your stores not just some. I try to keep it as consistent as possible. I often ask the dealers if they know if their menus are the same in every store. You’d be surprised how often this isn’t the case, especially if you’re offering different products in one store versus another. Believe it or not some dealers will actually use different menu providers in their stores especially when the product provider offers free access vs another one or the newly hired F&I person wants to use the menu they are accustomed to at their last dealership. The training is not consistent. Consistency, in this case, is very important. Remember, you can’t manage what you can’t measure.

The best way to go about this is by conducting an in-house audit. Examine your deals. Pull 20 deals from each location and determine if you have a solid paper trail in place and if practices are consistent. Has your F&I manager decided to delete disclosures you weren’t aware of? Is pricing of the products consistent in all your stores? If not, why?

I learned a long time ago that pulling deals and doing a full inspection will save you from stepping on yourself. Once you do this, you may find out what you didn’t want to know—but at least you didn’t have to learn about it the hard way!

OUTRO

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. Contact me regarding my consulting services, my specialty is helping auto dealers achieve high levels of performance and profit by improving internal processes that begin the moment customer touches down on the dealership website and end with finalizing in-person transactions in F&I. My techniques are proven and make for a serious impact in your overall performance. Let’s discuss my online “free” analysis with no obligation! What you will learn will save your millions of dollars in lost revenue! My in-dealership training is guaranteed or your money back if not completely satisfied– travel is not included!  Contact me today to learn more.

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Rebecca Chernek, founded Chernek Consulting, LLC in 2001, has nearly three decades of experience in the automobile dealership industry. She started her career by working with her father at their family-owned auto dealerships in Have De Grace, Maryland. She gained hands-on skills and experience in almost every aspect of the automotive sales process: new used cars and trucks sales, F&I, Director of Finance for volume operations and general management. She was hired in 1986 as the first woman to sell cars for Al Packer Lincoln & Mercury in Baltimore, and in 1989, she was promoted to F&I Manager for Ron Bortnick Ford in Upper Marlboro, Maryland. In 1995, Rebecca took a position with the JM&A Group and was promoted to District Manager for the AutoNation division — the #1 retailer in the United States — to hire, train boost profits and implement menu selling. She single-handedly earned a sterling reputation for adding millions of dollars to the bottom line for all her accounts! Rebecca has a well-deserved reputation as a self-starter, high-performer, and spirited entrepreneur and motivator. It’s not a matter of what you think you know… it’s a matter of proving it! As a consultant, trainer and nationally recognized expert in F&I Training and sales procedures, Rebecca has helped hundreds of automotive car dealers throughout the United States and Canada streamline their processes and closing techniques and significantly increase profits. She writes regularly for Wards Business, CBT Automotive Network, Dealer Magazine, Subprime News and as a NCM 20 Group F&I Guest Expert. She facilitates for the NCM Institute, Desking and F&I Integration. Rebecca is the anchor for F&I Today – CBT Automotive Network headquartered in Atlanta, GA. Don’t forget to check out our interactive continuing F&I online education platform Chernek Consulting Virtual Pro the best kept secrets on how to be successful in F&I! Boost your F&I performance! Every dealer must have to help your F&I manager increase sales and profits while reducing liability.

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