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100 Percent Turnover To F&I - Reality Of Fantasy

For the past five years (and beyond), the automobile industry has seen a dramatic change in the makeup of its profit contribution sources. For example, in 1998 the difference in profit dollars between the sale of a new vehicle and the F&I dollars relating to that sale was only 12 percent. In 2003, that number jumped to 34 percent, as the sale itself generates about 10 percent of the profit, while F&I generates nearly 44 percent!

Understanding the importance of F&I dollars to any new car dealership is one thing – knowing how to maximize those dollars is another. In fact, did you know that over the past decade, on average, a new car dealership would have been operating at a 1 – 1.5 percent loss without the contribution of F&I dollars? That is a fact, so how do we be sure we are taking advantage of these profit opportunities?

We all know that one of the major components of an effective F&I Department is a quality turnover from the sales consultant at point of sale. However, with the cyclical nature of our business, combined with all the competition in the marketplace today, this can, at times, be compromised due to several influences. Before we can offer up solutions, it is critical that we are aware of the ultimate goal. Our goal is to achieve 100 percent quality turnover at the point of sale. Before defining a quality T.O., let’s identify a few non-quality methods in place today. All business managers are far too familiar with the ‘Dump T.O.’ where the sales consultant walks the customer in unannounced as you are halfway through your lunch, or the ‘Flying T.O.’ where the sales consultant stops you in the showroom to introduce you to the customer as they are walking out the door. The good news is that we are offering sales consultants an alternative…that is a proven winner.

A Quality T.O. has four major elements that must occur in order to be effective:

  • Complete & Accurate Paperwork
  • The 2-Minute Drill
  • Time to Prepare
  • Proper Verbiage

We, in today’s automobile industry have created what can be called a selfish environment. For the most part, all the players in the front-end operation of most dealerships are compensated based on the revenue they generate. That being the case, we can assume sales consultants are only interested in taking care of themselves. “If my customer wants to go to their credit union, that’s ok with me!” In the past, our solution to this never ending concern was to throw money at it. That concept has been diluted down to a point where the sales consultants expect it now and even see it as part of their pay plans…virtually eliminating its impact.

Knowing the potential impact of ‘Doing It The Right Way’, why do our sales consultants have difficulty introducing their customers to a business manager at point of sale? The answer is simple - lack of training. Fear management tells us that in order to motivate someone to accomplish a task, we must either threaten their income or their career path. A better and much more effective way to accomplish the same goal is to alter the perception of the business office. Research has shown that most sales consultants view their business office as the “money sucking leech that makes its living draining the blood from their customers.” In reality, the business manager should be the best friend a sales consultant has and viewed as an integral part of the delivery process. One prominent Florida dealer says, “I used to simply spiff my sales staff to turnover their customers to F&I, but then I realized the effectiveness of proper training and processes regarding F&I and my sales staff.” Let’s take a look at the many b
enefits that the sales staff derives from having a business office on premises.

First of all, none of us have ever been paid to sell a car. Nobody has ever seen a Dealer Principal pay a commission on undelivered stock. Rather, we are paid to deliver cars. The primary function of the business office is to deliver cars and create mental ownership in the customers mind. Statistics tell us that as many as 50 percent of all vehicles sold, but not delivered, were never introduced to the business office properly at point of sale. Certainly, we all know that you have delivered cars to customers who could not qualify for a loan without your help. The conclusion is simple: A quality turnover to a professional business manager doubles the odds of actually delivering the car and, thus, getting paid.

Additionally, the products that the business manager offers are a proven benefit to the sales consultant. Consider the fact that a Service Contract will make the customer’s life much easier in the event of a breakdown, but as many as 80 percent of the customers who extend their warranty coverage’s will return to the selling dealer for repair work. The point is that we have all sold cars to our past customers who were in the dealership for service. Service Contracts make for happier customers and more repeat business. GAP obviously keeps our customers in the market in the event they suffer a loss. Some GAP products even offer an incentive to bring the customer back to the selling dealer. Additionally, credit insurance protects our customer’s ability to buy from us. That same Florida dealer adds, “Being sure that every customer is introduced to F&I has enhanced C.S.I. at my dealerships, bringing more repeat and referral business, as well as increased service dollars.”

We need to communicate this information to our sales consultants in the form of structured, formal training sessions. Many business managers utilize the time the dealership sets aside for sales meetings to call back banks, bill deals, or read the newspaper. Take advantage of the opportunity to get in front of your sales consultants as an educator, and remember these key points when doing so.

  • Always maintain a positive outlook in these sessions.
  • Have these sessions on a consistent basis.
  • It is okay to bring in a guest speaker or trainer to work with them.
  • Utilize the WIIFM theory – ‘What’s In It For Me?’

With this year already under way, make the commitment to grow your department with the cooperation of your sales consultants. Use this information to instill processes and in no time at all the sales consultants will be wearing a path to your door.



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