Dealers who have yet to adopt an electronic F&I menu are at risk of falling behind the technological curve in a rapidly evolving auto retail market.
 - Photo by artisteer via Getty Images

Dealers who have yet to adopt an electronic F&I menu are at risk of falling behind the technological curve in a rapidly evolving auto retail market.

Photo by artisteer via Getty Images

The average age of a car buyer is approximately the same as that of the modern “gamer.” Mid-30s males drove game revenue to nearly $109 billion worldwide in 2017. The video game industry has long since crossed over from downtime fun to shared mass experiences that know no language barriers or borders.

The line between reality and virtual reality is disappearing with in-game microtransactions and real-world product ordering. On the other end, traditional retail is changing how we shop by embedding interactive involvements and real-time promotions based on geolocation, customer history, and buying habits.

The consumer experience is unifying under a mix of tangible and digital.

Yet, even as you read this, knowing you now buy many products through digitized transactions, your dealership may be one of many that continue to sell F&I the “old-fashioned” way — striving to turn a profit without a menu of any sort.

Seasoned and skilled F&I professionals can sell acorns to squirrels, but younger people now populating F&I offices may benefit from using the presentation structure — and consistency — that menu use brings to the party. Your new and talented recruits in the dealership are possibly set up to underperform, as their potential to present promptly (the No. 1 customer complaint about F&I) is automatically limited.

Instead of utilizing the digital game-like technologies that they’re used to — as the tools to run your dealership and interact with consumers like them — your F&I staff may be spending time on manual calculations, multistep processes, and other people-dependent activities that only increase the chance of human error.

Because of the lack of digital consumer-facing and engaging tools still used in too many F&I offices at this late date, dealers stuck in 1999 continue to drift when measured by key F&I indicators.

Selling Aftermarket Products

Two significant factors explain low per-vehicle retail (PVR) and product penetration: a lack of commitment on the dealer’s part to provide F&I sales training to develop personnel skill and attitude, and F&I processes that deprioritize or neglect menu use.

Even for technology-averse dealers, a simple building-block upgrade — the digital menu — will boost F&I performance and consistency. For many dealers, the emenu has become a required tool because it helps engage customers and improves aftermarket sales and customer satisfaction.

Over some years, we have conducted multiple surveys with FCA dealers to see the results of emenu use versus no menu use. In both tests, PVR and penetration improved when those dealers used an emenu. The overall results showed:

• Increased F&I profits, up $302 per car overall since 2012, from $691 to $993 per unit.

Menu deals were $538 per car higher, or 58%, above non-menu deals.

Product PVR was up $219, with $79 in higher reserve PVR than non-menu deals.

• A 20% vehicle service contract penetration increase from 2012.

• A 35% lift in GAP penetration overall since 2012.

Dealers using emenu technology report use of emenu tools also speeds up deals, saving time for customers, and adds simplicity that makes even novice F&I managers more professional and successful.

Contracting Deals

How important is cash flow to your dealership? How important is it for customers to have an efficient, high-end, and brand-consistent transaction experience? Both questions are affected by how your dealership incorporates electronic rating and contracting into its F&I process. Both of these digital tools help you achieve faster deal funding and streamline behind-the-scenes practices.

Using these tools creates other efficiency improvements that result in a net savings of time, work, and expenses, all while providing customers with more transparency, evaluation control, and a more pleasant experience. Econtracting offers remote document delivery, mobile esigning, and the ability to roll in aftermarket products with a quick click of the mouse.

On the other hand, paper contracting can take days, which most customers don’t have the patience for in our always-on world. It also costs you additional money in floorplan and courier fees. Also, there is a chance of lost paperwork and a much higher risk of errors that likely will cause paperwork to be reworked, wasting more time and money.

When a dealer and a finance source use econtracting, funding can be determined in a few minutes. Remote document delivery allows customers to review forms on their own time, before the signing ceremony, speeding up the signature process. This means the dealer gets the customer driving a new vehicle and the dealer paid — in a snap.

Bottom line, econtracting is fundamental for fast F&I. When loan funding happens in minutes rather than days, that cash is in hand for energizing the business or paying down the floorplan interest expense. econtracting also eliminates the need for (and cost of) printing and shipping paper documents.

Econtracting also saves dealers money. For example, in a real dealership example, based on 2,070 eligible contracts handled as econtracts, deals were funded on average 4.5 days faster than before, saving nearly $22 in various costs per transaction. Across the number of deals this dealer does annually, the econtracting savings is more than $45,000. For a large dealer group retailing 110,000 vehicles a year — another real example — econtracting saved more than a half million dollars in floorplan interest expense and document-shipping costs.

A Digital Challenge

What used to be the future is now the present. Take a look around your dealership and gauge your capability to:

Disrupt: Can customers engage with and begin to buy from your dealership without stepping into your showroom? Are your finance and aftermarket options incorporated into the deal flow, beginning online and continuing up-funnel?

Learn: Leverage the technology and talent behind vendors. Take advantage of what they offer so you can fight margin compression more successfully — and so you deliver a seamless and engaging experience, online and in the showroom.

Develop: Train, train, and train more. Develop product experts for your vehicles and your aftermarket products. While customers come loaded with information, train your specialists to ask the questions that deliver the products’ value story that customers must hear.

Embrace: I am often amazed at the number of dealerships still using old F&I techniques and paperwork, when studies show they cost the dealership opportunity and money. What kind of experience do you want to have?

My last point is a plea to bring your dealership up to current-day best practices by incorporating emenu, erating, and econtracting into your F&I process. If you plan today, 2020 could be the year you look back and see the benefits of a digitized dealership — or look back in hindsight and wish you had embraced the change more seriously.

Jim Maxim Jr. is president of MaximTrak (div. RouteOne) and chief digital officer for RouteOne, a provider of digital F&I platforms for dealers. Contact him at [email protected] 

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