People + Tools + Training

In lean times, dealers must take measures to be certain they are maximizing each and every deal, and the F&I department is one of the main places to look for opportunities to increase profit. However, it also contains a potential landmine—compliance. Fortunately, compliance and profit do not have to be mutually exclusive concepts in the F&I office. And, although staying complaint while increasing back-end profits can be quite the challenge for some dealers, it is far from impossible.

Proof of that can be found at Power of Bowser, a group with three stores in and around Pleasant Hills, Penn., encompassing six new car franchises, pre-owned sales and a commercial truck sales center near the main store.

“These last few years in the automobile business have been difficult for most dealers,” said Finance Director Janis Salka. “At Bowser, we have always done a great job with [unit sales] volume,” she said. Indeed, the stores average 500 sales per month. However, there was still room for improvement, and she said dealership Owner Gary Bowser recognized that the area with the greatest need and opportunity for growth was the finance department. Over a year ago, they began to focus intently on improving that department’s performance.

Power of Bowser, a three-store automotive group just outside of Pittsburgh, Pa., encompasses six new car franchises and averages 500 sales per month. The dealership implemented an F&I menu years ago for compliance reasons, but recently discovered it's also a profit generator.

The dealership took on menu selling years ago, primarily as a compliance measure. Salka, who has been with the dealership over 20 years and served as finance director for the last 15, has about 30 years’ experience in automotive retail. When she started in the business, she said, there weren’t nearly as many back-end products available as there are today. “You sold extended warranties, gap insurance, credit life and disability,” she said. “It was the basic four products on every customer. There weren’t as many people leasing or anything like that.” Hence, there wasn’t as much of a need for using a menu to present F&I products. As the F&I department has evolved, the finance department and Salka have adapted.

“As you grow to be larger and there are more F&I people, [it is important] to keep track of what everybody else is doing to make sure they’re all offering every product, every time to every customer,” she said. “Mr. Bowser wanted to make sure all customers got the same opportunity to purchase optional products.” In that respect, Bowser’s use of a menu has been successful. The system they use, MenuVantage, also helps them ensure that red flag and OFAC checks are done on each customer. “Knock on wood, we really haven’t had any issues,” Salka stated. “The menu really keeps us compliant.”

Compliance isn’t the only thing a menu helps with; it can also be a selling tool. However, the menu wasn’t being properly leveraged from a sales standpoint. Profit was seemingly taking a backseat to compliance. At Bowser, the menu was employed to ensure compliance; it was not in and of itself a successful selling tool. The reason? “We were never trained properly on it,” said Salka. “Mr. Bowser knew training from an outside source was the key to that increased success.”

Total commitment from the dealer to improving F&I profit is an essential first step, according Shari Vance, agency principal for IPS Agency, the company that provides training to Salka and her finance managers. “Every bit of this stuff comes from the top down,” she stated. “You must have the dealer that says, ‘This is what we’re going to do, and I’m committed to it.’ Without that, none of the stuff we do  makes any difference.”

In just over a year, the F&I department has experienced a $250 per-vehicle increase in profit. At 500 vehicles sold per month, that equates to an extra quarter-of-a-million dollars a month, or $1.5 million a year, in profit.

Since the dealership began ongoing F&I training, Bowser has seen product penetration on vehicle service contracts and paint and fabric protection increase 15 to 25 percent. Salka said they also added a tire and wheel road hazard product they hadn’t offered before and were rewarded with 30 percent penetration. Recently, an accelerated equity program was also added to the lineup. While these new products have of course helped boost profit, she said, “The training is definitely what has brought our PVR up.”

One of the biggest changes made during their training was adding a customer interview to the department’s process. “That is done with every customer, no exceptions,” Salka stated. They ask a number of questions, such as how long they’ve kept their current vehicle, how many miles they’ve put on it, whether they’ve ever had a service contract before or if they’ve ever experienced mechanical failure. The process takes only a few minutes and “tells us which products are most important to the customer,” said Salka.

One major part of the equation for F&I success at Power of Bowser is the F&I team, which includes seven finance managers and one finance director. Front row, L to R: Ralph Isabella, Tobie Kyle, Don Leon, Janis Salka (director) and Christine DiBattista. Back row, L to R: Kenny Knaus, Dan Brickett and Ken Phillips.

“From the customer interview, we customize the menu to fit the customer’s needs,” she said. Of course, the use of the menu ensures that each and every product is presented to the customer, but from the customer’s interview, the F&I manager has gained the knowledge needed to focus on selling those products that are of the greatest interest to that particular customer. “From there, we give them their options and if they say no, we know how to handle almost every objection without offending the customer.”

Salka said that while word tracks for the interview and menu presentation are part of their training, they’ve also been taught to employ other selling techniques in addition to those word tracks. “We have been taught the four personality profiles as well as how to identify the ways our customers retain information the fastest,” she said. “This is how we are able to quickly adapt to our customers’ needs and build rapport.”

Of course, learning a new process is of little good if it’s not followed by everyone, every time. Vance credits Salka’s leadership for Bowser’s success in that respect. “She truly is a leader … She leads through example, she leads through expectations and she holds [the F&I managers] accountable,” she observed.

“In our store, it doesn’t matter which F&I manager completes the paperwork; the customer is going to get the same non-confrontational, friendly presentation,” said Salka. “We monitor individual performances daily.”

Training is monthly and ongoing, and weekly department meetings help reinforce objectives and allow the managers to get input and help from each other on various issues. “Every week we sit down – all the F&I people – and we have a meeting amongst ourselves and talk about what different banks are doing and buying, and we look at [missed] deals and try to find a way to put that deal together … We discuss all that stuff and look to each other for help, for suggestions,” she said.

While Salka credited the training as being the biggest factor in increasing PVR, she said success cannot be achieved without having good people in the F&I office. “Our business starts with hiring the right people and we really do have an excellent group of F&I people at our stores,” she said.

She leads a team of seven finance managers—five with her at the main location in Pleasant Hills, one at the Cadillac store in McMurray and one at the Hyundai store in Beaver Falls. Most of her finance managers have many years of experience in finance and have been with the dealership four-plus years. “We’ve been blessed with very low turnover and that definitely makes a difference,” she said. “The owner and both of his sons are excellent people to work for.” Additionally, the F&I managers are rewarded monetarily for good performance.

In Salka’s opinion, the dealership’s employees and the training they receive are the keys to the overall success of the F&I department, hands down. “We had the right people. That’s where it starts and from there we have to teach, train, motivate and retain those people,” she said. She did not downplay the importance of compliance or the usefulness of menus in maintaining compliance, but she emphasized that it was simply one aspect of a larger picture. “We believe a menu is a menu. It’s our effort and talent that sell,” she said. “We had most of it down, we just needed some outside help on the training … Menus alone don’t sell a thing. It’s the right people and ongoing training,” she said.

Vol. 7, Issue 6