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What Does the One-Salesperson Trend Mean For F&I? | DrivingSales News

What Does the One-Salesperson Trend Mean For F&I?

June 1, 2015 0 Comments

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As more dealerships tune in to a more customer-centric buying process, are days numbered for the F&I department?  

A recent study introduced by DrivingSales revealed that 38 percent of car shoppers prefer to work with a dedicated specialist throughout the entire buying process, i.e., one salesperson. Conversely, 33 percent saw value in the dedicated finance and loan manager to establish terms, sign contracts, and finalize paperwork. The remaining shopping buyers were indifferent.

The nearly even split among the three opinions may imply that customers aren’t even sure what they want from this phase of the process. The customer perception is that the financing and insurance process is just a necessary evil in buying a vehicle. Customers think, “it takes too much time,” “it’s invasive,” or “am I really getting the best deal? The bad news for dealers is, when customers don’t understand (or worse, fear) your process, you are postponing the dealership visit, missing out on F&I income, and tainting what should be an elating experience.

Trust Is More Important Than Ever Between Dealer and Consumer

While the dealer franchise model continues to be chipped at by disruptive platforms and direct-to-consumer models, dealers are scrambling to understand how to maximize customer experience throughout the dealership. Auto dealers should respond to customer’s negative perceptions of the entire dealership by establishing transparent practices that facilitate trust throughout all departments.

In light of the recent attacks on indirect auto financing from the CFPB, dealers need to thoroughly scrutinize the transparency of their processes. By incorporating responsible practices for rate markups and utilizing resources like the NADA’s Fair Credit Program or the Association of Finance & Insurance Professionals’ (AFIP) Dealer Participating Rate Modification Form dealers can protect themselves from compliance issues and ensure consumers that decision-making is ethically based.

David Robertson, executive director of the AFIP, offered additional advice. He encourages dealers to establish retail markup margins over the wholesale price for all aftermarket products, with the caveat that the increase is reasonable. “Anything beyond a keystone markup (100 percent over the wholesale cost) will be considered excessive – and depending on the benefit derived the 100 percent markup may not be defensible,” he said.

Regulators are prioritizing the need for prospective buyers and customers to have an avenue to submit feedback and complaints about their interactions at the dealership. “Empirical data must be available noting that complaints were acknowledged and properly addressed; and equally important, that remedial action was taken to rectify the sources of the complaints,” Robertson stated.

Building trust in other areas of the dealership: transparent pricing both online and within the dealership, eliminating “let me ask my manager” sales processes, and prioritizing social reputation all stand to indirectly improve the F&I process by establishing a trust-base for the consumer.

Transforming F&I for Today’s Shoppers

Eric Hart, Vice President and general manager at Zurich Financial Services, commented about the evolving customer and the need for departmental change. Hart said Zurich is focusing in on the buying behavior of millennials, “their buying style is quite a bit different than previous generations; they do a lot of market research, transparency is king, face-to-face is not a priority, and they prefer a non-negotiating buying experience as much as possible.”

Zurich’s newest product is iPad driven and involves the customer in the F&I purchase process. The concept allows customers to guide themselves through the entire purchase and eliminates traditional “menu selling.? Hart did not expect that implementation would eliminate a professional to provide expertise, answer questions, and build a relationship with the customer.

Building Continued Relevance for F&I

MaryAnn Keller and Kenneth Elias sited finance and insurance as a consumer benefit of the dealer franchise system in a recent report prepared for NADA. “The indirect financing model is a very efficient and effective means of distributing credit and has been enormously successful in reducing the cost of – and increasing access to – credit for millions of Americans,” the report stated.

Providing affordable and accessible financing for vehicles is a noble cause and a responsibility that should not be taken lightly. New regulations will continue to further complicate efforts to streamline the sales process for the optimal customer experience. Employee engagement driven by continued training and certification investment will be vital in balancing the competing factors as dealers face transitions in F&I.

About the Author:

The DrivingSales News team is dedicated to breaking the relevant and the tough stories affecting car dealers. Have questions for DrivingSales News? Reach the team at news@drivingsales.com.

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