Like every other department, pre-pandemic life likely looked vastly different for auto dealerships’ F&I teams than it does now. Even with vehicle affordability concerns on the rise, record-high credit scores made financing relatively simple in most cases.
As automotive dealerships continue ramping back up, a question many auto dealerships are asking is: what’s stayed the same and what’s changed in dealership F&I as a result of the pandemic?
In this blog post, we share four best practices to improve your car dealership’s post-pandemic F&I results by:
– Staying connected to your lending sources
– Connecting with customers on finances before the transaction begins
– Reinforcing your dealership’s customer experience culture
Taking the time to train your team
Stay Connected to Your Lenders
It’s always been important for your F&I team to be closely connected to the banks and finance companies your auto dealership uses the most. But with current economic factors in play and the variety of special programs lenders have in place to deal with them, this has become more critical than ever.
Dealership leaders should make sure their F&I teams are watching every move lenders make and that they’re communicating the highlights to your sales teams so they’re prepared to answer shoppers’ questions and start financing discussions with the most current information, which is changing rapidly.
Challenge your F&I team to know each lender’s stipulations, their maximum advance guidelines, what book value they use, their relative affordability for subprime shoppers and many other lending guidelines and other factors that help you put together packages and get applications approved quickly and cleanly.
Connect on COVID-19 Auto Finances at the Start
Previously mentioned economic challenges emphasize the importance of F&I professionals having a clear, up-to-date view of their customers’ financial history, especially what may have happened to them in the first half of 2020.
The pandemic and its associated public health measures created sharp economic shocks for many American households, with 870,000 jobs lost in March and 20.5 million in April (according to the Bureau of Labor Statistics). But while people weren’t working, they also weren’t spending as much money. This was good news for credit scores: American consumers have paid down their credit cards during the pandemic. After hitting a record high in February, consumer credit card debt is now down to its lowest level in three years.
F&I professionals should make sure they take the time to learn up front to connect with customers and have a transparent conversation about their current financial situation, both to determine whether specific lender programs may apply, as well as to identify potential trouble spots and ensure every risk is transparently laid out on the table.
Establish a strong digital retailing process that includes F&I, such as offering options like e-signing or video chats for customer interviews. This may require investing in new dealership tools and solutions – a definitively worthwhile venture. A recent NADA study found dealerships with an established digital retailing process saw F&I profits rise 58% on new vehicles in April compared to February, versus 35% at dealerships that didn’t offer digital retailing.
Reinforce a Dealership Culture Driven by Customer Experience
One benefit from an auto dealership customer experience (CX) culture from an F&I perspective is it helps reduce chargebacks. When F&I pros ensure the customer is satisfied with the products and services they receive in the F&I room, those customers are less likely to cancel their products in a few months.
Instill a CX-driven culture by training your F&I team to design deals and offer add-on products based on a customer’s best interests. It’s not that F&I shouldn’t be maximizing gross profit PRU through profitable markups or selling add-ons, but they should be making sure the customer understands and is comfortable with their interest rate and they’re identifying and selling add-ons that the customer needs.
The result will be a customer who is less likely to default on a poorly structured deal, less likely to cancel useless add-ons and more likely to remain loyal to your dealership for service and their next purchase.
Make Time for Dealership F&I Training
High-quality F&I requires more training than arguably any other role in an auto dealership, except for service technicians. With sales volume down, this is a great time to both get your F&I team training that will help them grow in their roles, as well as update F&I-related dealership training for your new and pre-owned sales teams.
This could mean participating in lender updates, third-party sales training, product-specific training, internal role-playing training to help prepare for specific circumstances or more; whatever makes the most sense for your car dealership.
One simple and low-cost dealership F&I training method is simply to videotape an F&I transaction – either live or mock – and walk through it with the staff involved to identify areas of potential improvement. Have them explain why they made the choices they did at key points in the presentation.
Contact your dealership’s service and technology providers to inquire about any included in-person dealership training programs or remote opportunities. Mastermind, for example, provides ongoing, personalized car sales training to all our dealer partners to ensure every member of their team gets the most value from our product suit.