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Jared Hamilton
From: Jared Hamilton
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Rebecca Chernek

Rebecca Chernek President, CEO

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Toyota Dealer Endorses One-Price Sales Sales Staff Writes Deals and Finalizes with a Menu Presentation!

For most dealers nationwide, a one-pricing sales strategy is a tough concept to accept. To even suggest that their sales staff should be given the authority to finalize every transaction at their desks and include the menu presentation without sending any customer into “the box” is heart-stopping for them. What about banning the F&I office altogether?  

 

Naysayers will tell you it can’t be done. You have to lock down customers in the traditional F&I office in order to sell money-making products that earn profits. No sales person can possibly sell the car and aftermarket products as well!

 

Well, one dealer I know is doing just that and very successfully. During these tough economic times, Colonial Toyota in Milford, CT, made a critical decision. The dealer chose to ban the F&I office and let his sales staff take charge of every transaction from beginning to end.  He gave them all the title of “sales manager.” I applaud Colonial Toyota for realizing that today’s customers have changed and they needed to initiate their own changes to capture their business.

 

I was hired to train these sales managers in the proper and most effective presentation of menu presentation. I was skeptical at first, and then wholly impressed by this dealer’s innovative “out of the box” thinking. The sales staff was enthusiastic and infused with optimism. The showroom is humming to a different beat of the drum and the excitement is palpable. Customers are buying and liking the upfront honesty projected by the staff.

 

Ironically, far too many dealerships still don’t understand the necessity for transparent selling. They would rather stick to the status quo and continue to use outdated sales techniques. Their F&I managers tout their use of menu selling, but their process is seldom conducted with proper disclosures. They rarely review the base payment with customers for fear that any upfront disclosure will reduce their personal income. Although there are several great menu software providers on the market, the reality is that individual dealership menus are often changed to accommodate the missing base payment or itemization of cost. Dealers and F&I managers fear they cannot make a profit by being upfront with their customers. It’s time to set fears aside.

 

One-price vehicle sales and the menu go together. Take Saturn, for example. Back in 1989-1990, when they first opened their doors with a brave new concept of “one-price” sales, the so-called experts in the industry said it wouldn’t work. Customers wanted to haggle for the best deal. Customer wouldn’t pay retail for a car without the bargaining process. Surprise! Customers did buy Saturns with the one-price offer and were happy to do it. The showrooms were packed with customers and the cars were hard to come by!

 

Especially to today’s recession market, more dealers should think seriously about changing their ways. Perhaps they should get on the phone and talk with other dealers who are successfully using the one-price sales system. They will learn that a transparent finance process is the best way to increase overall profits, while limiting liability and keeping customers coming back for more. They will learn that, sometimes, it’s best to just clean out the barn! Get rid of old practices that aren’t working. This clean-up process comes with an important “fiat,” of course. The sales staff must receive thorough training in how to effectively fulfill their new obligations. Dealers will have to make an investment in their education so that everyone is on the same page.

 

AutoNation demonstrated that one-price sales on pre-owned vehicles is not only feasible, but profitable. In 1996, when this pioneer of menu selling opened its doors to transparent selling policies, their showrooms were open environments. Like Saturn, the showrooms were soon packed with customers who weren’t dragged from one office to another. They were sold the vehicle of choice and a menu presentation followed. The pessimists were astounded by the results. How could anyone make a profit this way and, especially, by being honest and not playing the game? In AutoNation’s menu selling, every product was priced consistently and offered 100% of the time to every customer! And . . . no customer was ever sent into “the box” for a grueling, much dreaded, pressure-filled sales battle! 

 

The more transparent your sales procedure becomes, the more income you will generate.  That’s a fact. But it’s also true that nothing good comes without hard work. Changing ingrained habits is a daunting task. Doing a complete turnabout is scary. Learning innovative techniques may seem risky, but the rewards are plentiful. Now is the time for your dealership to take a new look at its old ways of doing business.

 

Most of us had to spend considerable time learning now to use computers and the Internet and the plethora of software available for running our business. The long hours spent were worth it. Our office work was streamlined. Communication with customers and suppliers improved and business profits grew. The quantity of documents filed in already bulging cabinets was significantly cut. We became leaner and more proficient.

 

When initiating a change in procedures, training is critical. You want your staff to feel secure and optimistic. This only comes when they can meet any customer at any income level and guide them intelligently into making the right choices. Give them the tools to be their best. Customers buy from those who exude self-confidence and know how to communicate effectively. Give your sales team new responsibilities, new techniques, new expectations, then train them in how to be successful in their endeavors and then watch them reel in the profits!

 

CCI Learning Center provides online workshops for any professional in or out of the automotive business who seeks a position in management. We work with automotive, RV, credit unions and call centers nationwide. CCI Learning Center will be offering a new online workshop on developing an “in-house, virtual finance office” soon! Your dealership can be open for business on a 24/7 basis. We are experts in teaching your team how to increase profits by thinking outside the box! Give us a call . . . today!

 

Jim Radogna
Great points Becky. I've seen the "one-price, no-box" process work remarkably well in both a group of Nissan stores and a group of Saturn stores. By "remarkably well" I mean very healthy front end grosses and consistent 4-figure PVRs in F&I. You're absolutely correct that it requires extensive training and complete commitment by upper management. With "the tail wagging the dog", it probably won't work. Great article, thanks!
Dave Erickson
Liked this article too I really like the idea of banning F&I regardless if there's a one price or not. It just seems that the person who built the customers trust would be the best person to sell the customer additional options. I wonder if one price works best because there isn't some guy behind the curtain, no back and forth, and that the customer is actually discussing price with the person they've built trust with.
Bart Wilson
I think the argument here would be gross. As far as I'm aware most negotiating stores make more per car than one-price stores, mainly because the salespeople tend to take the path of least resistance. That's why dealerships have the desk. How is giving them control of warranties going to reverse that trend? I would like to see the back end PVR of this dealership. That being said, if you could figure the gross thing out, I like the idea. In my opinion dealers are always trying to find the balance between two opposing forces, F&I PVR and CSI.
Kevin Stevens
Bobby is crazy, always has been always will be. I would no more put the trust and security of financial transactions into a salespersons hands. Someone has to guard the store and salespeople are not the hired guns. Does the salesperson beat up the bank too? You can loose the F&I department but you still need a good paperwork person and salespeople are not the best choice. God Bless ya Bobby but you have lost it.
David Ruggles
This is nothing new. Lexus pitched this for years. I know Lexus dealers who tried it and went back to the old model. All dealers need is untrained sales people offering to be a fountainhead of knowledge to the consumer, giving away precious gross. The only problem with F&I turnover is if it is done poorly. How in the world can you expect sales people to be equally proficient in F&I? Especially with the turn over in staff that has never been addresses in the industry. Sales people would have to become proficient in the ever more complex world of finance, credit insurance, service contracts, and regulatory compliance. Are you going to hav them all get insurance licenses, or will you just give up selling credit insurance? This is a REALLY BAD IDEA, and certainly not a new one. Having said all of this, when I started in the business, each sales person did his/her own F&I. But we used payment books in those days. And we didn't have staff turnover. And it was before the advent of "tiered approvals," instant credit scoring, and service contracts. Hell, we didn't even have fax machines. We had to send smoke signals!

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