Professional Community for Car Dealers, Automotive Marketers and Sales Managers
If you haven’t already done so, it’s that time to review your 2012 performance in detail. In what areas did you fall short of your goals and why? Where could you have generated greater gains and how? Don’t allow January to slip by without these facts in writing and a discussion of how you can best move forward in 2013.
A common F&I pay plan in the automotive industry is known as the grid. It compensates managers based on their per vehicle retail performance and products sold during the menu presentation process. The amount of products sold combined with per vehicle retail earned determines the percentage of payout from the department or individual pot reserved.
A grid pay plan is one of many, but the final outcome should result in over $1,000 per vehicle retail. This outcome is derived from approximately 60% of products sold and 40% from reserve, which will keep charge-backs under 12%, with a better than average CSI score.
Whatever your pay plan is, don’t put off reviewing the opportunities that 2013 and a potentially improved economy might present.
Ask yourself these questions:
How well do you understand the facts and benefits of each product for individual customers with different needs and abilities to pay, and can you discuss them with clarity and confidence?
Which particular products do you have the most trouble presenting and why?
How effective are you in overcoming customer objections on any or all products offered and do you use visuals?
Would you rather just flip to a higher term or discount your product offering a lower payment in lieu of selling the value of your product?
When you prepare your menu, do you maintain a stringent policy preventing you from discounting the price of your products for fear of customer rejection?
Do you present your menu 100% of the time with all terms properly disclosed?
Do you get involved earlier on in the transaction and out on the floor visible and proactive with the sales personnel?
Do you have a positive relationship with your banks and do you understand the various alternative guidelines available to obtain financing?
Do you have a turn -key process that assures 100% turn over to finance? How many cash transaction are you converting to finance or lease per month?
Do you meet each customer at the sales person desk, review the transaction and establish rapport, every time before the customer enters your office? Why not?
The Customer Interview
One of the biggest mistakes F&I managers make is forgoing the interview. It can literally add thousands to your bottom line. According to the J.D. Power and Associates 2012 U.S. Sales Satisfaction Index (SSI) StudySM released in November, statistics showed that customers prefer salespeople “who invest the time up front to listen to them and ensure they select the right vehicle.” Their apprehensions decreased when dealership personnel established a business relationship and understood their needs.
Today’s savvy customers have access to Edmunds.com, a favorite shopping guide that lists all the do’s and don’ts on buying a new or used vehicle. The website even has a special section on financing options and what products to buy or forego. These customers develop an aversion to a dealership’s F&I manager and consider their meeting with you a threat.
The 2012 SSI showed that “nearly 80 percent of new-vehicle buyers use the Internet during their shopping process” and about a third of them consult online ratings/review sites when selecting a dealer. Vehicle buyers are using social media sites to gather perceptions of your general sales reputation. Don’t ignore or minimize the influence of dissatisfied customers.
It wouldn’t be out of the ordinary to envision that some customers may even whisper to one another on their way to the F&I office, “Honey, don’t forget what we read and what happened to us the last time we bought a car. Just say NO!” Or when the customer pleads with the sales person, “Do we have to go in there?”
However, if your customers have already met you, shaken your hand, shared a few pleasantries and built a rapport, however tenuous, the edge is taken off their office meeting with you. The time you spend reviewing the transaction at the salesperson’s desk—to assure there aren’t any red-flag issues that might stall the final contract-signing—pays off in big dividends later.
During the interview, determine the customer’s driving habits, whether the vehicle is an addition to a current one, or whether a trade is being made and why. Learn if the customer is single, married, or head of a family with live-at-home children. These facts make a significant difference in how you overcome product objections and succeed in making the sale. Abstain from an intense interrogation for a more conversational approach. A conversation is interactive. Watch and listen carefully. Body language speaks as loudly as words.
Once you greet this customer again in your office, maintain a cordial attitude. In addition to selling products for the selected vehicle, you are also selling trust and your integrity. Satisfied customers become loyal customers. Since you have already met the customer you don’t have to go into unnecessary dialogue that dilutes the presentation. The transaction is verified and complete you can immediately present the menu without fear of reprisal. Once the customer enters your office delivery time should take no more than 20 to 30 minutes. Avoid long drawn out deliveries—as the saying goes, the more you babble the less you earn.
If your goal in 2013 is to achieve over $1,000 per car or more each month, spend as much time on evaluating your personal attitude and overall customer satisfaction as you do on the ROI percentage. Never forget that personally meeting each customer at the sales person desk sets the tone for your ultimate success.
After the 2010 SSI was finalized, Jon Osborn, director of automotive research at J.D. Power and Associates, said, “The process of working out the deal is the primary indicator of whether new vehicle buyers have a satisfactory purchase experience.… It is particularly important for retailers to make this process as efficient and collaborative as possible, given its importance to overall satisfaction.”
It still is in 2013.
Rebecca Chernek of Chernek Consulting is an NCM Up To Speed guest expert in the area of retail automotive F&I best practices. Chernek Consulting offers affordable customized in-dealership consultation, web conferencing and workshops. You may contact Rebecca at 404-276-4026.