By Robert Grant
With over 30 years in the recreation industry, I’ve spent a lot of time at dealerships. Those with optimized F&I processes succeed in providing a comfortable, consistent, and structured buying experience that translates into satisfied customers and a more profitable business. Knowing this, you’d think every dealership would be focused on F&I. But that’s not the case. According to a study published on autonews.com, the average F&I profit per retail unit is less than $800. That’s well below top performers who average more than $1,100 per unit. The study also notes that the average F&I office has a 38% penetration rate for service contracts while the top performers have a 54% penetration rate.
F&I optimization starts with the right tools.
It makes good business sense to take a closer look at your own F&I office. Making sure you’re getting the most out of every purchase can quickly add to the overall success of your dealership. What’s the best way to boost F&I performance? I recommend you start by making sure you have the proper tools in place.
Centralized Customer and Deal Database
One of the biggest issues I see in dealerships is the use of multiple systems in the sales process. Many dealerships have a separate CRM to track and manage leads, a separate quoting/desking tool, a separate F&I menu and multiple F&I product providers who use different systems. Using too many systems can reduce efficiency by requiring multiple points of manual data entry. It can also increase the probability of introducing errors along the buying journey. I recommend looking at your process and ensuring that you have a DMS (Dealership Management System) in place that allows you to track your customers’ entire buying journey in one place.
Credit Pulls
Being able to do your credit checks with a push of the button is critical in the overall financing process. Whether you are doing a soft pull or full checks including red flag, OFAC, having the ability to automatically transmit customer information directly to bureaus will save you time and money. An industry provider, such as 700 Credit, provides access to bureaus, controls and assessments, along with a business shield with security protocols that help detect fraud, protect sensitive information and monitor processes.
Menu Selling
A consistent and structured buying experience is key to the F&I process. If you can generate a menu presentation quickly and accurately for your customers, they will be pleased plus it allows you to remain compliant with regulations. Whether your customer prefers an onscreen experience or a hard copy, you can present your offering and the benefits for each product including product images and descriptions. If you use an onscreen process, customers can easily approve the packages or sign the declination statements so you can file in your records for the deal. Automating this process using eSignature makes it quick and convenient for document storage.
F&I Integration
Because there are so many different F&I product and service providers, having a system in place that can integrate with those providers will help reduce manual data entry. Since you have already entered the buyer and unit information, with a single click of the button, you can transmit details directly to your third party, helping eliminate errors and increasing efficiency for processing contracts.
With the latest technology, third party F&I providers can even push updated totals and deal details back to your DMS. This allows you to eliminate errors and increase your efficiency for processing. If your current F&I provider doesn’t have this capability, encourage them to implement the latest features.
eSignature Contracting
I can’t emphasize enough how important it is to do business with your customers where they want to do business. Today’s customers are always on the run. With 97% of the American population carrying cell phones and 85% having smart phones¹, consumers have access to review, sign and complete paperwork on the fly. Having an integrated eSignature program allows you to track document status, speed up the F&I process, reduce missing signatures and forms, reduce lender rejections and costly mistakes, and reduce printing and distribution costs associated with hard copy contracts.
Large eForms Library (over 9000+)
Because dealerships use so many contracts, it’s critical to have easy access to your bank, F&I and other forms. Having access to a large library of contracts, forms and other important documents will ease the setup process for your department.
While there are more ways you can improve your customer experience and create a profitable F&I department within your dealership, having the right tools in place is a great place to start.
- Pew Research Center, Surveys of U.S. adults conducted 2002-2021
Robert Grant is director of OEM Solutions for Lightspeed
