By Rob Voltaire, Senior VP, Managing Director, EasyCare
The F&I office is the last step in the car buying process – but finance and insurance products should be seeded at every step of the customer’s journey. The more often you can alert customers to products that will help protect their vehicle investment the more likely they are to buy.
This is especially important today when you consider the average care payment is a record-high $700 for new vehicles and $525 for used. In addition, the average loan term is nearly 70 months for both new and used vehicles. Having products to shield customers’ wallets in the event of repairs or a total loss is critical when they are paying top-dollar for vehicles and holding onto them longer.
The following strategies introduce products and build value so when customers sit in front of the F&I manager they will be more receptive to a conversation.
1. Ask about a service contract. Ask every customer with a trade-in if the vehicle is covered by a service contract. Any needed repairs may be covered so the customer will get more for the trade; or, if repairs are not needed, the customer can cancel the contract and use those funds for a bigger down payment. A customer with a service contract will immediately see the value and will most likely want the same coverage on the new vehicle. Customers who do not have coverage will also understand the value once you explain the benefits. It’s a win-win to get customers thinking about future repair bills and how to cover them.
2. Focus on the trade. The condition of a trade-in vehicle is also fertile ground for protection products. During a walk-around focus on any problems such as paint damage and/or torn and dirty upholstery. Explain that you offer appearance products that can protect the new vehicle from wear and tear and even weather-induced fading and cracking. Protection throughout the vehicle lifecycle equals more money in trade when it’s time for the next new vehicle.
3. Visit the service department. Many dealerships have a retention process where sales takes new vehicle owners to the service department, introduces the service advisor, and explains the benefits of servicing with the dealership. There’s another benefit to this process. Customers will see numerous vehicles up on lifts – many likely the same brand they just purchased – undergoing repairs. Psychologically they’ll understand that cars do break and at some point in the future they will need to pay for repairs. The value of a service contract or prepaid maintenance is on full display.
4. Include “freebies” for one year. Giving away short-term versions of F&I products is an effective way to differentiate your dealership and up-sell longer-term contracts. A vehicle that includes two oil changes and tire and wheel damage coverage for one year, for example, is more attractive than the same vehicle down the street without any add-ons. Freebies also give the F&I manager the opportunity to offer extended coverage at a lower price since the dealer paid for the first year. This strategy is most effective when freebies are prominently marketed on the vehicle and VDP pages.
It’s important to note that the F&I manager will not always have the time to interact with customers and talk about products before the sale. In this case, sales associates will need to be trained to bring F&I products into conversations at appropriate times. They don’t need to be product experts – but working knowledge of products sold should be required. One way to encourage learning and customer conversations around F&I is to spiff sales $5 to $10 when they discuss products with customers.
It’s also helpful to talk to sales about the benefits to the entire dealership of selling F&I products. It’s not just about profit per vehicle sold. It’s also about connecting car buyers back to the dealership for long-term gains.
For example, according to internal APCO data 70 percent of customers who purchase a service contract will return to the selling dealership for service. That number jumps to 80 percent when a customer has tire and wheel protection and 92 percent for covered oil changes. What should get sales really excited is that customers who service their vehicles at a dealership are 86 times more likely to buy their cars from that dealership.
F&I products are an effective way to build value with the customer, retain service business, and prime the pump for more vehicle sales. Build awareness and value at every step of the customers’ journey to sell more products now, and earn customer business far into the future.
About the Author
Rob Volataire is Senior Vice President, Managing Director, EasyCare at APCO Holdings, home of the GWC Warranty and EasyCare brands. He has been a national trainer and worked with hundreds of dealers to optimize profits. Previously, Rob was founder and owner of Northeast Dealer Service and Strategic Diversified, serving the mid-Atlantic region for over 20 years. In 2021 the company merged with APCO Holdings, LLC.