Apr. 6, 2009: Putting your best manager in F&I: Can you afford not to?
April 6, 2009
Filed under Archives
You gotta maximize what’s already there!
“Take your best salesperson, and make him/her your F&I manager.” We’ve preached that message for years, yet few seem to act on it. The thought of pulling one’s best salesperson off of the floor seems too daunting. Can you afford not to? In an annual report from a prominent publication last year, I was shocked to see almost 50 percent of the powersports dealers in our country have no F&I products for sale. As far as dealers are concerned, F&I should stand for “Found Income,” mainly because it’s incremental income on the deals that you are currently seeing. You don’t have to sell any more bikes to reap the rewards. You don’t have to invest in anymore advertising to jump into the fray. What you need is a sharp, sales-minded person with a “put me in, coach” attitude.
A successful F&I person will accomplish two things for you. First off, they bring in cash. Secondly, they can drastically improve customer retention. In the world of retail, you want to sell at a profit and retain your customer base. No other position in the dealership can accomplish this like the F&I manager.
On the heels of the March 9th issue of Powersports Business, the question arises, “Can I afford an F&I manager?” At an average annual F&I PUS (per unit sale) of $500 (metric), a dealership selling 100 units can produce $50,000 in net F&I dollars (not including payroll). So a dealership selling 100 units per year can afford to pay someone $50,000 in payroll, and potentially “break even” on the profitability side. The average Assurant Solutions 20 Group metric dealer in 2008 sold 805 units, well above the 100 needed to break even at average. In fact, the dollars generated in F&I accounted for a whopping 68 percent of the total dealership operating GP. Again I ask, “Can you afford not to have a strong F&I manager?”
Also, if you truly put your best salesperson in the F&I chair, would you really expect to perform at average? We have dealers at $1,000 PUS. What would that do to your bottom line? Remember Q4 when it felt as if someone turned off the light switch? How might that winter of ’08 turned out with an additional $1,000 on every deal?
How many units did you not roll because of lack of financing? My guess is more than
50 percent of those who wanted a bike? A good F&I manager should be constantly sourcing new lenders. The most useful ones are right in your back yard: local banks and credit unions. Imagine finding a local bank that allowed for two-three additional bike sales per month.
The Motorcycle Industry Council states that the average person trades their motorcycle every 2.1 years. So every 2.1 years, are your customers coming back to you? Are you constantly finding new customers to replace your previous ones, or add to them? In this world of cutthroat retail, customer service trumps all. People will knowingly pay more for something if they enjoy the experience. So how can the F&I manager fuel your retention?
Follow-up customer service calls: A week or so after the purchase, have your F&I manager call back the customer to ask them how they are doing. Chances are that there will be no issues, but if there are, wouldn’t you want to get in front of them to prevent them from blowing up? Most times, it’ll be a short 2-minute phone call, but the customer will remember the “touch.” Also, the average dealer had $25,000 in chargebacks ($30 PUS) for 2008. A simple customer service call such as this can eliminate a substantial amount of those chargebacks.
Priority maintenance: Although a byproduct of selling this is partial non-redemption (translation: unused cash reserves), the original intent was to use this as a retention tool. How much is it worth to see that customer back in your dealership six times over the next three years?
Mining the service ROs: Imagine having your bike in for service and having the F&I manager call. He/she tells you that your warranty is almost out, and although you originally turned down an extended plan, he/she will have multiple options available for you upon pick up of your bike. How would you, the customer, react? After receiving this type of strong customer service, you may even want to pick up a tire/wheel contract for those new Marchesini wheels.