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Aug. 14, 2006 – Making F&I a full-time benefit

August 14, 2006
Filed under Features

S&W, the Alabama powersports dealership involved in a year-long effort to modernize its business, is not unlike other powersports dealerships in how it handles F&I opportunitiess.
“Many dealers turn the F&I responsibilities over to the office manager, who gives it part-time attention,” said Larry Koch, founder of the $30 million Tousley Motorsports, based in White Bear Lake, Minn. “And the results turn out to be ‘part time.’ ”
Koch is a consultant for the Turning Technology into Sales and Profit program, the year-long project that involves several industry companies trying to update the business practices of S&W, a family owned dealership in Jasper, Ala.
“One of the most important success factors among the best powersports dealers in the United States is proper management of the F&I department,” Koch said. “The highest performing dealers understand that F&I’s not just about selling insurance to a motorcycle enthusiast, it’s about locking that customer into a three-four year program, selling them parts, services and hopefully, a life-long relationship that keeps them coming back.”
The drawback is, it’s hard for smaller dealers to swallow a $75,000 to $100,000 a year salary — plus benefits and bonuses — for a F&I specialist, who can help create these kinds of long-term, highly profitable relationships.
That’s why many dealerships use the office manager for this function. And that’s just how S&W has handled it with office manager Rachel Wilhite.
Between managing the accounting process, closing the books every month and making sure the bills get paid, Wilhite has two or three credit-challenged customers lined up outside her door on a busy day, waiting for her to find them a loan. If just one customer has poor credit, getting loan approval for that person can turn into a full-time job.
To ease Wilhite’s duties and hopefully boost F&I sales, the companies involved in the technology series have found an alternative for S&W: a F&I kiosk run by Dealers Finance Source, a Texas company.
This month, Motorcycle Management Consulting Services, Inc. (MMCS) will set up the F&I kiosk at S&W.
Traditionally, the kiosk is a small, self-contained cubicle, equipped with a direct line telephone, computer with Internet connection, a printer/scanner and a printer. Some dealers, like S&W, choose to use a dedicated office, which is usually equipped with a desk already.
Once a customer has decided on a vehicle, along with add-on accessories and parts, the salesperson completes the buyer’s order and then a five-step loan approval process starts:

  • Step 1: The sales person picks up a phone and is immediately connected to a customer service person at Dealers Finance Source’s call center. The buyer’s order is scanned into the computer, along with the customer’s driver’s license
  • Step 2: The buyer verbally fills out a loan application with the customer service representative, and confirms its accuracy by viewing it on the screen. Then, using the remote printing capabilities, the sales center prints the application and asks the customer to sign it, authorizing Dealers Finance Source to pull their credit report.
  • Step 3: Once authorized, Dealers Finance Source uses a list of lenders the dealership has agreed to use to look for a lending institution that will fund the loan. In the meantime, a videotape plays on the computer screen, entertaining the buyer with video and music, while they wait.
  • Step 4: The buyer is notified if their loan has been approved. This entire process takes about 30 minutes on average, longer if the customer is credit-challenged. If approved, the customer service representative offers the consumer a menu of F&I products, including manufacturer service contract, GAP, theft protection and Tire & Wheel, a roadside assistance program.
  • Step 5: The loan paperwork is printed at the dealership and is signed by the customer.
    Julia McCarthy, president of MMCS, said, “based on our experience, dealers using our kiosk experience higher loan approval rates for increased unit sales, increased sale of highly profitable services, increased parts and accessories sales and build long-term customer relationships.”
    The upfront cost of installing the kiosk is $6,700. There also is a transaction charge and profit-sharing arrangement with the dealer on every sale.
    “Based on our experience with other dealers, we’ve gotten about 25 percent improvement in unit sales, and F&I sales exceed 50 percent penetration,” McCarthy said. “Jim Jr. and his people are doing a pretty good job already, selling service contracts. But I think we can generate another $100,000 toward S&W’s bottom line, in the first 12 months of use.”
    To do that, McCarthy said S&W’s sales staff will have to be educated on presenting customers with a “whole sale” of bundled products and services, versus a single unit sale.
    “And we’ll need to get them to get comfortable relinquishing part of the overall selling process to our F&I customer service financial experts,” she said. “Once that’s done, the benefits of higher margin service sales, higher parts and accessories sales and repeat customers will become obvious to S&W.” psb

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