Dealerships Have More F&I Power Under the Hood Than They May Think

Pitching finance-and-insurance products in the service drive might seem counterintuitive, but of course that’s where many of those very products ultimately get fulfilled.

To Corey Smith, national fixed operations training manager at F&I products provider APCO Holdings, it’s an all-too-often missed opportunity.

He explained why at Bobit Dealer Group’s most recent Industry Summit event, where automotive professionals gathered to hear his talk, “Why F&I Drives Service Drive Revenue.”

Smith shared his perspective, gleaned from 15 years in the business, starting in – you guessed it – a service drive, and advancing through fixed-operations management, a sales directorship for a product provider, corporate service training and more. Along the way, he said he’s trained at least 10,000 service advisers, so he intimately knows that side of the business and how it could make a difference in F&I.

“By offering F&I products in the service drive, you have an opportunity to increase revenue and increase customer satisfaction,” he said, “provide peace of mind.”

With interest rates high, automotive technicians scarce, and the ride-share sector at least theoretically cutting into vehicle sales, it makes sense to explore alternative business boosters, said Smith, who also hosts a fixed-operations podcast.

He counted off some pain points, or frictions, dealerships tend to have between their F&I department and the service drive: F&I overpromises coverage; the service team regularly misdiagnoses vehicles; and it’s not the service department’s job to understand coverages that a customer may have.

“F&I doesn’t see the service adviser as being a salesperson, when in fact they’re the best salesperson,” Smith said.

The Customer’s Love Language

Perhaps realizing he’d suggested something many of his listeners found preposterous, Smith segued into a little comic relief, though it led to his next point.

“Who’s read the five love languages?” he asked, referring to Gary Chapman’s multiyear New York Times best-seller. He got just a few hand-raises in the largely male audience. “My wife had me read it – I learned a lot.”

Smith said he’s applied to the customer experience Chapman’s theory on how couples can “speak” each other’s love language for optimum relational success.

He calls them “customer buying motives,” of which he says there are four: safety, reliability, performance and protecting investment. And which of the four applies depends on the customer.

“If you can tailor the way you make presentations around buying motives, you will sell more things to your customer,” he said.

Customers are “looking for somebody who’ll respect their time and give them the answers they’re looking for.”

F&I Fundamentals

As the service department can drive F&I sales, so can properly executed F&I salesmanship drive the service department’s top line, Smith said. “The role of F&I in service is to drive revenue and loyalty.”

Dealerships can realize “up to a 50% increase in service drive revenue when F&I is properly implemented.”

Smith elaborated on what “properly implemented” looks like:

• First, customer education is key so that customers make their own decisions – “upselling,” to him, is a dirty word. “Accurately explain products and how to leverage coverage.”
• Provide real-life scenarios of when and how products could save the customer money in the long run.
• Offer a prepaid maintenance plan, vehicle-protection products and bundled packages.

Basic communication skills come in handy here and should be instilled in F&I training, Smith said.

“Being transparent with the customer is huge. Effective communication is key.”

He said that process should be easy for the adviser, or it won’t get done and easy for the customer, or the products won’t be purchased. An application or portal will help with that, along with a process for follow-up.

Along with strong communication skills, F&I staff should have full command of products and compliance, along with negotiation and objection-handling skills, all of which can be taught through regular meetings, role-playing exercises and access to online trainings.

“It’s crucial for maximizing revenue.”

Two common F&I missteps he pointed out are inadequately explaining products to customers, which fosters mistrust, and failing to offer products to every customer, which of course results in lost sales.

Teamwork Tips

Smith maintained that F&I and the service drive should collaborate, and seamlessly. He said service drive revenue climbs when F&I informs customers about service packages and the service drive follows up to schedule appointments.

“A service adviser doesn’t know the pain points of an F&I manager, and vice versa.”

To facilitate such teamwork, he advised job shadowing between the two departments, an exercise that increases employee satisfaction and ultimately lead to more customer satisfaction, the end goal for everybody.

“Take care of the customer, and you’ll not just sell one car but multiple cars,” he said, adding in a paraphrase of a Steve Jobs quote, “The customer doesn’t know what they want till you show it to them.”

Good Questions

In a question-and-answer session after his talk, one listener asked Smith how the service drive can sell a product if advisers don’t know what the customer has. The speaker said the F&I department should communicate that information to the service drive – problem solved.

Another audience member asked for the best way for a service adviser to sell a vehicle service contract. Smith said the adviser can quote a price and answer the customer’s basic questions, then tell them the dealer’s call center can phone them to answer detail questions.

Keeping in mind that research shows a customer needs exposure to a product at least three times to be primed for purchase, Smith said the adviser’s advice, the dealer’s smartphone application recommendation, and the call center conversation can be those three-times-is-the-charm to convince them to buy.

“They’re more apt to buy and not have buyer’s remorse,” he said.

Another listener asked if there are any compliance risks in the service drive selling products.

Smith said the service drive should handle only protection programs that the dealer’s application shows particular vehicles qualify for so that advisers can’t make noncompliant product sales.

“The adviser can plug in the information, print out a contract, the customer puts a deposit down, and the adviser tells them when (the contract) becomes active. That protects the dealer, the adviser, the third-party administrator and the customer,” Smith said. “You’re not selling a new VSC on a 10-year-old vehicle.”

Hannah Mitchell is executive editor of F&I and Showroom. A former daily newspaper journalist, her first car was a hand-me-down Chevrolet Nova.

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Originally posted on F&I and Showroom