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ReprintsWhat it's going to take to make F&I products fly in the service lane
 | Dorfman: Increasing F&I sales penetration in the service lane requires training and many other changes. |
Despite years of effort, selling F&I products in the service lane hasn't caught on, says Larry Dorfman, CEO of EasyCare, an Atlanta F&I vendor that sells service contracts and other F&I products.
"This is a 27-year mission for me," he says.
Everybody agrees service customers are a good target for F&I products, especially extended-service contracts, Dorfman said. But he said sales penetration remains relatively low. There are several reasons for this, he says, and they're tough to fix:
• Service writers are set in their ways. Their pay revolves around increasing service business, not F&I. It's hard to fix because nobody wants to risk their compensation to try something new.
• Service writers are too busy. F&I managers juggle responsibilities for sales, compliance, profits and paperwork. When something else comes along, like this year's Red Flags Rule, it's another burden. The same applies to service writers.
• Service writers typically aren't trained in F&I products or retrained to keep them up to date, Dorfman said.
New software can help service writers fill out the paperwork, and also keep them trained. But Dorfman says increasing F&I sales penetration in the service lane requires many other changes.
Automotive News Special Correspondent Jim Henry interviewed Dorfman this month.
Software now allows service writers handle the whole transaction at their work station. How much will that help?
You can plug in all the software you want, but the biggest need in the service drive is to be trained. You wouldn't expect an F&I manager to do a better job unless they were trained and developed properly, right? The same argument goes for the service writer.
OK, but software helps.
Several vendors have really solid processes where you can get all the documentation in the service lane. The system can be set up so that for every customer who comes in for an appointment, if they're eligible in terms of vehicle age and mileage, it prints a quote up for them automatically.
What kind of training does it take? Do you mean product knowledge?
There's that, but the bigger thing is, there's a cultural challenge.
The service writers themselves have a natural inclination to focus exclusively on hours of labor per repair order. They also have to handle dispatch, getting cars moved around the lot; they have to deal with customer follow-up -- they have their hands full.
What can be done to cut the time required?
Let's say that the day before the service appointment the customer is sent an e-mail video: "We're looking forward to seeing you. Please let us know what your requirements are for a loaner car. If you need to change your appointment, please let us know. If you have a service contract, we will be happy to review that coverage with you. If you don't have one, we can review that with you when you're here."
Think how much better that is than just text. It also prepares the customer for that service contract discussion. It gets them thinking about it.
We are also testing with our own people in the service drive. So far we're just doing it with one Ford store in Atlanta.
According to J.D. Power, service contract penetration for new cars is around 30 percent. I understand it's lower in the service lane, but how much lower?
A store that has 800 repair orders a month, maybe 350 to 400 of those should be eligible. They should be doing 20 to 30 contracts per month. I think it could be more. But nobody's doing that.
Several dealers are doing 10 to 12. We have stores doing 15-plus and heading in that direction. But nobody's even knocking on the door of doing 20 to 40 per month consistently. We believe there's a breakthrough opportunity to do 25, 30, 40 per month.
You can reach Jim Henry at autonews@crain.com.
