Dealers want finance and insurance vendors to provide more than tools to boost sales. They also want products, services and vendor relationships that improve the experience for customers and dealership staffers.
Navigating a constellation of vendors vying for new business can be difficult, especially because choosing the wrong one can be costly. How do dealers make the best choice?
"The vendor list is getting huge," Drew Conkle, general manager of Brondes Ford Toledo, in Ohio, told Automotive News. "It's hard to choose the right ones."
Jeff Proctor, managing partner at Metro Honda in Montclair, Calif., said his dealership requires at least 30 vendors.
"If you look at the sheet that I have on my computer, it's a daunting spreadsheet of passwords to access all the systems it takes to run the store," Proctor said. "We don't have the margins to invest in the innovation. We're forced to use vendors to innovate."
Dealers want stability when it comes to vendors, said Mo Zahabi, senior director of product consulting at VinSolutions and Dealertrack. In his 11 years attending the National Automobile Dealers Association convention, Zahabi said, finding F&I solutions that stick is the most difficult task.
"I see it every year," Zahabi said. "A ton of [vendors] coming to the market, and then the next year you don't see them because they're not around."
Dealers choose F&I vendors largely based on word of mouth, though the selection is also influenced by the automaker they work with, their F&I product provider and their dealership management system.
Conkle said he relies on advice from 20 Group meetings, where dealers swap notes on which vendors have been successful for their stores.
Whether a store is part of a dealership group also influences vendor selection, particularly if group executives want all stores to work with the same vendors. But experts say that what works in one market may not work in another.
"No two dealerships are going to run the same, not even in a dealer group. Software and technology is much needed in the dealership, but it doesn't replace people," Zahabi said. "Dealers need to leverage the people who understand that a little more than they do now."
Customers say they want to spend 90 minutes buying a vehicle, but the average deal takes three hours, half of which is spent in the F&I office, Zahabi said, citing Cox Automotive's 2017 Car Buyer Journey Study. Dealers choose vendors in part to save time for customers and to remove problems that drain time in the dealership.
Proctor's store began using the digital retail tool Roadster specifically to solve those problems.
"We believe this is going to help to facilitate the needs of the customer," he said. "They want to be able to control their buying process."
Involving the F&I manager — the main user of the software — in the process is another major step.
Going the extra mile
Dealers are more inclined to trust smaller companies that are flexible and go the extra mile.
Matt Calavan, general manager at Beaver Toyota of Cumming, in Georgia, which sells an average of 300 new and used vehicles a month, said he is more likely to select a vendor who is willing to visit his store.
"I prefer for the demo to be in-house rather than a webinar. If somebody is going to invest the time to come to the store to demonstrate their product or solution, and if they have representation in my market, I have somebody that can help ensure that it's going to be a success," he said.
Calavan also seeks vendors that offer month-to-month contracts because he believes the company will work harder to retain business that has to be earned every four weeks. He prefers smaller vendors capable of offering what the industry wants most at the time, but, Calavan warned, small, successful companies are often acquired by larger players.
"What generally happens if they grow their rooftops, the big companies buy them. Then it's just not as cutting edge as before," he said. "It becomes more difficult for them to provide that same level of service."
Zahabi said vendors must properly explain how their products benefit the dealership and the customer. Even the most intuitive software requires proper training, and dealers need someone to be accountable, he said.
"Especially when it comes to the liability standpoint, we need to become more of a partner than a vendor," Zahabi said. "The dealer is looking for a partner that understands their business, and when something goes wrong, that partner is standing behind to help them."