Easy does it when selling F&I products

Dealers, when selling F&I products, don’t count pressuring the customer as an effective sales technique.Too much pressure to buy F&I products leads to slightly lower close rates. And the type of presentation matters as dealers try to up their product sales, a study by J.D. Power found.Overall satisfaction among buyers who said the dealer applied too much pressure during the F&I process was 638 on a 1,000-point scale vs. 852 for those who experienced no pressure, according to J.D. Power’s 2015 U.S. Sales Satisfaction Index Study, released last week.Depending on the products, what consumers perceive as too much pressure to buy usually leads to a lower close rate. For example, 18 percent of consumers who felt too much pressure to buy purchased tire/road hazard protection vs. 19 percent of consumers who felt some pressure and 21 percent of those who felt no pressure to buy.Overall, for a higher close rate, dealers should manage time in the dealership properly, said Mike Battaglia, senior director of automotive retail at J.D. Power.If the customer has a long wait between the time they agree to buy a vehicle and the time they meet the F&I manager, the customer may feel agitated before even stepping into the office. When customers make it into the F&I office, they want to know what their F&I product options are, and they want to see it on some sort of product menu, whether paper or digital. Then, the F&I manager should explain the value of the product.“The likelihood that the customer will feel pressured is reduced if [the entire dealership] process is optimized,” he said.For extended warranties, applying only some pressure to buy led to the highest close rates. The close rate on a warranty among consumers who felt some pressure to buy was 30 percent, compared with 28 percent among those who felt no pressure and 26 percent among those who felt too much pressure to buy.Whether or not a customer will purchase another vehicle from a dealership depends partly on the pressure they felt from the store to buy F&I products on their prior vehicle, J.D. Power found. Only 10 percent of customers who felt too much pressure said they “definitely will” purchase from the same dealer again. For consumers who felt no pressure, however, 44 percent said they definitely will purchase from the same dealer in the future.Most prefer paperF&I product sales also depend on how products are presented, the study found.Nonluxury customers are more likely to buy F&I products when managers show them the options on a paper brochure or menu. Premium customers, however, are more likely to purchase when they are shown the options digitally.Overall, though, the close rates on all four of the products J.D. Power included -- prepaid maintenance, extended warranty, tire/road hazard protection and interior/exterior sealant protection -- were highest when the customer viewed the options on a paper brochure or menu.“While the technology around digital presentation is evolving, it is probably not quite at prime time yet,” Battaglia said. It is more common for dealers to offer products on a paper brochure, and “customers appreciate having something tangible in their hands that they can read and look over.”“However this march toward technology is going to spill over into F&I, and it makes perfect sense” that many F&I process would become digital, he said.For prepaid maintenance, interior/exterior sealant protection and tire/road hazard protection, the close rates were the same whether the dealership offered the products verbally or showed them on a computer screen. Those rates were 22 percent, 21 percent and 20 percent, respectively.For an extended warranty, the close rate was 32 percent with a paper brochure or menu. It was 29 percent with a computer screen and one point lower, at 28 percent, with verbal offers.The studyThe 2015 U.S. Sales Satisfaction Index Study, now in its 29th year, is based on responses from 27,831 consumers who bought or leased a new vehicle in April or May 2015.It measures satisfaction with the sales experience among new-vehicle buyers and so-called rejecters -- those who shop a dealership but purchase a new car or light truck elsewhere.J.D. Power calculates the buyer-satisfaction scores using four factors, in this order of importance: Working out the deal, salesperson, delivery process and facility.Rejecter satisfaction is based -- also in order of importance -- on the salesperson, fairness of price, experience negotiating, variety of inventory and facility.Jamie LaReau contributed to this report.

Easy does it when selling F&I products

Featured Stories