Dealers who feel confident about their current product penetration might miss new opportunities — especially chances to sell outside of their own territory.
One example: Selling service contracts post-transaction to customers can be a lucrative profit booster, F&I experts say. Dealerships can purchase a list of newly registered vehicles that don't have service contracts, call those customers and make their case over the phone.
"You have 50 percent of customers who didn't buy a service contract every single month. Why aren't you handling that business, when you know how much income that is?" F&I trainer Rebecca Chernek of Chernek Consulting said. "It falls off the radar."
Treating aftermarket F&I sales as a separate business will improve the odds of selling these contracts. AAA insurance, according to Chernek, has entire call centers devoted to the practice.
Still, cold-calling and direct-mail are expensive. Customers field so many calls and promotional mailings that most of it ends up in the trash, said Tony Dupaquier, director of F&I school The Academy.
"That's tremendously ineffective. The close-in ratio on it is minute," Dupaquier said.
He suggests dealerships focus instead on trying to sell those service contracts in the service drive. If service customers aren't looking to get in a new vehicle, they may be primed to purchase service contracts and possibly other F&I products that could help as they drive vehicles longer.
Any approved agency that can offer a consumer service contract can, and should, if the opportunity is available.
Dealerships, however, should proceed cautiously the further beyond their market they try to sell.
In 2013, Toyota Financial Services changed its policy on nationwide online sales by dealerships of extended service contracts, citing concern about potential violations of state commerce regulations that vary from jurisdiction to jurisdiction.
Some dealers, however, believed the business was curtailed because the company couldn't compete with the pricing offered over the Internet. Prior to the policy change, one Massachusetts store was selling 100 online extended service contract sales a month for as much as $750 less than other dealerships.
In the end, whether you're picking up incremental sales from the service drive or finding success by calling recent vehicle buyers in other markets, selling F&I products beyond the in-dealership vehicle transaction can help profits amid margin compression and other marketplace pressures.
Dealerships should consider dedicating a salesperson — or two — to drive F&I sales along these channels. By not investing in these ideas, dealerships are forgoing income that others are capturing.