Dealers, follow up on missed F&I product sales opportunities. There's plenty of competition waiting in the wings to capture that revenue.
Lenders and dealers often work together to finance deals, but when a customer doesn't buy an F&I product from the dealership, other lenders may swoop in.
Nearly every credit union on the CU Direct lending platform sells F&I products, according to Phil DuPree, chief revenue officer for CU Direct, but not all of those sales come as a direct loss to a dealer.
"Both like to sell aftermarket products, but credit unions know that's a critical piece for dealers, so they don't go to try to unwind those," DuPree said. "The dealer wasn't able to sell it, so it didn't affect their margin."
Some companies are working to capture missed revenue with products designed to be sold outside the F&I office. F&I product provider Assurant is piloting a start-and-stop vehicle service contract to be sold by lenders and dealership service departments alike.
The idea behind the aftermarket product is to make the sale without cannibalizing F&I profits from traditional products purchased in the office. The flexibility of the program could attract wishy-washy customers who turned down the initial offer over the price tag or the idea of being locked into a predetermined payment for the duration of their loan term. Dealerships can sell the product after the customer has left the dealership, but so can Assurant's lender clients.
Some F&I managers may think that following up with customers is time-consuming and often fruitless. It's difficult to focus time and attention on chasing customers who have already rejected an F&I product where they were most likely to purchase it — in the F&I office. But dealers should follow up when it comes to missed product sales, whether the opportunity is in their own service bays or via a phone call with customers who didn't purchase.
Once customers have been driving their vehicle for a while, they may become more privy to what could go wrong -- and the cost to fix it. Dealerships should maintain an open line of communication with customers to remind them about the F&I products they offer. If they don't, someone else will.