Right fit key to online F&I experience

As digital retailing becomes more prevalent for U.S. dealerships, so does the desire to develop a contactless finance-and-insurance customer experience.

The challenge for dealerships is to design a path for consumers that is simple, persuasive and transparent — where F&I is an important step customers can take without slowing down the process of buying a vehicle. Imitating the in-dealership experience too closely could add time and confusion to the digital process, retail experts say. Changing too much could create an inconsistent process, wherein a customer entering the dealership will find employees working to unwind the deal they put together online.

Most digital retailing platforms were designed to duplicate the in-store experience on the Web — with F&I at the end, according to Elliot Schor, associate vice president of sales operations at F&I company JM&A Group.

"The irony of that is that in our research, most digital customers are going online because they don't want the in-store experience," Schor said.

To simplify the F&I process, the industry has to simplify the car deal, said Scot Eisenfelder, CEO of APCO Holdings, which owns the EasyCare, GWC Warranty and MemberCare brands. But creating a compliant, user-friendly version of a complicated process that takes hours in-person is no small task.

"We're trying to pave the proverbial cow path — to digitize a process and a set of procedures that were never designed for a digital world," he said.

Understanding how F&I fits online begins with how the deals are approached in-store.

Digital retailing platform Roadster says its dealership customers employ one of three methods of F&I product presentation: a traditional process that separates F&I and vehicle sales, a single sales team that also sells F&I products and a hybrid approach where the vehicle salesperson introduces F&I to the customer and an F&I manager finalizes the sale and prepares documents. A hybrid approach is what the platform recommends and translates best to an online environment, said Roadster COO Rudi Thun.

"That's where we've seen the most success in bridging those two different worlds from where we used to be to where this is all going," he said.

Especially for sales expected to finish in the dealership, placing F&I product information at the top of the funnel has proved successful. Michelle Denogean, Roadster's chief marketing officer, said priming customers for an F&I sales pitch in-store or on a video platform is best when customers know what to expect.

"They understand what's available," she said. "They don't feel like at the very end of the process you're now adding a bunch of cost to the deal."

Phil Battista, CEO of F&I software platform Darwin Automotive, said the system provides personalized recommendations for consumers after asking some questions. After producing a monthly payment option, the system offers three choices of protection. Customers can learn more with videos and third-party data from companies such as AAA and the National Insurance Crime Bureau.

"We mirror the experience in dealerships ... only we simplify that for the online consumer," Battista said. "In our world, you have the ability to say, 'I want it,' be able to actually buy that protection product, electronically pay for it and electronically sign for it online ... all absent a human being."

Some dealerships allow the functionality of full self-selection in their digital retailing process, knowing few people use it.

The most profitable F&I sales on Darwin's site are to customers who don't interact with his dealerships, said Prime Automotive Group CEO Todd Skelton. The Massachusetts-based group, No. 18 on Automotive News' list of the top 150 dealership groups in the U.S. based on new-vehicle sales in 2020, is testing Darwin at four dealerships.

Still, the number of customers who elect a full contactless F&I digital process is small. For example, Skelton said in the past two months only three customers have gone "from A to Z online" at one of his Mercedes-Benz dealerships.

"We just can't get enough people down that funnel all the way," he said.

Placing F&I later in the process and prioritizing vehicle selection works for his store, said Mark Alderman, general manager of Alderman's Chevrolet-Buick-GMC in Rutland, Vt. The point of having a website, he said, is to help consumers make a selection, not to present a barrage of options. "They need someone to narrow the choices," he said.

All of the dealership's sales customers take delivery in the store and go through a traditional F&I sales presentation from an F&I manager. The group uses Darwin's software to facilitate and expedite the process, he said, but keeps some of the tool's self-desking capabilities turned off.

"The benefit of these products will be, for most people, years down the road," Alderman said. "I think that needs a human touch."

For other dealerships, smoothing F&I tensions in-store starts with allowing customers to do even more online.

Earl Stewart Toyota in North Palm Beach, Fla., is in the midst of an F&I overhaul. The store recently signed onto JM&A's virtual F&I sales program, wherein JM&A employees sell the products directly to customers. The store's F&I director and managers are in training for the program.

The right F&I product presentation, according to Dealer Principal Earl Stewart, is "simplified and totally transparent."

It's hard to sacrifice F&I profits, which dealerships increasingly relied upon in recent years amid shrinking margins on new-vehicle sales. That puts pressure on the F&I office, and in turn, on the customers who enter it.

"Consumers that are sophisticated enough to know they can shop online, shopping the price of the car, they don't shop for the F&I products online," Stewart said.

Combating that imbalance takes full digital transparency, he said. Rather than narrow the list of F&I products online, Stewart advocates for a full shopping experience.

"Put all of them online," he said. "You don't know what the customer really truly wants. Once he narrows it down, then they can come in."

A one-touch F&I and sales process is something Stewart has considered for a long time. JM&A's program is a step in that direction, but the dealership is still navigating how F&I is incorporated into the process.

JM&A will sell products from Stewart's own warranty company. Stewart said he can send customers directly to JM&A employees for the presentation. "It takes a different person to do finance-and-insurance sales and car sales," he said. "It would be impractical, asking an F&I person to sell the car."

While much progress has been made incorporating F&I educational and purchase options online, space for a finance consultant is still necessary. Prime Automotive offered to deliver vehicles to customers' homes during the pandemic, though many refused, Skelton said. Buyers wanted to go into the dealerships to speak with consultants, and many of their questions were finance-related.

"We know that most people are not any time soon going to go through the entire process," Skelton said. "We're probably still better pitching F&I on a one-on-one basis than the computer would be. But from what we've seen, this is what we've got."