Being face-to-face when not in the same place

After his suburban Philadelphia showroom was forced to close during the pandemic, David Kelleher’s dealership team needed to figure out a new way to handle F&I. And fast.

Providing customers opportunities for online browsing, shopping, prequalification and even a digital sale is one thing, he says. F&I is something else. 

“As an industry, we weren’t ready to address the situation when the pandemic hit,” says Kelleher, president of David Auto Group in Glen Mills, Pa. “We were managing from a place where there is no guidebook. We had to learn how to deliver F&I remotely.

“In the retail buying experience today, a customer can get most of the way through the process of buying a car without speaking to anyone at all. But when you think about what the F&I presentation is, it’s really a direct consultation between an F&I professional and the client. As an industry, we don’t yet have something built to deliver that kind of F&I experience remotely.” 

At David Dodge-Chrysler-Jeep-Ram, Kelleher says, his team has used videoconferencing and other digital tools to formulate a solution “to re-create that personalized experience. We’ve been making it up as we go along.”

Mark Manzo, Ally’s president of insurance, praises that sort of resilience. 

“Dealers all have processes that are successful for them,” Manzo says. “What the pandemic did was to kill that traditional F&I process for many dealers.”

Like Kelleher, dealers have learned and adapted, Manzo says. “What we’ve seen is what we always see,” he says. “When dealers are forced into a corner, they get creative.” 

Figuring out solutions has been a priority. With F&I representing a growing portion of profits for so many dealers, no one wants to miss an opportunity with a purchaser. According to NADA Data 2019, F&I profits increased to 3% of new-vehicle sales and 4% of used-vehicle sales in 2019. 

And many industry experts say room to grow remains. Consider that according to NADA, only about half of customers buy a service contract when purchasing their vehicle. “The average dealer still has upside for better F&I profits,” says Jeremy Alicandri, a former dealer and independent dealership consultant. He points to the F&I gains posted by the large, publicly held dealership groups.

So how can dealers protect their F&I profits, maximize potential sales and fine-tune their F&I operations even in this challenging environment? A key component is making sure that even with remote sales, there is a one-on-one F&I consultation—even if it’s on an audio or video call.

Alicandri works with one dealership that sends remote customers a link to a questionnaire on a proprietary F&I platform. Once the customer completes the assessment, they’re shown suggested F&I products. 

But Alicandri says, “We have found that when customers simply view the recommended F&I products and decide to purchase without an F&I manager’s assistance, the conversion rate isn’t as high as when they view and discuss them with the manager.” 

Although Kelleher agrees that dealers and lenders will work together to create a more seamless remote F&I process, Manzo says it’s also important to learn how to use people skills in new ways. 

“The best practices do not necessarily involve technology but are simply applying existing skill sets to build the rapport with customers in new ways: over videoconferencing or just on the phone,” he says. 

“What a lot of dealers have learned is that they don’t need fancy digital solutions. The existing technology—combined with basic communications skills, are good enough.”

Besides providing basic F&I and compliance training, Manzo says, today dealers must make sure F&I employees know how to use those available technologies and how to complete and deliver content such as video walkarounds. This year Ally made all its F&I training available to dealers online. 

“Our focus this year has been to work with stores and help them be better at what they do,” Manzo says. “That means helping them refine or create better processes with better-trained people—and also trying new things that might work for them.”

Transparency continues to be increasingly important. Dealers historically have been reluctant to post F&I menus and prices online alongside vehicle inventories and prices. But Manzo says more transparency can be both a good and a profitable practice. 

“Traditionally, F&I is brought in at the end of the sales process,” he says. “Yes, when working with a buyer, you want to focus on the vehicle upfront. But it’s OK to make F&I products available to review upfront, too.

“The timing is really important—you can’t introduce it too soon and overwhelm the customer. But we are finding that for dealers who make the information available for review in advance, consumers have a higher take rate.”

For dealer Kelleher, the key to F&I success, whether customers and transactions are in person or off-site, is “having a process and sticking to it all the time.” 

Alicandri agrees. “Having a consistent process for prequalifying the customer and using that to find out what that customer needs is so important,” he says. “Presenting a menu of what’s applicable to them removes a lot of friction in the process. It’s not rocket science.”

Ally’s Manzo, too, says the best practice in F&I today is focusing on the customer as never before. 

“The No. 1 thing is to tailor the offering to the customer, as opposed to selling what you want to sell,” he says. “That means understanding the customer’s needs—the number of miles they drive, their trade-in, their monthly budget—so that when it comes to F&I products, you can make a more specific recommendation that is tailored to their usage. 

“You only have so much time working with a customer on the internet. You need to pinpoint the right products. And the days of, ‘Hey, I need you to sign this if you turn it down’ are over.

“The goal is to offer to solve the customer’s needs. That is where the market is moving today.”