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Customers Build Own Cases for Buying F&I Products

Customers Build Own Cases for Buying F&I Products

Dealership car buyers take a digital survey, and predictive analysis creates an aftermarket product menu just for them.

Publicly owned dealership groups can provide useful F&I performance comparisons for other dealerships.

Recent per-vehicle-retailed F&I-revenue averages for the six public groups ranged from $1,127 to $1,649.

Sometimes, it’s a little more training, smarter hiring and better utilization of technology that can explain why some dealerships consistently outperform others in F&I. Those enterprises also likely use reporting tools to more deeply examine F&I results, analyzing the data to discover where lost opportunities are eroding PVR and product penetration.

NADA reports members’ service-contract penetration is about 40% of new-car sales. How is your dealership doing against that metric?

Three reasons can explain lower PVR and penetration:

  • No commitment or training to promote aftersale products, especially vehicle service contracts and GAP insurance.
  • F&I processes that deprioritize or neglect menu use. Last year, our company pulled data from 270 Fiat Chrysler dealers using leading e-menu software. Dealers using a digital e-menu system were realizing $538 more new-car PVR and 12% and 10% lifts in VSC and GAP penetration, respectively.
  • Poor ability to draw out important personal information from customers about their driving habits, concerns, and attitudes. By gaining this insight, F&I managers can better identify risk and behavior triggers that should lead to a more appropriate and focused product presentation.

These challenges are solvable. Dealers who don’t take advantage of those solutions bring into question their resolve for improving their F&I profitability. If they were concerned, they’d soon realize an increase in F&I activity and results.

Perhaps if these dealers could know their customers’ propensity for buying aftermarket products – before they step into the F&I office – they’d be more inclined to talk enthusiastically and confidently about them to every customer.

I recommend embracing a behavior/risk-based identification strategy as an essential part of more productive aftermarket sales.

One way to identify consumer-purchase risk is through a survey. Such a survey, controlled on a laptop or touchscreen device by the consumer, asks questions to which answers are analyzed by predictive-decisioning technology.

In F&I, consumers engage with decisioning tools that analyze deal factors – demographics, vehicle payment, credit rating, risk profiles and other behaviors.

It helps customers make more intelligent aftermarket purchase decisions. These points include vehicle data, deal information, driving habits, vehicle usage and expected ownership duration.

It matches individual lifestyle needs with real-world risks. A decisioning tool guides consumers towards tailored, yet unbiased options they might consider to protect their vehicle investment and budget.

The system builds a menu of products that consumer survey input has identified as having the most value to individuals.

Drivers today increasingly want to enjoy worry-free vehicle ownership. F&I decisioning tools help them connect this desire to the value in products the dealership sells.

Bankrate commissioned Princeton Survey Research Associates International to conduct a survey on consumer budgeting and unexpected expenses. Of 1,000 people participating, 37% say they would pay for an unexpected expense with savings.

A survey by the National Foundation for Credit Counseling found that 64% of Americans would utilize a source other than their savings account to satisfy a $1,000 unplanned expense.

That a customer sitting in the F&I office might fit one or both of these budget-expense categories may not immediately be evident to you.

However, that insight is available through decisioning technology as part of a more engaging customer experience. Consumer answers to various risk-profile questions would clue them into how the products dealers offer can help them avoid the risk to their wallet created by an unexpected vehicle-repair bill.

Survey strategies like this help F&I managers address the concerns of the modern consumer who is skeptical of the car-buying process. This puts them in control, and people buy more when they have that control.

Customers build their own case to purchase coverage. This transforms the tone of the conversation from customers feeling like they are “being sold” to a personal pursuit of the best solutions to achieve a positive ownership experience.

This is a big step in serving modern consumers.  

Jim Maxim, Jr. is president of MaximTrak Technologies. Reach him at [email protected].

TAGS: Dealers
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