In most dealerships, finance and insurance remains a department that is forced to rely upon the sales department for its business.
When vehicle sales are healthy, so is F&I income, unfortunately the opposite is often true when sales slow, as they have in some dealerships recently. But there are several F&I actions that can generate incremental business, not just for the F&I department but for the entire dealership.
The F&I department touches so many dealership departments. With some focus and marketing support, overlooked or neglected business can be found. It might make sense to include the dealership's advertising agency when crafting and polishing these messages.
Here are some tips on boosting F&I profits in different ways:
- Check with your primary banks and finance companies to see if they can provide lists of maturing customers or customers that might have some equity. With the summer of manufacturer discounts, customers that actually have equity might be as rare as a Hollywood party without Paris Hilton. But those equity holders are out there and should be marketed to often and immediately. Companies can analyze the dealership database to create specific marketing lists based upon examinations of customer loan situations.
- Dealerships in general fail to work lease maturities. These clients will be in the market, guaranteed, and many have begun thinking about their next purchase long before most dealerships begin to contact them, if they contact them at all. Initiate contact up to a year in advance, and six months prior to the maturity date. F&I is the ideal initial point of contact with these customers. A business development caller or a salesperson often lack the financial voice of authority or expertise to assist and lead the customer back to the dealership.
- In a previous column, I discussed companies that directly market to dealership customers that didn't purchase a service contract at time of purchase. Most firms do this marketing at little or no charge to the dealership, and the results often can generate solid returns. If your dealership is uncomfortable with such outsourcing, consider increasing internal efforts in chasing this business, with F&I serving as the point of contact and follow-up. Targeting customers approaching the end of a factory warranty is an ideal starting point. Regrettably, most dealerships do nothing after the initial vehicle sale, but unwittingly allow outside companies, banks or other service-contract companies to sell to their client base. Studies show increased service-contract sales boost service-department retention and revenue.
- Increasing F&I involvement in the parts and accessory business can lead to a per-vehicle-retailed bump in sales. Before entering the F&I office, a customer ideally gets a parts and accessory walk-through to increase their interest in products that can be included in their payment plan. Some F&I managers fret that such walk-throughs limit their selling of core products. However, customers accessorizing their vehicle already have deepened their emotional attachment to their new vehicles, and should be even more open to purchase traditional F&I products that protect their new vehicles.
It can be difficult to initiate business beyond the traditional walk-in traffic or people responding to advertising. The auto business is often one of customers reacting to what is directly in front of them.
In spite of or because of that, F&I managers should consider examining the aforementioned ideas to generate much-needed and always-needed profits.
Bryan Dorfler is a finance & insurance consultant. He's at [email protected]