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5 Tips to Boost F&I Profit Margins

5 Tips to Boost F&I Profit Margins

Vince DeMare

It’s no secret that satisfied customers spend more than dissatisfied customers. When it comes to buying a car, arguably the biggest area of frustration—and therefore the biggest opportunity to increase customer satisfaction—is in the F&I process.

From long wait times to confusing menu presentations and overzealous sales efforts, consumers often rate this as their least favorite part of the car-buying process. Updating your dealership’s processes and technology can greatly improve the customer experience. Here are five F&I tips to increase satisfaction and revenue.

1) Reduce Customer Wait Times

Your customer has just selected a new car. They’re excited and can’t wait to drive it off the lot. Then they’re escorted to the F&I manager’s office and are told to wait. The longer they wait, the more frustrated they get and the less amenable they are to sitting through what they perceive as a sales presentation.

Creating a process to reduce this wait time is critical to improving overall customer satisfaction, as well as paving the way to bigger profits. Ideally, the customer wait time should be 15 minutes or less.

To help expedite this process, incorporate mobile tablets into your F&I process. When the F&I manager is alerted to a new deal, they hand the customer a mobile tablet that walks them through a variety of menu presentations. While they’re waiting, the customer answers questions about their driving habits and history, and how they plan to use the car. Not only does this make the time go by quicker, it greatly reduces the time involved in the next step: the menu presentation.

2) Customize Menu Presentations

Remember the 300 percent rule? Offer 100 percent of your products to 100 percent of your customers 100 percent of the time. This is no longer a viable strategy if your focus is on customer satisfaction. These days, trying to sell everything puts customers into a defensive mode and breeds distrust. Menu presentations should be customized to each customer’s needs.

Similar to the car sales process, start by asking the customer a series of questions. Time goes by faster when you’re talking about yourself. To create trust and the perception that you’re not trying to sell them everything, tell the customer all the products that you can immediately eliminate based on their driving habits.

Then, reiterate what they’ve already told you. “Based on the fact that you’ve lost your keys before, you may want to consider our key replacement service. These days a new key can cost $300, so even if you use it just one time, it will more than pay for itself.”

If the customer has answered questions during a mobile tablet presentation, their preferences will already be in the system. This saves even more of the customer’s valuable time. Instead of selling, now you’re simply re-stating their preferences and giving them pricing information on the products and services they need.

3) Educate Customers

Selling doesn’t seem like selling when you’re educating. But before you can educate your customer, you must educate yourself. Know as much about your products as possible so you can explain benefits and costs. Put yourself in an advisor role instead of a sales role to inspire confidence.

This is another area where mobile tablets can help. The ability to show educational videos that highlight product benefits greatly increases customer engagement. The videos are linked to product menus and many vendors provide this educational video content at no additional cost to the dealership.

4) Eliminate Paperwork

Also known as eContracting, most F&I menus now offer the ability to file all deals electronically. For dealers, the primary benefit is faster funding, but eContracting also saves time and reduces contract errors. Many customers appreciate the fact that there is no paperwork and they perceive the dealership as being more technically savvy.

5) Follow Up on Lost Sales

Some customers will develop a case of sticker shock during the purchasing process. By the time they arrive at the F&I office they don’t want to spend another dime. That’s understandable. In fact, nearly half of all customers leave without purchasing anything.

When a customer declines a product, add them to a follow-up list. If your F&I menu is integrated with your DMS, you can easily run a sales report on declined product sales. Follow up with your customers several times over a period of six months. By that time, the customer will be accustomed to their new monthly payment and might not be averse to adding to it. We have dealership customers that have done this and netted a 10-percent return rate on lost sales, resulting in thousands of dollars of recovered revenue per month.

Focusing on your customers’ needs is the surest way to increase satisfaction and boost F&I revenue. Consider updating processes and learning new technology solutions that can help.

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