How to Raise Your Profits & Penetrations in Finance

How to Raise Your Profits & Penetrations in Finance

When it comes to selling in F&I, you must separate the sales process from the finance process.

As I sit and read about all the new products in the industry today designed to help dealers sell more cars, a few things dawn on me. Digital retailing is now the new buzzword in the industry and it’s becoming clear that these digital retailing companies are trying to take the digital retailing experience to the showroom. While that may work with some aspects of the business, when it comes to the financing aspect, this is a recipe for reduced penetrations and profits in F&I. 

Over the years I’ve tried everything possible when running a store to increase finance penetrations and profits in F&I. The number one way to increase penetrations and profits based on my decades of experience in a store is you must separate the sales process from the finance process. This degree of separation is the key to having success in the business office. 

I was at the store recently, where I was talking to the general manager about finance. He wanted to increase his finance profits and penetrations and, in order to do that, he was using a tool (that I won’t mention here) that includes financing options with products and having the salespeople pitch them. I’ve tried that and it doesn’t work! Now I’m sure there are a few outliers who are reading this and saying, “We’re very successful doing it that way.” I can tell you with absolute certainty and experience after training thousands of people to sell cars that less than 10% of the salespeople (especially with the new generation of salespeople) have what it takes to be successful with this process.

Let me dive a little deeper and explain why I make this statement. To be successful in any customer-facing environment, you must first understand the psychology of people. Salespeople care about one thing: selling a car. When you spiff them 50 bucks if their customer buys a warranty, that’s not enough incentive for them to truly understand what they’re pitching and even care if they sell it or not. They care more about selling the car and getting the unit out more than they do selling any F&I products. 

Now let’s look at this from the customer perspective. If I’m a customer and you present me with a service contract or gap or any other ancillary products and I tell you no and then when I go to the business office I’m getting hit with it again, I have a propensity to say I already told the guy/girl out there that I don’t want that. It’s because we haven’t separated the sales process from the finance process. 

In all my years trying to do multiple things to be transparent and upfront (which is how I believe in doing business), I have learned several things. 

First, you need to make sure you have someone who is willing to listen. If the customer has already been presented these options before he even gets to the business office and then I bring it up again, the likelihood of him being willing to listen is very slim.

Second, a solid F&I process. We must set ourselves up to be the authority about financing and everything related to it. In order to establish ourselves as the authority, most people try to talk and build rapport during the process. The rapport and that mindset is built through a solid process.

Third is a great presentation. To do F&I effectively, you have to master your craft. Repetition is the mother of skill! How much training are you giving these salespeople to prepare them to present things that are not financially beneficial to them? The presentation of products in the process of doing finance is crucial for the success of this department. When a trained professional is presenting things, the customers are asked to make a decision on the spot and be presented with these options when finalizing the paperwork — that is your best time and opportunity to be successful with a trained professional. 

In closing, taking advice from a tech person on what the most effective way to sell something is like going to a dentist asking them to fix your broken arm. While they may understand in theory how to set a bone, it is not their area of expertise. When trying to make a major shift in process to get better results, look for someone who has sat in the seat, done the job and understands what it takes to get the results you’re looking for.

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