A whopping 99.6 percent of consumers are dissatisfied with the current car-buying process. It’s long, complex and painstaking, and they often fear dealerships are taking advantage of them. Plus, there’s a lot of waiting involved — today’s consumers hate waiting. We live in a world where instant gratification is the norm, where consumers can buy a product online and have it delivered in less than an hour. And yet, the average buyer spends more than three hours at the dealership purchasing a car.
After spending an hour negotiating with your sales staff and 45 minutes getting their trade-in valued, it’s no wonder buyers are tired and defensive. But, what’s next? The dreaded F&I process. Another hour as your F&I staff diligently describes all the available upgrades and service packages that may — or may not — interest the buyer. Throughout the entire process, the buyer may at times feel pressured, frustrated or confused.
Why Dealerships Fail During the F&I Process
It is during the F&I process that many dealerships fail to put the buyer at ease and create a trusted environment. This lack of trust is the No. 1 reason dealers aren’t maximizing F&I profit. Buyers want a stress-free, non-judgmental atmosphere to review the options at their own pace. But most F&I processes are far from this ideal. A car buyer in the U.K. described the process this way:
“They tried to sell me so many other financial products — I’m an accountant, but even I got confused. I would have felt better sitting at home and reading all the details because it was a lot to take in.”
When buyers feel confused, pressured or defensive, they are less likely to purchase F&I upgrades. They are more likely to add F&I upgrades if they are able to review the options at their own pace in a comfortable environment.
Even if your F&I manager does an incredible job explaining GAP insurance, the customer is still fearful that they are being taken advantage of, despite the fact that it all seems to make sense; in other words, customers are not likely to buy, simply because of lack of trust. This is why studies show a customer who is exposed to F&I products before entering the F&I office is more likely to purchase F&I products.
Customers want to feel like they’re in control of the buying process. They want the entire process to be faster, but they also want time to ask questions and don’t want to feel rushed. At first, this may seem contradictory. How can you make the process at the dealership faster while simultaneously giving buyers more time to review F&I options and paperwork?
How Your Dealership Can Build Trust and Maximize F&I Profit
Luckily, there’s an easy answer to this question. It comes from outside the automotive industry. In real estate, companies are making it possible to complete more of the home-buying process online. This satisfies customers’ desire for an easier, more streamlined process. From applying for a mortgage, to reviewing and signing documents online, customers can now complete much of the home-buying process online.
Dealerships can learn from this example by offering online checkout. Customers already spend hours researching vehicles online. Online checkout allows buyers to walk through the buying process online, including choosing accessories, estimating their trade-in value and reviewing F&I upgrades. All this is done in the comfort of their own home, at their own pace.
In this comfortable, pressure-free environment, buyers feel more in control of the process, making them more likely to add F&I upgrades than they would otherwise decline at the dealership. In fact, many dealerships find that online orders earn $500 to $700 more F&I profit per vehicle, compared to their previous averages. A large reason for this is the customers’ ability to reference third parties online that help them understand whether GAP insurance, extended service contracts or prepaid maintenance make sense for their purchase. These third-party resources may be giving the same exact explanations your F&I team will give, but it is delivered without pressure and will be viewed as more trustworthy from the customer’s perspective.
Online checkout saves hours at the dealership, for buyers and staff alike. CRM and financing software is pre-filled, reducing time spent on data entry. Dealerships can run credit checks ahead of time. They can also see if the buyer may have missed an upgrade that may be relevant to them and recommend additional upgrades when the customer picks up their car.
Customer satisfaction is at its highest within the first 90 minutes at the dealership. With online checkout, buyers are able pick up their car in less than 90 minutes, when satisfaction is the highest, making them more likely to become loyal customers and to refer others. So, it makes sense that dealers are reporting that they achieve higher CSI when the customer utilizes online checkout.
The Bottom Line
Maximize F&I profits by offering online checkout and letting buyers upsell themselves. Deliver a streamlined, modern car-buying experience, and increase customer satisfaction and loyalty. All in all, online checkout is better for the bottom line.