The No. 1 Reason Why Dealerships Fail to Maximize F&I Profits - AutoSuccessOnline

The No. 1 Reason Why Dealerships Fail to Maximize F&I Profits

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?

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 product.

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 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, increasing customer satisfaction and loyalty. All in all, online checkout is better for the bottom line.

You May Also Like

Live Chat Revs Up Automotive Marketing in 2024

Discover strategic shifts, like prioritizing digital marketing with live chat, to engage customers effectively and drive sales.

Live Chat Revs Up Automotive Marketing in 2024

For many auto dealers, 2024 is shaping up to be a challenging year. According to Cox Automotive, the new vehicle inventory supply is near its highest point since June 2020. At the same time, dealers are seeing triple-digit increases in floor plan expenses, mainly due to increased interest rates, according to Auto Finance News.

The Myths and Truths Behind Artificial Intelligence

Learn how AI enhances efficiency and productivity in business settings, creates new job opportunities and promotes ethical practices.

Navigating Title Clerk Transitions

Discover solutions for dealership title clerk shortages to avoid backlogs and ensure smooth vehicle sales and registration processes.

Navigating Title Clerk Transitions
The Jury Is Out: How Many Dealers Are Utilizing AI?

Discover insights from industry surveys revealing the shift away from gut instinct to data-driven decisions.

Accelerating Auto Dealership Efficiency: 7 VoIP Trends for 2024

With these advancements, there’s a prime opportunity for dealers to harness technology for heightened productivity and efficiency.

Other Posts

How to Choose a Digital Marketing Agency: 7 Signs of a Bad Agency

Here’s a complete guide to identifying the red flags that signal a digital marketing agency might not be the right fit for your business.

Digital marketing agency
Paving the Way for Self-Discipline

Self-discipline is like a muscle, where the more we use it, the stronger it becomes. By being smart about how we use it, we can develop this key attribute and get the best return for our energy.

Paving the Way for Self-Discipline
How Auto Retailers Are Leveraging Advanced Connected Vehicle Data for Optimized Lot Management Solutions

Advanced technologies based on intuitive real-time data seamlessly integrate with the software platforms to receive real-time connected vehicle data from equipped and eligible vehicles to simplify lot management for accurate and remote inventory management, that leads to a contactless and seamless experience for fleet and auto retailers.

How Auto Retailers Are Leveraging Advanced Connected Vehicle Data for Optimized Lot Management Solutions
Back to the Future: Hybrids Offer Alternative to Electric Vehicles

A collaborative effort could not only revitalize consumer interest in hybrids but also position auto dealers as advocates for a greener future.

Hybrids Offer Alternative to Electric Vehicles