Finance and Insurance departments adapt to offer more choice
Finance and insurance (F&I) departments are doing quite well. According to an Automotive News survey in February, managers were optimistic that 2011 would see even better returns than 2010. Sixty-three percent of dealers responding expected a moderate, even significant increase in profits this year. In a climate like that, don’t look for major change.
Dealers I spoke with concurred. At King Mazda, in Saint John, NB, Business Manager Jim Hanley started the year expecting modest growth and is up three per cent over the year-to-date figures. At Oakridge Ford in London, Ont. Financial Services Manager Noble Supersad anticipated an increase of about 8 per cent for the current year. So far, he says, “we have not only met this target but have seen an increase of about 11 per cent.”
The same survey also found that those who have tried a radical revamp, i.e. building the business office into the sales associate’s job — have found that results are mixed at best. And when Jim Hanley joined King Mazda last January, he quickly reverted to the traditional. Calling it the old school approach, Hanley specifically asked sales people not to pre-sell F&I product. “It just created resistance,” said Hanley, “I’m better qualified to sell these products.” And he urges sales staff to ensure that every customer is introduced to the business office.
Adopt the right approach
Speaking at the BMO’s first national web F&I conference recently, Raymond O’Kane, the National Director of Retail Dealer Finance at the Bank of Montreal advised listeners to use the right techniques to deal with customers.
“Approaching customers is an individual thing. I think you have to try and build rapport very quickly,” said Noble Supersad. “To do that, I use humour. You could call that a technique, I guess, but it’s a fast way to break down a barrier.”
At the same conference, keynote speaker George Angus referred to “social conducts,” saying, “if the right social conducts are employed at the right times, the customer may buy more than initially expected.”
Jenny Pellerin interpreted that for me. “When I first meet a guest, we put aside business for a minute. I want them to see that I’m human too, that I’m not just here to sell them something.” Pellerin’s responsibilities extend beyond her role as the Financial Services Consultant at Spinelli Lexus Pointe Claire in Quebec. “I’m way more than just a sales person. I co-ordinate the whole delivery process and always explain my role and the options we offer. I work hard to adapt to the guest I’m working with.”
Create the right mood
The physical environment of the finance centre creates the right atmosphere for approaching customers. A self confessed pink addict, Jenny Pellerin finds that her pink-themed décor humanizes her. “People like the pink thing; they get it, and think it’s a little bit funny. It’s an ice-breaker.” Pellerin stopped short of painting her office walls pink, but does mention her pink calculator and favourite pastel paintings that are predominantly pink.
Others strive to create a professional atmosphere that is distinct from the showroom environment. Noble Supersad described his office. “It’s tidy, uncluttered and doesn’t feel like a sales office. I don’t have any manuals in sight. I do have a couple of plaques for awards I’ve received, a picture of my family on the credenza and an artificial plant, because I would never remember to water a real one.”
Jim Hanley’s spacious, carpeted office is set up to make people comfortable, but for Hanley, another old school technique is to dress in business attire — shirt, tie and jacket — even on casual Fridays! Business dress enhances the professional atmosphere he wants to create.
New financing options
The F&I office constantly responds to evolving market realities. Paul Ladouceur, co-owner of Boulevard Dodge Chrysler in Montreal, Que. says balloon loans are an attractive option for some customers. Ladouceur likes the 36-month term with buy back ability which gets customers into the store sooner. For Ladouceur, it’s about balance. “We can’t work with 95 per cent finance, we need to get to a more balanced portfolio.” Currently they’re doing 90 per cent financing and 10 per cent balloon loans, but he’s aiming for 20 per cent.
With Chrysler Credit out of the picture, Paul Ladouceur has to work harder to get credit approval. “We used to deal with just one company, and had a relationship with them. Now I have to call four or five banks and I’m just a number to them.” As the workload has shifted, they’ve hired an administrative assistant to handle the mountain of paperwork produced by several sets of contracts and conditions.
Noble Supersad is seeing more customers wanting to pay cash, which usually means using a line of credit. “I discourage that,” said Supersad, “because it tends to come back to haunt them. It’s like a credit card; the onus is on the customer to make the payment, and it’s too easy just to pay the minimum. The car can depreciate faster than the line of credit is being paid off, and when they come to trade it in, they owe more than the car is worth.”
Guests at Spinelli Lexus Pointe Claire, where leasing is at 70 per cent, tend to be business people and self-employed people. One evolution is to work with these clients by email and text. Jenny Pellerin explained: “They know they can reach me any time, although as the only F.S.C. at the dealership, obviously I’m not in the office all the time.” She frequently sends documents by email for guests to read at home. At delivery time they return to the dealership and sign contracts then.
