One point of contact for sales and F&I taking hold
It is said that the only constant in the automotive industry is change, and the way customers are buying cars is no exception. Before the pandemic we talked about this change as if it was part of a distant future.
Inventory was aplenty, and customers were, for the most part, doing their shopping in-store. Then the pandemic taught customers a new way of buying everything, including cars.
Customers relying on salespeople to guide them through the process, and F&I managers to hold their approvals in their hands are becoming a thing of the past.
Customers are demanding more transparency, convenience and control over the car buying journey. In response, dealerships need to adapt and adopt new approaches, and part of that change includes introducing F&I products earlier in the process.
Traditionally the road to the sale includes customers choosing a vehicle and negotiating a price before being presented with F&I products by a business manager.
A study by J.D. Power found that dealerships that present F&I products earlier in the process saw a 24 per cent increase in gross profit per deal compared to those that stick to a more traditional model.
With the business office representing one of the largest profit centres in a dealership, the hesitancy to change what doesn’t seem broken is understandable.
Studies have shown, however, that not only does introducing F&I products earlier not negatively affect the dealership’s profitability but that stores adopting this model often see higher gross profit per deal.
In fact, a study by J.D. Power found that dealerships that present F&I products earlier in the process saw a 24 per cent increase in gross profit per deal compared to those that stick to a more traditional model.
Additionally, the two-stage sales process, involving both a sales person and a separate F&I manager is also becoming outdated.
In its place, we are seeing an emergence of the single point of contact sales process, where customers work with a single representative who guides them through the entire process from start to finish.
One of the biggest reasons for this shift towards a single point of contact is the changing needs of customers who are more informed than ever before and want to feel in control of their purchase. With the rise of online sales and the push from automotive manufacturers to adopt more customer-friendly processes, it’s clear that change is necessary
One of the biggest complaints customers have with the traditional sales model is the surprises that they face when they are turned over to the box. According to a study by Cox Automotive, 56 per cent of car buyers reported feeling pressured by the F&I process and 47 per cent said that the process took too long.
Furthermore 37 per cent of car buyers said that they felt that they have been presented with unexpected add-ons and 28 per cent reported feeling unhappy that the payment options presented were higher than they were initially told.
With a single point sales process customers can consider their options as part of the negotiating process instead of having to wait to see a business manager to find out how the warranty they want will impact their payment.
Of course, implementing a single point sales process isn’t without its challenges. Dealerships will need to invest in F&I training for their sales representatives who will have to be able to manage the various stages of the sale, right from qualifying the customer to building value in F&I products.
The good news is that there is no shortage of F&I providers to offer this training and support. In addition, dealerships can invest in new technologies coming to market that help to automate this process, many of which have built-in product-specific media designed to effectively communicate the options and build value for your customers.
In today’s market dealerships are all trying to stay ahead of the curve. As technology continues to transform the way cars are bought and sold no one can afford to be left behind.
As Lee Iacocca once said “The most successful businessman is the man who holds onto the old just as long as it is good, and grabs the new just as soon as it is better.”
Sources:
J.D. Power. (2020). “J.D. Power 2020 Canada Sales Satisfaction index (SSI) Study.” https://canada.jdpower.com/business/press-releases/2020-canada-sales-satisfaction-index-ssi-study
Cox Automotive. (2018). The car buyer journey study: F&I in the digital age. https://www.coxautoinc.com/wp-content/uploads/2018/02/2018-Cox-Automotive-Car-Buyer-Journey-report-2-16-18.pd
