Time for F&I to Join Rest of Automotive World

Think for a moment about how the typical car shopper goes about finding a vehicle in 2015. They see a sleek commercial from a manufacturer – maybe on television, but almost as likely as a lead-in to watching Netflix online.
Next, they hit a third-party or dealer web site, read reviews and compare features and pricing with similar models. Then, they figure out what their current trade-in is worth, check interest rates and calculate their monthly payment. They walk into the dealership well-educated and with confidence. And, more often than not, they will sign on the dotted line to buy or lease a new vehicle.

But, there is a key element missing from the online shopping experience, and it’s one that represents a significant opportunity for F&I departments. According to a recent study of 500 car shoppers by MakeMyDeal, 63 percent of customers would be more likely to purchase F&I products if they had the option to learn about them before finalizing their vehicle purchase.
It is time for the F&I department to join the rest of the automotive world and move more product and pricing information online.

A recent article by Gerry Gould from UDS, “Excel-erate the Experience” emphasized this clearly: “To deliver unparalleled customer service, we have to streamline our processes. That means the F&I team needs to take action by contacting customers as soon as possible… More importantly, they’ll be engaged throughout your more efficient process, and they’ll remember your store as the one that didn’t waste any of their time.”
What’s driving the need for online F&I?
It’s important to recognize what is driving the need for change. Customers today are used to having everything at their fingertips. Online shopping has reshaped every phase of the business world, from how we purchase music, shop for a house, watch television, and even how we search for our next vehicle.
The technological revolution has changed customer expectations for just about everything, including how they shop for F&I products. Consider these stats from the MakeMyDeal study:
• 83 percent of study participants said they are interested in learning about F&I products BEFORE entering the dealership.
• 71 percent indicated they would like to start that process online.
Most customers don’t want to stick around the dealership once they’ve made a purchase. According to MakeMyDeal, 54 percent of respondents said they simply wanted to sign for their car and get out of the dealership as quickly as possible. After the test drive and negotiations with the sales person, the customer is ready to take the keys and go. Spending a lengthy period of time going through a list of aftermarket insurance products isn’t how customers want to spend their time.

Opportunity lies in education.
Consumers lack basic F&I product knowledge and that’s a huge problem for dealerships. According to the MakeMyDeal research, 33 percent of respondents find the list of F&I products confusing. And, 46 percent of respondents who claimed to be familiar with Vehicle Service Contracts did not pick the correct definition in the survey.

Most consumers are not exposed to F&I products until they’ve already purchased the vehicle and negotiated a price. When they finally meet with the F&I Manager, it is with little product knowledge and even less desire to be there. Solving for these obstacles with an upgraded and enhanced digital experience will provide the solution.

Providing product and price information online will improve understanding prior to entering the dealership, and ultimately improve F&I closing rates.
Even the most skeptical customers can become more pre-disposed to making a purchase when they have been educated about products and prices up front. This is underscored by the MakeMyDeal research – 75 percent of respondents report being interested in learning from the dealership when they had a better understanding of F&I products. Educating consumers online – before they enter the dealership – is the key.

What needs to change?
One of the largest obstacles preventing the move of the F&I process online is internal. A significant majority of today’s F&I managers believe the current system is the best way to close sales and drive profits. It’s easy to understand why they feel this way. That’s how they’ve been trained, that’s how they’ve always done it and they have been successful. Change can be scary, and frankly, it’s never easy.

But, savvy F&I managers embrace an online sales strategy. At the Automotive News Retail Forum during NADA this year, Auto Nation CEO Mike Jackson talked about Auto Nation Express. This system includes full F&I functionality on the Auto Nation dealer website. Auto Nation will offer it for all its stores by year end. They also announced that they set a record at $1,515 F&I Revenue per sale as well. Would Auto Nation risk reducing their earnings substantially by offering online F&I?

Part of the solution for online migration also sits with F&I product providers themselves. Most marketing material produced by product providers includes brochures that F&I mangers use in the 10 x 10 F&I Office. The marketing material is not designed for digital presentations or customer engagement in the process. The overall F&I product provider industry needs to start providing better media and tools for dealers so that this information can be provided to the consumer online in the buying process.

Customers will drive education earlier and online.
Automotive retailers have shown they are smart, adaptable business people. The world has moved to an online shopping model and automotive retailing is no exception. F&I offices must adapt as well.

Customer feedback is clear. They want information about F&I products earlier and on their own terms. The customer always drives change in behavior, and the industry needs to shift more toward the digital space. It will be the single largest evolution in F&I in the last 20 years. But, it’s one that will lead to more satisfied customers and ultimately, higher profits for dealerships.