Whenever a new product is introduced to an independent agent, they ask themselves, “Should I take this product to my dealers?” An example of such a decision occurred when the “Combination Package” was introduced by several ancillary product companies recently. The combination package is a mixture of Tire and Wheel, Dent and Ding, Windshield Repair, and Key Fob Replacement. Sometimes these new product offerings become a staple in the F&I office, like the Tire and Wheel product has; other times they just fade away only to be replaced by the next new product.
An agency may take the new opportunity to their dealer for a variety of reasons:
- The dealer expects them to bring exciting new profit ideas.
- To diversify product/income opportunities for the dealership & agency.
An agents decision to promote the new product is really a decision to “break the paradigm” of the status quo and change the way the agency does business. This can sometimes be subtle but many times it requires a significant shift in agency practices. Introducing a new product may dilute existing product offerings or cause the agency bad will with the dealer if it isn’t successful or the company doesn’t follow through with such promises as paying claims efficiently.
Breaking the paradigm is necessary for the proactive independent agent if they want to lead people in a new direction but is something few can do because as much as we say we want change, it is natural to resist it.
In addition to breaking the paradigm by bringing a new product to a dealer, an agent may also diversify into another related business. The skills that an independent agent has in consulting the dealership with their F&I Department for Automotive dealers can be effectively transferred to the F&I Department for the Power Sports dealership but his/her approach needs to be different.
How does an Independent Agent break the paradigm and diversify into PowerSports?
Just as there are many similarities between Automobile and Powersports dealerships, there are also many differences. Their similarities provide for the appearance that an independent agent can easily transition from automobile F&I into Powersports F&I. This appearance has led several agents to try their hand at Powersports, all to often returning to their comfort zone because they were unsuccessful. If you take the exact same approach that you do in Automotive and try to duplicate it in Powersports, you’re almost certain to fail. To provide you success with Powersports dealers I suggest you take the “Best Practices” that have made you successful in the Automotive sector and tailor them to the Powersports sector.
I have heard many people in the both industries say the Powersport’s industry is 10 years behind the automotive industry when it comes to Sales and F&I but that’s not really the case. They are just very different industries. One difference is that the PowerSports industry is filled with enthusiasts who are both selling and purchasing the product. Another difference is it is more difficult to get the customer financed because there are less lending options available. Powersports customers are also more likely to pay cash for their purchase.
In the end, both industries need a front-end sales and an F&I sales process which results in providing the customer various options and products to choose from.
Which dealers should you focus on?
Under most circumstances, when calling on an automotive dealer, you know if you sign the business you’re going to get paid. This does not necessarily hold true when you sign a Powersports dealer. When calling on Powersports dealerships you must qualify the dealer just to evaluate their income potential. These are the dealers that have the potential to be the most profitable accounts. They are low maintenance and often aren’t being serviced by their existing agents. These dealers most likely aren’t realizing their true income potential.
- Focus on Medium to Large Dealers: Medium to large dealerships typically sell more units and often employ an F&I Manager which usually translates into more product sales. How do you know which dealers these are? You could scan the dealership to see how many units are on the lot and in the showroom but this may not reveal the entire story. Powerports Business Magazine is a great resource for this kind of information. They produce a market data book annually that lists most dealerships annual revenue and publishes whether or not they have an F&I Department.
- Focus on Dealers that have an F&I Manager: We have learned that automotive dealerships having a dedicated F&I Department translate to the highest profitability. Powersports dealers aren’t any different. If an F&I Manager is employed, it is usually worth your while to pursue the account. Unfortunately, many powersports dealers haven’t made the transition to a dedicated F&I Manager. So, the only way you’ll know is to go in and talk to the people who work there. You may just find that dealer who isn’t reaching their true potential.
- Focus on Dealers that will install process tools like Menu and Reporting software which will increase the chances they sell F&I products. If a dealer is willing to install an F&I selling system that promotes product sales, you can be moderately successful even if only the salesforce is selling the F&I products. I suggest you offer a turnkey system to the dealership that includes an electronic menu system to ensure products are offered 100% of the time and a reporting system to hold them accountable to the set goals and desired results. If the dealer isn’t willing to install a system to ensure the dealerships success, then they most likely won’t hold employees accountable for presenting the necessary products to ensure dealer and agency profitability.
What is your unique sales proposition?Brand your agency as one that specializes in Powersports F&I consulting
You shouldn’t just act like you’re in the Powersports business, you should look like it. Start by having a Powersports specific area at your website. Describe your agency as one that services motorcycle dealers with:
- A Mission Statement that is specific as to what you do.
- An Intuitive Navigation System that makes it very easy to get there by simply pointing and clicking to where you want to go.
- A great visual experience coming into the Powersports area of your website.
- A description of your services which differentiate you from your competitors.
- Logins to your Technology tools (i.e. Menu, Reporting, Desking, On -Line Training).
You need to create a business card with a logo and headline specific for Powersports dealers. When you present or leave your card behind, you will have an edge if it spells Power sports. You should be versed in the industry just as you are in automotive. That means keeping up on the latest Powersports news, especially as it relates to F&I. For example, the lenders in this niche are different than in Automotive. You should know who those lenders are as well as their lending practices.Align your agency with the right vendors
The right vendor may or may not be the same as those you use for your Automotive Aftermarket products. Be sure and chose a company that understands the Powersports business, not just someone offering a product line.Position yourself as a reinsurance expert
Many agents have become very successful in the automotive niche by positioning themselves as the reinsurance expert alternative. You can use this same strategy for Powersports. You’ll find that many times the dealer has never been given an option to start a reinsurance position with their existing provider. Providing reinsurance to the dealer not only gives them an excellent profit opportunity, it allows you a potentially long lasting partnership with the dealer.Use Technology to enhance your offering
In order to set yourself and the dealership up for success, you need to insist from the start which policies and procedures will get you there. One such policy is to require that the F&I Department use an electronic menu and report as part of your unique sales proposition. It will separate you from your competitors and install the tools necessary for the dealer to be profitable. The electronic menu should be designed specifically for Powersports. It should not be a menu that was designed for the automotive F&I department. A Menu designed for Powersports means it has the flexibility to handle things like promotional options, fewer package options, and when necessary, breaking out accessories and applying taxes, or capping payments when the lender restricts the payment or amount financed. I suggest you offer it for free to the dealer as long as they achieve a minimum level of production. You can always prorate the fee to them based upon them achieving lower levels of production. This way you don’t end up losing money or not making a reasonable profit with the account.Sell them on using a Menu
Automotive agents who have experienced the evolution of menu selling know that it hasn’t just served as a compliance tool, it has enhanced F&I income since its inception. Most auto dealers see the value of using an electronic menu and are probably already using one. This is not the case with the Powersport’s dealer. Only about 10-20% of Powersports dealers use an electronic menu much like it was in Automotive five years ago. This makes your first order of business to sell the dealer on why an electronic menu will make them profitable. The use of a menu should be a requirement to do business with you, and part of your unique sales proposition.
Should you break the paradigm?
I am not suggesting that all agents should “break the paradigm” and diversify into the Powersports area, anymore than every new product that comes out should be placed in your briefcase. Simply signing a few dealers and transferring the same message that you use in Automotive is likely to cost you time and money.
What I am suggesting is you recognize the differences between the two businesses and focus your skills on their similarities. Instead of visiting the dealership each week to train the F&I staff, use online training and monthly meetings to leverage your position with the dealer.