Three Keys to an Agent’s Menu Selection
Three Keys to an Agent’s Menu Selection

I recently read a survey published in a leading weekly industry publication that discussed an issue well worth taking note of. The publication surveyed over 200 dealerships asking for their opinion of how and why a Menu should be incorporated in their F&I selling system. Of those surveyed, approximately 85% said using a menu was important to consistently sell F&I products. Though all of the respondents agreed that a menu should be part of the sales process, they didn’t agree on the type of sales system or methods that should be utilized.

So what should an agent take from this survey? An agent would like to think that he (or she) can always control the selling process within a dealership, but the fact is that even though most of the time he implements his particular F&I selling process within a dealership, he can’t always expect it to be embraced by all dealership personnel.

An agent could even lose an account by trying to force a specific sales process in the dealership – especially if certain decision-making personnel don’t completely support the process. Simply put, an independent agent needs a menu system flexible enough to account for a variety of dealer needs.

The survey also suggested that menu selling has been a key component in the increase in F&I income for a dealership, and since the adoption of menu selling, vehicle service contract penetrations have risen and maintained penetrations of approximately 30-40%, peaking at 39% in 2010.

The National Automobile Dealers Association's 2011 Data report also supported the idea that F&I income is increasing as menu selling becomes more popular when it reported an increase of aftermarket income in 2010 of 15% (in F&I dollars) and an increase of 7% in service contract dollars from 2009.

It is clear that menu selling is not only the future of F&I product sales, but is the best practices standard as well. So what do I need to know as an agent when selecting the appropriate menu system that will both meet these best practices standards and provide the tool that can be used with the F&I selling process of a dealers choice?

Although, it is important to keep these two concepts at the forefront of each electronic menu implementation, there are three other essential features that I believe should be incorporated into the menu system:

  1. Base Payment must be shown
  2. Menu Product Positioning
  3. Ability to Provide Multiple Templates for the Menu

The Menu Must Show a Base Payment

Sure, I’ve heard the argument, “there is no legal precedent that has made the base payment on the menu a necessity,” and though no one has been sued for not including the appropriate base payment on their menu, common sense tells us that by not disclosing it, the dealer may be exposed to potential litigation. I personally would not be comfortable recommending a sales system to my dealers that didn’t include an accurate base payment.

The fact is: the menu is front and center in the purchasing process and contributes a major part of the financial decision making process for the customer. It is admittedly my un-legal opinion, that it is only a matter of time before it will be scrutinized as such.

As a result of the FTC’s recent roundtable event touted as the ‘listening tour’, the Federal Reserve Board (FRB) has temporarily exempted dealers from certain requirements under the Dodd-Frank Act. The FRB also announced that it still maintains the authority to issue rules for certain motor vehicle dealers.

If we as an industry are scrutinized, and part of that scrutiny is focused on the menu process that is implemented in most automobile dealerships and an increasing number of powersports dealerships, I certainly hope that the commission sees that menu systems provide a transparent selling process – and providing an accurate base payment on a menu would certainly be a part of that.

Potential legal exposure aside, if looked at from a sheer selling strategy point of view, I’d like to hear the answer when the customer poses the question, “where is the payment without any of the products?"

Menu Product Positioning

The implementation of electronic menus has given us a tremendous amount of flexibility in our F&I sales process. We can select different product closing options on the fly, as well as change the options so that we can display the different options to our customers.

With all this added flexibility, how do we choose our package options that are displayed on the menu, in what order do we display them, and how often should they appear? This is what is considered product positioning within the menu, and I like to look at menu product positioning the way merchandisers look at how they display products for us to choose at retail facilities or grocery stores.

Merchandisers place products strategically so they are marketed and displayed for buyers' specific choices. The optimal placement is at eye level at the front of the store. For a menu, it’s at the top of each column and according to what appears most frequently. So how does the finance manager make the choices of where to display the products on the menu? I suggest you focus on five key areas when evaluating your menu set up.

  1. Which products do you believe in most? The products that you have the most enthusiasm for will be the ones that you are most successful selling.
  2. Which products have the most benefit to the customer? This can differ by customer. For example a construction worker who could be injured on the job most likely sees more value in disability insurance than a white collar worker such as an attorney. Someone who keeps their vehicle for 5 or 6 years probably would buy a service contract before someone who trades every 2 or 3 years.
  3. Which products fit best within the loan terms? GAP protection fits very well with a person who is financing for 6 years, or a 5 year 100,000 mile wrap contract fits well for a customer financing for 5 years.
  4. Which products are soft-adds? That is, which products are okay to sell without asking for lender approval? And….
  5. Which products have the smallest increase in a customer’s monthly payment? The smaller the bump that you have to make to sell a product correlates to a product that is easier to persuade the customer to take.

The electronic menu must have the ability to provide multiple templates for the appropriate number of products and options

The best electronic menus allow the user to set up multiple templates so that you can change the menu product positioning quickly and easily. It should allow you to simply select the menu template that is set up for a particular situation.

For example, a default “Long-term Finance Menu” would have the service contract appear at the top or optimum positioning on the menu and also appear four times. The GAP could appear second and then appear 3 times. On the other hand, a “Tire and Wheel” focused menu might have good product placement for a luxury car with high performance rims and tires. I would also recommend having templates that allow for just three (3) options instead of four (4). These might be used for people who don’t qualify for certain products, so you don’t have as many potential products to sell.

Finally, the survey mentioned that there is a move many finance managers to limit the number of products displayed on a menu. The reasoning behind this idea is that fewer options give the F&I person less to focus on. Therefore, they are more effective selling those carefully selected products for a particular customer. This doesn’t come as a surprise to me.

I am often asked how many products should appear on a menu. This is a tough one, because it can vary immensely depending on the finance person’s ability to handle numerous options. If you put a gun to my head and ask me to choose I’ll go with 5-7 products presented in 2-3 product presentation packages.

What I mean by product packages is since the customer will only endure so many product presentations, present them in packages, such as a service contract presentation with the option of a tire and wheel upgrade, or loan protection which has 3-option benefits of credit life, disability and GAP protection that all protect the loan.

These keys work for any F&I sales process

Is there only one sales process that works? Of course not! We at The Vision of F&I have always promoted a sales system that uses the menu as a closing tool, rather than a spreadsheet to sell from, but we also understand our method might not be the preferred method to be used by all agents and dealers.

Therefore, the electronic menu tool needs to be flexible enough to account for many types of sales presentations. It should be transparent, which includes showing the accurate base payment and it should be flexible enough to allow the F&I manager the ability to mix and match their product options based on the customer’s needs. That is what they are telling us they want!

About the author

Ron Martin

Contributor

Ron Martin is the president of The Vision of F&I Inc., a training and technology company. Ron is nationally recognized for his seminars and dealer consulting services.

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