What Agents and Providers Can Look for in 2013

At the first Agent Summit, I gave a luncheon presentation titled “What Dealers Want From F&I Agents and Product Suppliers in 2011” that detailed the results from a study we did in late 2010. Dealers had expressed their need for several things, training being chief among them. However, when we updated that study for 2013, we found significant changes in what dealers are looking for from their agents and product providers in the year ahead.

Reinsurance

This March, Agent Summit 2013 will expand its focus on reinsurance. That’s no accident. In our 2013 update of the 2011 “What Dealers Want” study, one of the more significant changes was the dealer’s increased focus on reinsurance programs. While not a major priority in 2011, reinsurance leapt up the chart of dealer’s concerns for 2013.

Changes in the economy and some perceived insecurity about the future have made dealers more concerned about putting assets away for their personal future. This applied to larger dealers, of course, but there was also a significant increase among smaller dealers to focus on their "back-end" programs.

Compliance Issues

Your dealers are hearing about some new enforcement by the Federal Trade Commission (FTC) regarding automobile dealers. As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the FTC’s Division of Financial Practices was given enforcement authority over motor-vehicle dealers.

As this applies to F&I and the way payments are quoted by the sales department, the enforcement people have made it clear that what they are mainly concerned about is what they call “deceptive practices.” Your dealer clients are going to look to their agents and product providers for answers about how these compliance issues are going to be enforced.

Customer Satisfaction

I work with manufacturers at various levels, and we have focused on CSI as an integral part of our process development. Over the last 19 years, we have used sales satisfaction scoring as one of the criteria for measuring F&I performance in every step of developing our F&I process. You can’t hit our top performers list without very-close-to-perfect sales satisfaction scores.

Lately, more and more of those manufacturers' representatives are asking me how the dealers using our process have figured out how to lead in F&I performance while managing to post the top sales satisfaction scores as well. My answer is that if it didn’t, we’d be doing something different.

The fact is, your dealers have to get good CSI scores. And the push for top CSI scores is going to be even more intense this year.

Gadgets, Gizmos and High-Tech Goodies

With the advent of the iPad, smart tablets and in-desk systems, legions of software programmers are in the field — more than 24 that I know of to date — trying to convince dealers to take on an additional expense. And of course, when it comes to F&I, the people selling these gadgets tell the dealer, “Have your agent pay for it.”

I work with several large chains and dealer 20 groups around the country, and the question I get most often from dealer principals and controllers regarding the F&I process is whether I think the new iPad, tablet or computer presentation programs can eventually replace the F&I manager. Of course, the companies out there selling these programs will climb all over themselves to tell F&I managers that replacing them is not their goal. And I believe them.

But agents need to be wary of these claims. Even though common sense tells us that these products can’t replace the F&I manager, there is a temptation for dealers to buy into the concept. From the dealer’s perspective, if the performance claims of some of the software providers are true, and an F&I manager can just go out and let the customer play with an iPad for a few minutes and produce the income they need, why not just let the salespeople do that and eliminate those high-priced F&I managers?

In 2013, anybody selling any technology will have to convince dealers and agents that this technology will somehow make the dealer more money or they won’t be interested.

Conversions

One of the fastest ways to improve an F&I department’s overall numbers is to get a higher percentage of customers to finance with them. And while that would seem to be a fairly simple idea, there is tremendous competition for auto loans in the marketplace, and an increasing number of cash buyers walking into dealerships.

F&I professionals are going to have to focus on converting buyers to finance, and agents may want to concentrate on training in this area. We have focused on conversions, and the results can be significant with the right techniques and the involvement of the agent in setting policies in the dealership.

Pressure to Make Money

Dealers are facing some expensive entrées on their plate for 2013. With increasing pressure from the manufacturers to upgrade facilities, higher expenses for personnel due to increasing health insurance costs, and an overall increase in operating expenses, dealers will be looking to maximize every revenue source in the dealership, especially from F&I.

The goal in 2013 for dealer principals and controllers will be to examine every revenue source in the dealership while strictly controlling operating costs and spending. Many dealers we interviewed in our “What Dealers Want In 2013” poll defined this as their top priority for the coming year.

While profitability is always a priority, our poll for 2013 shows dealers will expect their agents and product providers to be an integral part of that process.