As a research and process development company, we are constantly looking for new ideas, products, or anything that would be of value to our F&I professionals. There are always plenty of new products, software programs or someone touting the “next big thing” in the F&I world for us to evaluate and share those results with our clients.
In this decade, all the talk is about technology taking over the F&I process in the future. With advent of electronic menus and different versions of software that are designed to do the selling of the F&I products, one might assume it’s just a matter of time before we eliminate the need for those pesky, highly paid, F&I managers. This idea catches the attention of dealers who wonder if they pay those F&I people too much, F&I product providers who would love to be able to control how their product is presented and especially software vendors, (think of how much could they could charge a dealer for that, if it worked).
And so, you hear a lot of talk about it. We are currently working with several software providers to develop their F&I selling tools and tools for service and other related functions. And we have been successful with some ideas of how to use these devices to assist in the F&I process. But before we accept the idea that this technology can replace the F&I manager’s job, we should take a closer look at what this new technology will have to accomplish.
You see, the thing that seems to be missed in these discussions about the future of F&I, and what technology can do for the process, is an in-depth understanding of what the F&I Manager’s job really entails. So, what does the F&I manager have to accomplish? Protect the dealership. And the ways they do that are:
- Legally. There are a lot of laws and regulations dealers need to be concerned with, and F&I managers cover the dealer’s rear end every day. Ask any F&I manager - they’ll tell you. The dealer needs the F&I managers to watch this stuff, unless, of course, they are confident enough to rely on the absolute honesty, good will and attention to detail of every member of their sales force to do it, on every deal, every time, because it only takes one mistake in this area to cause giant problems.
- Cash Flow. These contracts are 20-40 thousand dollars each. If they get a few of those contracts rejected because they weren’t done properly, they’ve got a cash flow problem. And there are a constantly-changing set of rules and “stips” that have to be chased down every day by the F&I manager. (If you don’t know what “stips” are, again, ask any F&I manager. They’re probably trying to track down one or two of them right now).
- Customer Satisfaction Scoring. A good case has been made that the F&I manager has a huge influence on Sales Satisfaction scoring. Many times they can correct a bad customer impression and smooth over a customer that wasn’t too happy with the sales process. Ask any F&I manager that, as well. They’ll tell you story after story of customers they smoothed over and even deals they saved by making the F&I process comfortable and professional.
- Help Make The Sale. One of the emerging talents of top F&I managers in the current economy is their ability to know where, and how, to get deals approved. Getting financing for the wide range of credit scores and income levels we are dealing with today has become a real art form that depends on personal interaction with many lenders. It has become a moving target in today’s marketplace. F&I managers are getting very good at it, and that skill helps deliver deals the dealer would have otherwise missed.
- Control Chargebacks. Chargebacks can have a detrimental effect on income, but also tend to have a negative effect on CSI scores. Controlling cancellations is usually the direct result of the interaction between the customer and the F&I manager. Top F&I managers have mastered this skill, and it shows in their numbers.
- Full Disclosure. Now, one may think that simply getting a signature from a customer is proof of a full disclosure. Not so, according to the FTC and the Attorneys General around the country. Full disclosure is the result of a professional F&I manager going over the terms of the transaction, making sure the customer clearly knows all of the terms and charges and answering any questions the customer might have. And customers have questions that need to be answered. That is full disclosure. And our top F&I managers are honest, professional people that make that happen with every customer that passes through their dealership.
- And Finally... Make Money. After the F&I manager accomplishes all of the tasks above, as an added bonus, they also have to provide a significant portion of the dealership’s income. The F&I department is the highest net profit department in the dealership, and with the advent of Internet sales and declining gross profit averages, many dealers are relying on the F&I department to make up for that lost income. F&I managers live on commission. Because of that, they are inspired to perform at their best. We have yet to test or observe any software or technology that comes anywhere close to matching the income per unit of even an average F&I manager.
F&I managers accomplish all of those functions, every day. Now, if there is a machine or software program that can do all of that, we haven’t seen it yet. And field testing of the current, available, forms of technology in real dealership environments has not shown any indication that it will happen anytime soon, if ever.
You see, this is still a people business, as it always has been. We sell cars to people. And, so far, it takes people to run it efficiently and accomplish all of the duties, above.
So it looks like that F&I manager will be around for just a while longer.