Paper or Plastic: Which Works Best in F&I?

We have been working with several software providers over the last couple of years to develop training and better processes for several of the new electronic F&I presentation tools. We have also been testing and measuring results from different types of printed menus.

I am quite often asked which type of presentation media is the most effective. After extensive analysis of media performance over the last two years, it has become abundantly clear that what an F&I menu, iPad, tablet or on-screen program can do has been overstated and, in many ways, misunderstood in the marketplace.

What do customers prefer? Well, let’s turn to the results of the 2015 J.D. Power U.S. Sales Satisfaction Index Study. Now in its 29th year, the study is based on responses from 27,831 consumers who bought or leased a new vehicle in April or May 2015. It measures satisfaction with the sales experience among new-vehicle buyers.

The study calculates the buyer-satisfaction scores using four factors, in this order of importance: working out the deal, salesperson, delivery process and facility. Let’s take a look at how those factors feed into the use of electronic presentations.

Paper or Tablet?

According to the survey, when customers make it into the F&I office, they want to know what their F&I product options are, and they want to see it on some sort of product menu, whether paper or digital. The F&I manager should then explain the value of the product.

Overall, the close rates on all four of the products J.D. Power included — prepaid maintenance, extended warranty, tire/road hazard protection and interior/exterior sealant protection — were highest when the customer viewed the options on a paper brochure or menu.

For service contracts, the close rate was 32% with a paper brochure or menu. It was 29% with a computer screen and one point lower, at 28%, with verbal offers. For prepaid maintenance, interior and exterior sealant protection and tire and road hazard protection, the close rates were the same whether the dealership offered the products verbally or showed them on a computer screen.

F&I product sales also depend on the process, the study found. If the customer has a long wait between the time they agree to buy a vehicle and the time they meet the F&I manager, the customer may feel agitated before even stepping into the office.

The study found that the likelihood of customers purchasing another vehicle from a dealership depends partly on the pressure they felt from the store to buy F&I products on their previous sale. Only 10% of customers who felt too much pressure said they “definitely will” purchase from the same dealer again. For consumers who felt no pressure, however, 44% said they definitely will purchase from the same dealer in the future.

And the type of presentation matters. Too much pressure to buy F&I products resulted in lower penetration rates. For example, 18% of consumers who felt too much pressure to buy purchased tire and road hazard protection vs. 19% of consumers who felt some pressure and 21% of those who felt no pressure to buy.

Overall satisfaction among buyers who said the dealer applied too much pressure during the F&I process was 638 on a 1,000-point scale vs. 852 for those who experienced no pressure, according to the study.

It’s the Process

Based on what we’ve learned from real-world testing with a representative group of media forms in a wide range of real F&I offices, we have found that the menu or electronic device being used is , in many ways, less important than the person using it and the process they use to present it. Any media can be made to work to some extent, but none of them will do much by themselves.

What customers respond to best is a more modern “information provider” approach. Offering products in the most expedient and simple way is what the J.D. Power study suggests and it certainly has produced the best results in our testing.

We have found the keys to any successful process is to demonstrate three critical elements:

1. It has to be easy or F&I managers won’t do it. And if it’s easy for the F&I manager, it’s easy for the customer as well.
2. It has to be simple enough for the customer to easily absorb and understand immediately.
3. It has to be fast, because customers don’t want to sit through long, drawn-out sales pitches and time-consuming processes. They want to know their options, choose what they want, and get on their way. A common complaint from customers is that the F&I process takes too long.

Whatever process or procedure that produces those key factors will be the most successful for your dealer clients.