Deconstructing the Two Extremes of Digital F&I

Should F&I go completely online? Is today’s F&I process dying a slow death? The people on the extreme ends of this conversation concern me. There is a set of old school F&I professionals who are strongly resisting any move toward allowing the car deal to start online. They are resisting providing product information on dealer’s websites. They are resisting the notion of product videos utilized to introduce products to customers early. They want to maintain control of the transaction.

They might be operating out of fear — fear of the unknown or fear of lost income. In almost every instance, they will hide behind their vast compliance knowledge as the reason the new approaches can’t work.

On the other extreme, there are a set of people and companies that believe a clever set of processes with the right technology will delight the customer and match or even exceed current F&I performance without the reliance on traditional F&I managers and the expense associated with them.

Postponing the Inevitable

It is very naive to believe that change isn’t necessary and that we as an industry don’t have to respond to the pain points of the consumer. We have all witnessed how in a very short period of time the consumers have grown much more sophisticated. They are also way more skeptical and significantly less tolerant than they were 10 years ago.

It wasn’t that long ago that some F&I managers would purposely have customers wait a little longer in the waiting room in order to gain some sort of psychological advantage. For a dealer or F&I manager to believe they can just maintain the status quo and not have their customers defect to a more customer-friendly process is silly and reckless.

Let’s all agree that there is a general demand from consumers to streamline the car-buying process. Most consumers believe that the F&I portion of the transaction in particular is too slow. Hopefully we can agree that having a great deal of transparency is a best practice, and that anything we can do to give consumers access to more information is a positive thing and certainly fits with everyone’s desire for a compliant transaction. There are, of course, a set of customers who are perfectly happy with the current transaction times and processes; however, they are increasingly in the minority. Most want change.

But let’s not go too far too fast. There is a lot at stake here. Besides the compliance concern — which is real and does need to be dealt with — there is the F&I dollar that is so important to dealership profitability. In an environment of compressed margins on vehicles, F&I dollars are what’s making the dealership profit model work. Taking F&I profitability out of the hands of experienced sellers of F&I products will in many instances result in lower productivity.

I recently saw an interview with Steve Weisz, the CEO of the very successful Marriott Vacation Club. In the interview, he mentioned that his timeshare product is a product that needs to be sold. This struck me as being very true and compares well to a vehicle service contract. While there is a huge price difference between a timeshare and a service contract, they are similar in that both require a fair amount of explanation and nobody ever just comes wandering in to buy one.

Anybody who has sat in an F&I office and scratched and clawed their way to a 50% penetration knows very well that the same results cannot be achieved with a cool video or an Amazon “Buy Now” button.

The Agent’s Role

So what’s the answer? We can’t ignore the changing consumer dynamics while clinging to our old F&I ways. We also can’t throw out our current process and the huge revenue it produces in hopes of dazzling enough customers with technology that it translates in to a profit.

The answer is in the middle. The middle is still valuing people and the role they play in a successful dealership selling system. We also have to continue to develop and embrace technologies that speed the transaction time.

We have to offer consumers choices that allow them to start the deal early if they choose. We have to have information out front and available to the customers who want it early. Agents and dealers need to look at every aspect of their process and find places to trim minutes off the time needed to buy a car. We have to accept that change will continue to happen and we must be willing to embrace it. We also have to be willing to test pilot new processes and technologies so that we can adapt to the change ahead. There are several dealerships having great success with hybrid managers and with hybrid sales people who perform much of the F&I function.

A key ingredient to every positive solution will include a well thought-out training plan. Whether you are just trying to trim 10 minutes off of your dealers’ current transaction times or you want to convert to a one-person, one-process buying environment with salespeople taking the customers all the way through the process, training will have to be a key ingredient to your plan.

So no one has to panic. There is always going to be a place for high-quality proactive personnel in agencies and in dealerships. Technology and processes will never entirely replace high producers. If you embrace change and put a comprehensive plan in place with an ongoing training plan, the future is very bright.