Is F&I Dead? Not If You’re up for Being a Change Agent
Is F&I Dead? Not If You’re up for Being a Change Agent

I’ve always been a loyal New York Giants fan. Big Blue, as us New Yorkers call them, has always been a model professional sports franchise. The team has succeeded by focusing on leading through commitment to excellence and going about business the right way.

In 2004, the franchise was in a desperate position. They were coming off a 4-12 season, and they needed a reset. They needed a “change agent.” They needed a leader who would shape a culture built on discipline, respect and focus.

Enter Tom Coughlin, a hard-nosed, old school football coach who thrives on winning through planning, precise execution and building comradery. Coach Coughlin was brought in as that needed change agent to help a storied franchise regain their rightful leadership position in the National Football League. And that they did, winning two Super Bowls during the Coughlin Era.

There are many parallels with the Giants in ’04 and F&I in ’17.

We, in F&I and auto retail, are facing change. We are facing changing consumer expectations throughout the car-buying journey. We are facing a new generation of sales and F&I personnel working in our dealerships. And we are facing tightening profits. According to NADA’s midyear Data Report, gross profit as a percentage of selling price was 5.9%, down from 6.1% a year ago and 6.5% in the 2015 period. In dollar terms, average retail gross profit per new vehicle sold was $2,014, vs. $2,075 a year earlier and $2,148 in 2015, the report said.

So, with all of these changes, how can you be an influential “change agent” with your team of dealership partners?

You succeed by improving dealership F&I departments’ profitability and productivity, all while assisting with training and even sales when dealers need the support. But, as more of the car-purchasing experience moves online — including F&I — what can you do next to show your value? At a glance, it seems there is an initial embracement of change and the move to digital for agents; however, make no mistake: Those who are not adjusting are being left behind in the online F&I revolution.

We are now in the age of the consumer. Empowered buyers are demanding a new level of customer experience. Across all industries, customers are walking into stores knowing what they want … and expecting those selling a product to know what they want as well.

The combination of technology and consumerism is driving disruption. So, dealers need to see the value of F&I — from both theirs and the agents’ perspective — while also keeping the future in mind.

The Current Landscape

Much of this change in shopping experiences has been driven by the rise in the buying power of millennials, the generation that now represents the largest segment of consumers in the country at 75.4 million people. Millennials are expected to account for 40% of ne-car sales by 2020. In 2016, they occupied 36% of the auto lending market.

Why does this matter? Millennials are connected more than any other generation. They are putting more time into researching their next cars online, and they want as much of the car-buying process done before they enter the dealership as possible.

However, even though millennials may be driving the change in shopping behaviors, shoppers of all generations are doing more of the car research and purchase process online. On average, dealership visits have gone from five per purchase in 2005 to 1.5 per purchase in 2016.

Today’s car shoppers are all about “the experience,” and dealerships have begun and continue to embrace that perspective. But as more of the car-buying experience moves online and customers complete more and more of the purchase process before even entering a dealership, it is at the F&I point of sale where dealers are continuing to fall short.

The Long F&I Process

There are two polarizing extremes in the world of F&I managers: Some do not want to change anything in their F&I process, and others want everything to move online. To be successful today, the F&I customer experience needs to be a continuum that spans the two extremes.

Many customers are uncomfortable sharing sensitive information online, but others will do anything to speed up the entire process, get their car and go. Dealers and agents need to keep both perspectives in mind when making changes, while also looking at how these decisions will change a dealership’s operations.

For today’s customer, after a deal is made, the ideal experience with the F&I department is as follows: meet with the F&I representative, sign their papers, and then go home with a new car. However, this ideal experience is almost never the case. According to a recent study conducted by Cox Automotive, 25% of shopper frustrations at the dealership are in the F&I process, with nearly one hour spent on average in the process.

The problem with this long process — in which F&I products and why they matter are not being explained clearly — leads to customers feeling as if they are being upsold on things they do not need. In turn, customers do not know the important value of these products. This is the moment where an agent’s assistance proves to be ideal in aiding the F&I department in working with the customer on understanding the products.

This perception would change if customers had the opportunity to research F&I products online before coming to the dealership the same way they have with the vehicle they are about to purchase. If F&I products are online to be researched, this is where control can remain with a dealership.

Enhancing a dealership’s website with F&I product content will not only increase the value of the time a consumer spends in the dealership, but it may also lead them to purchase more products. That increased spending, in turn, has the ability to increase your bottom line.

Customer Education

The key to successfully selling all F&I products is customer education. The more a customer knows about each add-on, the better chance there is that a purchase will be made.

It is the dealer’s job to bridge the online and instore experience through education. How do they do that? For starters, make the instore experience interactive. Have customers feel like they are dealing with real people and situations to help them have better expectations of the car-buying process. Agents can help here in influencing how dealers improve the online and instore experience during the F&I process. An improved process will directly impact the agents’ bottom lines as well.

Key Themes for Online F&I

There are four key themes that dealers and agents need to keep in mind as the F&I process slowly moves online.

  • Embrace change: The industry is different now than it was 10, five, and even one year ago. It will continue to evolve and change as technology becomes more efficient and mainstream.

Agents can be the gatekeepers of this change. The agents who sit back and let dealers continue to function in their old ways will almost certainly fall behind and eventually be obsolete. But those agents who embrace the move to digital can be the change agents that meet customers where they are and help them in the F&I process before they even come into the dealership.

  • Think about dealership culture — where it currently is and where it needs to go: Dealers would benefit by leveraging technology as an enabler of their procedures. Change isn’t easy, but if positioned correctly, new procedures with enabling technology can help to more effectively align everyone working at the dealership. If you do not have a culture where technology matters, then the new technologies you implement will not matter because no one on your staff will utilize them properly.

Agents need to be involved in this culture change as well. If the agent is on board with the shift at the dealership, the technology use will aid everyone that is involved.

  • We need to extend F&I’s reach online: Being where current and potential customers are is vital to the long-term success of F&I. That doesn’t just mean in the business office. So outside of your website, think about how F&I can be woven into ads in your area, social media pages that are updated frequently, and live chats where possible. A key factor in a successful online F&I strategy is to provide quick and easy access to information to your customers.
  • Enhance the instore experience: Regardless of what gets completed online, through most transactions right now, the customer still needs to come to the dealership to close the deal and pick up the car. To optimize this experience, ensure you have a record of every customer that comes in the door with activity conducted online and in the dealership.

There is no reason why a customer should have to fill out a form in-store that was already filled out online. Make sure all of your services and communications are synced. Agents should be in the loop every step of the way in optimizing the instore experience to be sure they stay involved in the F&I conversations.

Agents Can Be the Change Agents

F&I departments are evolving with the rest of the dealership as they embrace technology and move more online. F&I is not just a solution with technology at the end. Rather, dealers and agents need to be thinking about bettering the experience throughout their procedures.

Remember one thing: You can be the disruptor and change agent your dealer partners want to see at a dealership. In order for that to work, we must embrace the needs of the dealer and the consumer.

So what if Tom Coughlin never signed with the Giants? What if Eli Manning didn’t become a Giant and win two Super Bowls with Coach Tom? Well, as a lifelong Giant fan, I never want to say “what if.” Same goes for the future of F&I.