Cash Deal Bias

I was asked by a F&I manager recently if I could help her “get better at cash deals” — not an unusual request from an F&I manager. However, it occurred to me that rarely, if ever, has an F&I manger said to me, “I’m fine on lease and cash deals, but I need help with finance deals.”

Cash deals have a bad reputation and seem to come with a certain amount of perceived baggage. Let’s call it a negative bias. If asked, many F&I managers might share that they believe it is harder to enroll customers in products on cash deals. Or, once the customer has written that check, their mind is closed to what they have to offer. Sound familiar? If so, I am going to suggest you reassess your position on cash deals and open your mind to what they really are — an opportunity, just like any other type of deal. The truth is that if you have a negative bias towards cash deals, your results may be determined before you ever talk to a cash customer.

If you want to realize the full potential of cash deals, you will need to figure out how you are currently performing with them. Once accomplished, you can then set some goals based on what you learn. The first step in this process is determining your rolling 90-day averages on cash deal production. Let’s start with a couple of questions: On average how many cash deal opportunities have you had over the last three months? What was your average products per delivery and profit per delivery on those deals? Now look at your finance deals over the same period — remove GAP and reserve from your averages. What are your products per delivery and profit per delivery with those removed? Is it close to what your numbers look like on cash deals? If not, why not?

The answer may be in your process. Do you have a different process for cash deals? If you want to start to improve your production on cash deals, it starts at the sales desk.

Instead of reacting to cash deals, start becoming more proactive by being at the sales desk when not delivering a vehicle. The “out the door” or “final cash price” figure needs to be quoted by you, the F&I manager. Whether it is an in-person negotiation and delivery or remote, it doesn’t matter. It needs to be you who gives the customer an accurate number.

Instead of short cutting the process because it’s a cash deal, you instead are inviting the customer into the process. This gives you the opportunity to learn more about the customer and their needs. By doing so you can match the benefits of the products offered to the customer’s life, creating a better environment for the customer to recognize value. You may discover that it isn’t really a cash deal after all, and they are planning on going to a credit union or an outside lending source. Who knows, you may be able to offer the customer better terms. This raises the question of conversions. Should you try to convert the cash customer to finance? I would suggest that it only makes sense if offering that option benefits the customer in some way such as a very low interest rate or combination of rate and rebate. Otherwise, don’t bother.

The days of trying to show the customer ROI by investing versus paying cash all in the effort to make it easier to sell product or make a little reserve have passed. That sounds like a lot of work to support a bad F&I process. Customers do not come to dealerships wanting expert investment advice. They come to the dealership to gather enough information to make a decision to buy and to gain an understanding of their options in doing so.

Cash deals are all about mindset and process. Different mindset, better result. Stay on your process, better result. It’s up to you. Decide to embrace cash deals as the opportunity they are. Slow down and stay on process. Utilize smart discovery and relate your product’s benefits to the customers unique situation and watch your cash deal production grow.

ABOUT THE AUTHOR: John Tabar serves as Executive Director of Training for Brown & Brown Dealer Services.

Originally posted on F&I and Showroom