I have been honored for the past several years to serve as master of ceremonies at Agent Summit. This event proves, on an annual basis, how important agents are to dealership profitability, customer satisfaction and repeat and referral business. At this year’s event, I had the opportunity to take off my emcee hat (for a few minutes, at least) and put on my moderator hat for a panel discussion we called “Training Points of Impact.”
I was joined by Craig Almon, a partner at PRO Consulting, and Greg Gomer, president and owner of Finance Solutions LLC. Anyone who has attended Agent Summit knows that it draws a very focused group of agents and agent principals, and our audience was no exception. We covered quite a bit in the 45 minutes we were allotted, and the level of engagement agents demonstrated before, during and after our time together was truly inspiring.
It is clear to me from my work with agents and dealers around the country that there is an unlimited demand for effective training that maximizes production in the F&I office without sacrificing the dealer’s net-dollar profit opportunity — that is, F&I income after deducting claims, chargebacks and, quite frankly, the amount paid to the F&I manager (although I prefer the term “financial services manager” or “FSM”).
Let’s discuss why agents should be interested in training, how to be sure your program will pay dividends, and how to select the training partner if you are in need of one.
Your Interest in Training
You may already be familiar with the so-called “Five ‘P’s” of dealer profitability: people, process, programs, pay plans and performance. As an agent, you must realize that you can and should take responsibility for all five. Only then can you maximize your dealers’ income as well as your own.
Consider, if you will, the financial services manager’s duties. They can be divided into five distinct areas of responsibility:
Compliance and ethics
Sales
Management
Administration
Financial function
Why is compliance and ethics No. 1 on my list? Because it’s the No. 1 hot-button topic in the industry today. Every dealer in America should elect a compliance officer and establish an in-house, effective and ongoing compliance management system. They must respect the relationship between F&I and the law, and their F&I producers must sell with integrity.
If you think these matters are the sole interest of the dealers themselves, think again. When the Consumer Financial Protection Bureau (CFPB) and other federal regulators look at an automotive retail and financial transaction, all involved parties are under the microscope.
I am no great fan of the CFPB’s methods, but I believe agents should acknowledge and even embrace this strange new reality. Let the onus of compliance fall equally upon your shoulders and those of your clients. Shared responsibilities are the foundation of a cohesive partnership. That’s why I think the agency model has been so successful and is growing exponentially.
Your Training Program
Successful training programs are built around the aforementioned net-dollar profit opportunity and designed to benefit the dealer and the agent. But the big winner is the retail or lease customer. I like to refer to F&I products as part of the dealership’s “unique financial package,” because they are designed to protect the customer.
They do so in five ways:
Protect the family budget: On a visit to a Nissan store in Tampa, Fla. I learned that, in the previous six months, that store’s average service contract claim was $802. Now imagine a customer financed the purchase of a vehicle for what they thought was a fixed monthly payment of $450. An unexpected repair would change it to a variable payment of $1,252.
Protect the customer’s good credit: When unexpected, vehicle-related expenses crop up, the credit card comes out, because they have to be paid for somehow. When the car needs work, they have to have the car to get to work. They may have to rob Peter to pay Paul, and other bills might be paid late or not at all.
Protect their investment in their purchase: Customers make down payments and then make monthly payments. At some point, they begin to build positive equity in the vehicle, and, sometime later, they own it outright. The dealer’s unique financial package ensures this time-honored process is not interrupted. If more FSMs were able to illustrate this concept to their customers, they would be shocked at the improvement in their own numbers.
Protect their personal savings: Survey after survey reveals that the majority of U.S. households are not prepared to handle unexpected financial demands — including vehicle repairs — of as little as $500. A recent AAA study determined that tire and wheel repair is a $3 billion industry with an average claim amount of $300. Too close for comfort? You bet. And that’s just tire damage. How can car buyers be expected to put any money into savings — and leave it there — when their vehicles are unprotected?
Protect the vehicle itself: F&I products are not free, but with low-rate financing, customers are getting protection with little or no finance charge.
Traditionally, the clearest path to creating opportunities to explain these benefits is the 300% rule: Offer 100% of your products to 100% of your customers 100% of the time. I prefer the 400% rule: I follow the 300% rule and add 100% legal and ethical compliance.
Selling with integrity will determine your profitability. Integrity requires strict adherence to a code of values. Profitability is a product of complete integrity. In your capacity as an agent, you have the opportunity to help your dealer develop a statement to which F&I producers (and customers, if you wish) can refer:
“Here at ABC Motors, our commitment is that every customer knows what they’re getting, they agree to buy it, they know why they need it, and they feel good about it when they leave our dealership.”
This mantra is effective because it fits into any store’s process. Individual dealers and F&I directors have varying opinions as to when and where the customer and FSM should meet, but one part of the experience is always the same. When the customer walks into the finance office, they do so with three questions in mind:
Can I trust you?
Are you credible?
Do you care about my needs and my situation?
They may never ask these questions directly, but they’re all thinking it. Zig Ziglar once said that people don’t care what you know until they know that you care about them. I know you care about car buyers, so prove it! Build your training program around the customer’s needs and your profits will soar.
Your Training Partner
Taking nothing away from those agencies that have developed and implemented their own training programs, I would like to remind you that companies like mine and many others are ready, willing and able to serve as a trusted ally in your mission to deliver quality training to your dealer clients.
Effective training partners should be equipped to offer multiple avenues to effect improvements in profitability and productivity:
Offsite: Get your FSMs out of the store and into an offsite facility where they can rub shoulders with colleagues from other dealerships, other brands and, ideally, other parts of the country.
In-store: At some point, you will want your training partner to deliver in-dealership training, coaching and development. They will take some of that theoretical, 30,000-foot content from the offsite training and apply it to the dealership’s culture.
Online: Offsite and in-store training happens once a year, two or three times a year or, ideally, quarterly. Web-based training is available 24 hours a day, 365 days a year, and it is typically designed to reinforce the education and good habits acquired in the first two phases.
In my opinion, the first place an agent should look for a trainer is in the pages of this magazine and in F&I and Showroom. Read the articles and look for the message that resounds with you. Next, consider asking for a recommendation from your state dealer association. Finally, remember that dealers are members of 20 Groups, which often host trainers, so ask your dealers which trainers have inspired them.
Inspiration is a two-way street. Following one appearance at a 20 Group several years ago, a dealer told me, “Bob, I learned a long time ago that F&I gross is vanity and F&I net is sanity. Don’t tell me how much we’re putting up. Tell me how much we’re keeping.”
He was absolutely right. Dealers know that small changes in people, process, programs, pay plans and performance can be the difference between making money and maximizing their net-dollar profit opportunity. But they may not know how to execute those changes. You have the opportunity and ability to help dealers and car buyers take full advantage of the many benefits F&I products provide. I wish you the very best, as training is the key to dealership profitability, customer satisfaction, and repeat and referral business.
