Keep Your PVR High While Staying Transparent

All customers want and deserve to know what they’re paying for

Have you ever taken a good look at a restaurant check and discovered that the refills you thought you were free were added to the bill? A more serious example is in the medical industry, where patients assume certain procedures and tests are covered, included, or bundled together. But when the bill comes, they discover the services were coded in such a way that they ended up with more out-of-pocket expense than anticipated.

When consumers clearly know the costs upfront, they plan for them and order according to their means. But when there is a misunderstanding or miscommunication, the customer is left with an unpleasant experience from unexpected charges.

This is not meant as an indictment of any industry, but rather to shine a light on the reality that lack of process, miscommunication, human error, and bad practices are commonplace, but avoidable. Which leads me to ask: Are your customers paying what they are expecting for F&I products?

Present products transparently

We all know high per vehicle retailed (PVR) is the goal of every F&I department, but when it is achieved through bad methods, there is serious risk. You want to be sure your aftermarket products are presented transparently to customers.

This means two things. First, customers acknowledge that one or more aftermarket products are being presented to them for purchase consideration. Second, you must present this information in a way that shows them how their purchase of one or more of these products will affect their monthly payment.

When these steps aren’t done, or are not conducted transparently with customers, there’s a risk of running afoul of payment packing.

How payment packing occurs

By definition, payment packing describes a process whereby the monthly payment price quoted to a customer is inflated to cover inclusion of ancillary products—like service contracts—to raise the profit margin. Payment packing happens when a sales manager inflates a payment (unknown to the buyer) to cover a service contract or other product before handing off the deal to F&I.

Alternately, F&I might quote a payment that includes aftermarket products that haven’t been properly disclosed to or selected by the buyer. This practice, also called “jamming,” “fluffing,” or “giving a leg,” is not necessary to be profitable. It is illegal, and should not be approved.

The importance of menu use

Boosting F&I profit is never wrong—when they’re correctly gained through the use of professional selling and relationship skills. Menu use is critical here. It not only helps you provide consumers a more transparent products presentation but, when done right, it discloses aftermarket product prices and how their selection modifies the consumer’s monthly payment. The goal is to present every product to every customer every time.

Menu use, training, and software ensures standardized compliance to provide an interactive, customer-controlled presentation. It also digitally tracks what products were presented, and the consumer’s acceptance or decline of each. The right software should calculate on the fly how the selection of a product or products, if purchased, changes the customer’s monthly loan payment. You’ll want this digital audit trail for your own comfort—and should regulators come calling.

Inspiring confidence

Use of e-menu technology that helps you give a more thorough and compliant F&I presentation is a confidence-inspiring way to increase F&I profitability. E-menus help your customers understand what products they’re being offered, their value to them, and how these products might impact their monthly payments, and they also boost legitimate F&I PRV by 33% or more compared to non-menu use in the hands of trained F&I personnel.

In addition, cutting-edge tools, like tablet technology, promote comfort and confidence when customers slide through an interactive, guided buying process. This control assures them that they are in control and not being forced into making a purchase they shouldn’t. Best of all, the dealer principal can sleep at night knowing that good processes are in place to protect all involved parties.

From restaurant patrons to car buyers, all consumers want and deserve to know what they’re buying and paying for. To deliver this transparency to customers and value to your business, F&I should pursue two goals: (1) achieve the highest margin potential possible within the framework of the practices described in this article, and (2) provide transparent and legal transactions for buyers.

If your PVR is consistently high, find out why. How clean is your PVR?

Jim Maxim, Jr. is president of MaximTrak Technologies, Reach him at

Jim Maxim, Jr.


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