When sports teams take the field, commentators review their attributes, experience, and records. And although all players are unique, one cannot help but to compare their stats against their competition. How well does your finance and insurance department stack up against its F&I competition?
Although different dealerships deal with particular limitations, the public dealership groups’ results can provide a useful comparison. New-car per vehicle retailed (PVR) for late 2015 ranged from $1,189 to $1,556.
More heavily resourced enterprises can more easily fund F&I training and technology to improve results. And those enterprises also are likely to examine F&I results in depth, analyzing the data to discover where lost opportunities are eroding PVR and product penetration.
As for product penetration, NADA reports its members’ service contract penetration is about 40% of new-car sales. How is your dealership doing against that metric?
Last year, our company pulled data from 270 Fiat Chrysler Automobiles dealers using leading e-menu software. Digital menus engaged customers using interactive devices such as tablets, touchscreens, and televisions to give them a customized product presentation. The presentations were done transparently, quickly, and thoroughly. The right digital menu platforms should also provide dealership management with details about everything between the buyer and F&I presenter to ensure compliance and consistency.
The most advanced systems have a customer survey built in to help inform F&I managers of the driving habits of customers they are serving. The best-of-breed systems actually synthesize critical data points (like deal info, available products, cost of repair, customer lifestyle, driving behaviors, risk factors, and more) to create product recommendations and allow for maximum customer control. All this leads to a better buying experience for the customer, which translates into more sales for the dealer.
When we looked at the key performance indicator (KPI) data on these dealers’ use or non-use of an e-menu in their transactions, we learned these differences:
As a snapshot, the numbers told us dealers using a digital e-menu system were realizing $538 more new-car PVR and 12% and 10% lifts in VSC and GAP penetration, respectively.
As significant as these increases are, what’s perhaps most telling is that these stores achieved the lifts by using a leading digital menu for just slightly more than half of their total deals; they used no menu on the other 48%.
It is easy to imagine how much more profitable these stores would have been if high-end e-menu technology had been applied to all sales. Use was adjusted for the test to demonstrate how dramatically vital F&I indicators can be improved just by modernizing F&I processes.
Digital e-menu technology is essential for the modern dealership. Its consistent use helps F&I deliver five other core promises:
- Saves consumers time. E-menu use can shorten a consumers’ time in F&I by an average of 15 minutes, enormous savings for individuals eager to be done and on their way.
- Enables consumer control. Customers are already using touch technology in their daily lives. The best systems fully integrate the front end and the back end to create an F&I experience that extends the dealership, the brand, and the lifestyle of the customer. That synergy sells and raises the customer satisfaction index (CSI).
- Gives consumers clarity. Paper processes leave consumers wondering if they got the whole story. An interactive e-menu helps customers better understand the value of your products, which builds trust in them and your dealership.
- Creates transparency. The best-of-breed systems include surveys that analyze customer responses with key data points that render unbiased risk results and recommendations. Customers feel protected when they connect their lifestyle needs with the products that protect them.
- Protects customer data. Paper processes risk misplaced deal jackets and other documents that can put private customer data at risk. Digital menu systems keep F&I processes compliant with the Gramm-Leach-Bliley Act.
These kinds of results are available right now to dealerships willing to take advantage of a top-of-the-line menu system. But remember, although menus all promise to improve the front end of the product presentation on some level, they are not all created equal.
The menus that stand have fully integrated tools that are designed for speed and efficiency, and the best merge technology, science, and psychology to have a measurable impact profitability and CSI.
If we have learned anything from nearly any sports movie ever made, winning is not about the size of the opponents, it’s about the composition of the team. When you have a team member who brings a forward-thinking mindset, add in the technology to make that path clear, and the will (heart) to use it, you will win.
Latest posts by Jim Maxim, Jr.
- Digitize Your Dealership Operations Now to Be Ready for 2020—and Beyond - October 12, 2018
- Fintechs: Are They Creating New Revenue Streams, or Siphoning Existing Ones? - September 25, 2018
- Automotive Disruptors Are the Forewarning of “Icebergs” Ahead for Dealers - August 17, 2018