Proper Systems Strengthen F&I Profits in SF

 

The world runs on systems and processes. Have you ever thought about the importance of systems in our society? If we didn’t have these systems we would have complete and total anarchy. The stock market would crash, we would have lawlessness and society would spin out of control so fast, we wouldn’t even be able to drive down the road without crashing. If the world runs on systems and processes, then shouldn’t our dealerships?

Let’s step back a minute and analyze the dealership setting from a third party perspective. Why are there “great” dealers and “not so great” dealers? Is the answer in the cars themselves?  Is it how the buildings are laid out? Does the lot have balloons? Literally, we could ask hundreds of questions, and do a very deep analysis (and probably spend a lot of money) trying to figure out the answer to this. Allow me to save you the grief and trouble and share what the single most important attribute of a quality run dealership is. Are you ready? The answer is correct systems and processes.  I know you were probably hoping for something a little more magical than this, but it’s just this simple! There is no silver bullet or magic wand. If we utilize correct systems and processes in our dealership settings, we will be light years ahead of our competition. Correct systems can compensate for less talented people, less than spectacular buildings, and whether we wear a tie or not. 

I am besieged by dealers trying to get the Special Finance F&I office out of the toilet and on track to making some money. Without fail as I analyze the problems in this type of a setting, it boils down to simple systems and processes that are not being used or at least not used effectively. I hear all the reasons why something isn’t working for the people involved. Someday I’m going to write a book with all the excuses I’ve heard over the years about why business is off (but that’s beside the point). Keep in mind these are good dealers with good intentions. They just don’t know where to start and how to fix the problems.
I don’t care if the dealership has the world champion finance manager, and they can sell ice to an Eskimo. If there are not correct systems in place the dealership will not be a top achiever. Allow me to elaborate. More frequently than not, the reason dealerships don’t excel in F&I in special finance is that the finance companies will not allow it. This sounds reasonable right! We can only sell what the finance company is willing to allow on the back-end, and more often than not this is not very much. Sales managers (and rightly so) want to max out the front-end. The desk does their job and pencils the deal to max out the call on the front end. Finance is left scrambling trying to sell the customer products and services only to be told “not a chance,” by the bank. Does this scenario sound familiar? It should; as I see this occurring on an almost daily basis.

Let’s take a step back and analyze this a little closer. The real problem is the fact that finance companies really control what products and services are sold, and in this instance the customer is in special finance for a reason; their credit is less than stellar. Therefore, the finance company doesn’t want to risk any more money on these particular customers than what they have already committed to. Chances are, in this scenario, the customer is trying to buy a 2007 Ford Explorer instead of a 2005 Chevy Malibu. The system has broken down and it’s not the finance manager’s fault. The customer is on the wrong car. No matter how good the finance manager is at his/her job they cannot achieve the results they desire because their hands are tied by the banks. Frustrating isn’t it?
Our systems and procedures fail us when we allow the salesperson to land the customer on the wrong car. This in turn has a spiral effect all the way down to the finance office. The sales department ends up working the customer for a payment that the customer probably can’t afford. The gross profit is not maximized. This is a lose/lose situation. I’m more into a win/win scenario. Let’s tackle this deal from the correct perspective. Our sales person, in the course of the steps to a sale, qualifies the customer and finds out they are a special finance situation. They immediately should turn them to the special finance department. This department chooses a car that serves several purposes. The dealership should be able to max out the gross, the customer should be able to afford the payment and the finance department should be able to “up sell” some products and services. Guys, if this sounds hard, there are software systems which will literally do the job. Seriously, there are some good programs in the market that are designed to do just what we are talking about. This might be an angle to look at if you are in this downward spiral.

The key is that the systems and processes are in place. If we have the correct path in place, then all the other equations seem to work. This of course is an oversimplified example. There are many more equations to the problem than this. One that I need to mention is the importance of our buying. If we are in the realm of special finance then we should be buying vehicles that we can fit into this category. Once again our finance sources decide what the categories are. If we are buying our cars right, qualifying and landing the customer on the right vehicle, then problems get solved quickly. We make more gross profit, the customer is happy with a payment they can afford and F&I is finally smiling. Remember the world runs on systems! Until next time…Good Selling!
 
Vol. 1, Issue 1