Top 5 F&I Myths in Dealerships
Finance and Insurance (F&I) departments are notorious for the amount of myths that spawn from employees. Just like high school, rumors start to spread throughout dealerships and can sometimes cause issues for those who believe in them.
It's time to dispel some of the rumors surrounding the F&I industry in order to lessen the negative social stigma surrounding it. Shedding some light on these concepts can help to unify dealership personnel and get them on the same page. Read on to uncover the truth behind the top 5 F&I myths in dealerships.
1. Using a Menu Will Sell Products
Menu systems can be great and are an excellent way of offering products and services in a simple format. The menu system can be flashy and easy-to-use, yet it is just a tool. What matters is the professional using that system to further increase sales and inform the customer of possible advancements and packages.
Getting customers enthusiastic about the vehicle their interested in beforehand, going through test-drives, and showing off features is what really can boost sales. Realistically, a menu is used to break down prices and help with decision-making. Potential customers will be focused on the money and affordability instead of their interest if shown a menu before a presentation.
Also, an F&I manager is using a menu does not always equal total compliance. Consistency is key, and in compliance training it is important that F&I managers know how to use them properly to avoid blunders.
2. The More Products Offered, The More Money Made
The primary goal of each F&I product presentation is to sell items to a potential customer. Seems simple enough, yet it takes more than a presentation to entice a sale. Going through all the facts, features, benefits, and figures does not mean the customer will care about the product in the end, no matter how thorough the manager is.
Buyers come from all walks of life, and some situations present themselves where products will not suit their current situation. How does the product impact their life and needs? Throwing every product out there and hoping one sticks is a sure-fire approach to missing the customer connection. Think about the right questions to ask individual customers and direct all product pitches to what they want!
Emphasizing a designed number of products could also help the dealership not to overwhelm potential buyers. With too many products, customers may start to believe they are receiving a bad deal with distrust in the product and a pushy pitch.
3. A Big Ego Means Better Business
You may have worked with salespeople or other F&I managers that have a seemingly insurmountable ego. Sure, having a positive attitude is one thing, but possessing a large ego can actually harm business. Everyone has a job to do and should strive to be the best they can be, yet the path of self-importance can be damaging.
This is not to point out ego itself being a concept salespeople need to avoid. One's ego should not be so weak as to decrease motivation and lead to failure. Instead, it is a balance where empathy and personal drive are both concerned.
Confidence is different than showcasing a holier-than-thou persona. First impressions make a difference, and if a customer does not mesh well with a large ego-type, they could become missed opportunities. As the ego inflates, situational awareness decreases, and the ability to adapt to situations and customers will be affected.
A dealer should provide developed employee policy and procedures for F&I managers and others to remain compliant while being successful.
4. Millennials Do Not Want to Buy
With each generation comes a new set of myths about the previous one. It has been reported that millennials (born between 1980-1996) seem to purchase cars less frequently than their older counterparts.
However, a recent study from TransUnion in 2017 showed that millennials were taking out auto loans at a 21% higher rate than the previous generation's borrowers did when they were the same age. (Cite the study).
Technology has also increased the array of tools used by potential customers. Millennials often take the time to do research before a large purchase, and online shopping is comfortable and familiar with the generation. Instead of taking the time to visit five different dealerships, they would rather scope out the best suited one online for exactly their needs. On average, millennials visit 1.5 dealers before making a purchase or lease. Be prepared to become a product knowledge expert, because millennials are ready to buy— and well informed.
5. Keeping Pitches Short Is Key
Customers are not excited about what F&I products you are trying to sell them. Instead, they're thinking about the new vehicle they just closed a deal on. They probably have already spent a good portion of their day at the dealership. It is understandable that they're ready to be on their way— except that you've got a job to do.
Some may suggest having a strict time allotted to giving the rundown of F&I products to each customer. While this approach may be just fine for a fast food restaurant, it does not always bode well in the retail automotive sector. Setting a specific time to rush through a pitch may also lead to compliance issues, such as forgetting to offer certain items, resulting in accusations of discrimination.
Short pitches could work for some customers, but others may find that the approach is too pushy and difficult to comprehend fully. After all, F&I products aren't always simple for those not involved in the industry. Tailoring a single pitch to a variety of customers may not work perfectly each time. Rushing the presentation may also cause the potential buyer to feel overwhelmed, leading to loss of sales.
There are plenty of myths that are spread regarding the automotive retail industry, but that does not mean there aren't problems that arise. For more information on how you can better train your dealership employees to adhere to compliance laws, contact us today!