Dealerships can boost revenue and profitability significantly by taking a close look at the finance and insurance (F&I) department. When managed well, F&I can be a source of hidden profits.
The key to getting the most benefit from your F&I department is to approach these sales from a strategic standpoint: Identify the highest margin F&I products, as well as the products your customers are most likely to buy.
Consider these five industry best practices for increasing F&I revenue:
- Know your F&I products. From vehicle financing to such add-ons as extended warranties, service contracts and gap insurance coverage, you need to see to it that your employees thoroughly understand these products and, more importantly, how they can benefit customers. Then your employees can educate customers accordingly, an approach that tends to work better than hard sales tactics.
- Learn how to overcome customers’ F&I product objections. There are a few common customer objections to buying F&I products, such as not wanting steeper monthly payments. Prepare answers so your employees will be ready when objections inevitably come up.
- Avoid the noncompliance F&I pitfalls that can lead to regulatory agency enforcement actions. Unfortunately, F&I is an area where unethical practices sometimes arise. Make sure your F&I manager and employees are following all regulatory rules and procedures or you could be subject to large fines and penalties that might cripple your dealership.
- Create an F&I selling process and use it consistently. Your employees should present an F&I menu to customers upon every vehicle sale — no exceptions. Don’t let them prejudge deals because they think a customer might be uninterested for one reason or another. Your employees should give 100% every time.
- Be proactive in making F&I sales. Have your F&I employees get involved in the front end of vehicle sales, rather than waiting for deals to come to them. This will help them build rapport with customers before their guard goes up.