Shannon Robertson returns with a warning: Who’s watching the gate? page: 15 F&I 20/20 Tom Wilson The F&I Professional’s Newsletter A Division of EFI™ $4.99 VOL. 2, ISSUE 3 The Revenue River page 9 © Mad Marv: Critical Thinking F&I page 16 June-July 2021 George Angus 20 Group Blues page 12 Ethics in the F&I Office 1
F&I 20/20 The F&I Professional’s Newsletter A Division of EFI™ VOL. 2 ISSUE Top stories in this issue © F&I Spotlight F&I Pro Tip Stop Sign F&I Pro Tip Dan Mason on how timing things perfectly in F&I is a must for the F&I professional Page 4 Stop Sign Shannon Robertson has been trotting the nation and takes time out for some compliance perspective. Page 15 F&I 20/20 Spotlight Ethics in F&I. We dive into some of the fringe problems staffers and customers often demand to put difficult deals together in F&I. Ethical situations aren’t always found in training courses or even online. These have to be lived to be believed. Check it out on Page 5 Show Me the Money G.P. Anderson takes us to the crossroads of Rules versus Winning and if they can both co-exist in F&I. Page 11 Mad Marv Critical Thinking and F&I. Page 16 Show Me the Money News Around Town Produced by NADA's Industry Analysis division, NADA Market Beat is a monthly report on U.S. new light vehicle sales; it replaces the NADA Monthly Sales Recap. at June 2020 Hedges & Company-Insight on new car sales Consumer research and ratings firm J.D. Power has released its June 2021 auto sales forecast. Read about this expansive report here. 2
Well, here we are at the halfway point of yet another banner year in F&I and like you, I’m tired of hearing everything getting blamed on the virus. I don’t know about you, but I’m here getting my fair share as I’m certain you are. Even though the semiconductor chip has caused widespread new vehicle shortages, supply in demand has witnessed record front end grosses. Smart dealers have been paying premium prices well beyond current used book levels to keep things rolling and the truly smart ones are filling a niche of their lots with customer purchased units. Almost daily, we get visits from customers wanting to sell and it’s making a difference on our bottom line. How long this lasts is anyone’s guess but I do believe it will be awhile and I’ll be interested to see how sales forces nationwide handle pricing once inventory levels return. Will they wilt and return to a race to the bottom of hold-back or gradually find a happy medium of a fair gross margin somewhere in the middle? It’s anyone’s guess at this point. One thing is for certain, F&I departments continue growing in the midst of all this. I’m seeing record production throughout the reports in many states and hope you’re getting a piece of this action. This issue is pumped with some really great stuff and I hope you enjoy the hard work the staff has put into it. MM Bits & Pieces………. Partners… Checkered Flag Auto Group has acquired Pomoco Chrysler, Dodge, Jeep, Ram, Alpha Romeo and Fiat in Newport News, according to a May 25 announcement. The acquisition is Checkered Flag’s first to include U.S. car brands and brings a new standard of customer care for the dealership’s customers, including renovation plans, company president Steve Snyder said. Movements… Matt Clemmons has rejoined CNA National, resuming his position as regional vice president for the north central region of the U.S, which includes Illinois, Indiana, Michigan, Ohio and Wisconsin. F&I 20/20© is a bi-monthly Newsletter for the professional F&I Practitioner. This publication is a division of Ethical F&I Managers (EFI™) and is copyrighted. All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. For permission requests, write to the publisher at: Marv Eleazer 4043 Liska Circle Valdosta, GA 31605 fordpantera@yahoo.com (229)460-3310 Editorial Board Giving it Back... In 1996 founder Terry Franz and Mike Van Noy owned Car Biz, a used car lot in Kansas City, Missouri. That year, many people were looking to purchase a car to only be turned down because they were out of work due to medical emergencies, family issues or other circumstances in life. Car Santa gives away over 300 cars a year just in the Kansas City metro alone. 3 Gregory Arroyo garroyo@dealersocket.com Tony Dupaquier tonyd@theacademylive.com Shannon Robertson shannon.robertson@afip.com G.P. Anderson gp.anderson724@gmail.com
Timing is Everything E by:Dan Mason very day in our industry we are bombarded with the word…process. Unfortunately, most of the time it is flung around meaninglessly or thoughtlessly. The problem with that mentality is that processes should be the backbone of what we do every day. If we want to produce consistent results, we must follow a process. And I have two thoughts on process. First, any process, when followed 100% of the time without fail is infinitely more successful than none at all. Second, and this is one of my personal creeds, Processes don’t fail…..people do. Now what does any of this have to do with timing is everything? Great question. The answer is simple. Knowing the proper time to implement the stages of the process is absolutely critical. Timing is everything. Let’s take a deeper look. Let’s start with the deal itself. When would be the best time for a finance manager to know the details of the deal being worked on? After everything has been agreed to? At terms, rates, and advances that don’t work? Or during the negotiations, being involved with the desk to help structure the deal properly from the start? We know how the first scenario is going to play out don’t we? We know the finance manager is going to be bent out of shape, the salesperson is going to get aggravated, and worst of all, the customer is going to suffer. We all say “well DUH!!!” However, this happens in dealerships around the country EVERY SINGLE DAY! Timing is everything. Now, let us look at what the process is for after the deal is written up. The deal is handed to the finance manager and the finance manager will then do one of two things. In the first scenario, they will take the deal to their office, dissect the deal, load the deal, call in the deal and start to build their menu. All this happens while the customer sits idly at the customer's desk or even worse, in the chairs right outside the finance office. In the second scenario, the finance manager gets the deal and immediately goes to visit with the guest. They should be setting the expectations of what is going to happen next and reset the clock. This puts the customer at ease, and they now know exactly what the finance manager is doing. When the customer sits idly in the first scenario they grow anxious and aggravated. They believe that there is no respect for them and their time and every minute they wait feels like an eternity. In the second scenario, the customer is at ease, understands what is happening, and is excited about finalizing their purchase. One of these is much more profitable than the other. Again, timing is everything. Lastly, let’s look at the process of presenting products in the office. There are many different schools of thought on when this should occur. The first scenario is that as soon as the customer enters the office, we verify the customer info and immediately pull out a menu and go into our presentation. The second scenario is that we verify customer info and use that time to create a dialogue with our customers, and spend just a few minutes to get to know them while printing out all the basic paperwork. We then have them sign the basics and then we go into our product presentations. In the first scenario, this is very much a business transaction as we have not spent the time to build a relationship and get to know each other as human beings. It becomes all about dollars and cents and very transactional. In the second scenario, we are building trust and a relationship based on mutual respect because we take just a little time to get to know who our customer is and what is actually important to them. By putting our product presentation towards the end of our time together instead of the beginning, we have now EARNED the right to ask for all the money and built the value in not only the products but ourselves AND the dealership. Once again, TIMING is EVERYTHING. Dan Mason is the Asst VP National Sales Director for Principal Warranty Corp. 4
F&I Spotlight F&I and Dealership Ethics The bedrock of morality in the F&I office can sometimes have cracks that seem like gray areas but, are they? By: Marv Eleazer T he words were chilling. A lone F&I manager was delivering a deal and being placed in an unusual predicament. “Help! Executive management in my store wants me to look the other way and have the co-signor ‘sign’ their name to documents and they’re not present”. Apparently, the customer lives in another town and the supervisor didn’t have the patience to either wait for the customer to arrive and sign in person or, at the very least, have the paperwork sent and then returned with genuine original signatures intact. It goes without saying that commission-driven pay plans can cause an otherwise honest employee to blur the lines and walk where angels fear to tread if personal ethics aren’t checked at the door. Even though this manager wasn’t being asked to personally forge a document, the mere insinuation of allowing a spouse to sign by proxy albeit outside in their car was just as irresponsible an act. Doing so causes the manager to be complicit as though it was done in their presence or worse, forged by the said manager. Personally, I learned this the hard way many years ago when young in my career. A customer agreed to the terms of a sale and had phoned their spouse to discuss. The absent spouse was very busy and instructed the one present to sign their name as in the example above. Stupidly and without thinking, I allowed it. The next afternoon an employee from a competing dealership across town walked into my office demanding satisfaction. This person happened to be their son and was angry they hadn’t purchased from him. After slapping the paperwork and keys on my desk, he told me his parents revealed to him what happened, and he insisted we unwind the deal because we didn’t have a legal contract. I was speechless and morosely embarrassed. I never even entertained the idea again as it taught me a valuable lesson in conscious ethics. Label me naïve, but I believe most people want to do the right thing where a car deal is concerned. I do not think car folk get up every day with a dark scheme in mind to defraud nor step across the legal fence in pursuit of a commission check. Rather, it’s my conviction they’d love for every deal to be as clean as possible. However, it can be tempting to take the easy route of breaking the rules in favor of swiftly delivering a car when things start going south. Coupled with a lack of training and firm leadership, even a well meaning staffer can justify doing things the wrong way. But we all know quality error-free work can often take more time especially sub-prime deals. And assertive customers don’t always have the needed patience. They can quickly dial up the pressure to the point of threatening to go elsewhere which in turn, causes management to panic. And the dealer down the street will most likely not care about doing things being done the right way, so the heat is always on. You just have to remember to slow down and make sure everything is done according to the book. That old adage “A stitch in time, saves nine” shouldn’t be lost when considering car deal ethics. Do it right the first time so you don’t have to do it again because we all know how expensive that can be. Most of us have faced questionable situations like the one above and redirected things to avoid impropriety but there always seems to be another twist in the making. In this issue, I’d like to address various questionable borderline ethics practices sometimes observed by dealership management. These are just a few and I’m certain you’ve seen others. 5
*Cash Back Loans This one occasionally raises its ugly head and isn’t usually the fault of a salesperson or manager. On the contrary, it actually originates from the customer who wants to use the money to pay off a high-interest credit card or other obligation. I’ve even heard some customers wanting to avoid paying sales tax (my state allows trade tax credit) with the sales department actually listing the customer as the pay-off bank on the Buyer’s Order! This practice seemed to gain popularity when 0% interest was first introduced and even though we don’t read about it much these days, it still continues. Like some of you, I’ve actually seen Buyer’s Orders with sales prices increased to accommodate the customer’s wishes. The dealer simply cuts a check back to the customer and the bank funds the contract. “No harm no foul” you might say. ‘Not so fast’ says Thomas Hudson of Hudson & Cook-and the author of CARLAW F&I Legal Desk Book which happens to be the study guide for the Association of Finance and Insurance Professionals (AFIP). His take, when asked about the ramifications of such a practice, was clear in the May 2018 issue of F&I Showroom magazine- I shared with him some of the various conversations and debates I’ve had with other F&I pros regarding so-called “cash-back” practices. And, well, his reply wasn’t surprising. “A couple of thoughts: My spider-sense goes off any time the numbers in the deal don’t really represent what they are supposed to represent. Courts and regulators never like it when numbers have to be explained as something they aren’t,” he said. “that said, I’d share your concerns with all these scenarios.” “I find that it is common for finance company reps dealing with dealers to approve all sorts of things that the finance company’s lawyers would choke on, when both the dealer rep and the finance company rep get paid on originations, there’s often a real devil’s deal going on.” “The dealer agreement probably has something (in legalese) that says the numbers reflect the deal, and it also says that it (the dealer agreement) can be amended only in writing. The wink and nod from the guy on the [approval] desk are worth nothing when it’s time for the finance company to shove the deal back to the dealer.” And here’s the kicker: “Also, these are arguably Truth In Lending Act/Regulation Z violations, Unfair and Deceptive Acts, And Practices, state sales tax violations, etc. — by the dealer, who, despite the fact that most dealers don’t understand it, is the initial creditor in the transaction. The finance company reps can’t ‘OK’ a dealer’s law violations and torts.” The moral of all this is, if it smells like a rat, then it probably is. If not, then why would the dealer employee be so interested in getting the credit buyer to OK the practice in the deal notes? *Scooping Rebates This practice is one of the more creative ways of padding deal profit at the expense of customer satisfaction. You see, some new cars can qualify for multiple rebates based on a myriad of criteria and often, new ones can pop up at the last minute due to manufacture sales planning goals. The scenario goes like this: The customer has been shopping for a while and finally decides to pull the trigger and sets up a delivery time to finalize everything. Rebates have been discussed as part of the proposed sale numbers and everyone has agreed. And since rebate dates must coincide with actual deal dates, management will pull a fresh update, and sometimes a new one has been added. Viola! Since the customer has already agreed to numbers, unscrupulous staffers will refigure the same agreed-upon payment or bottom line price by adjusting the sales price and absorb the scooped rebate as additional profit. 6
I’ve actually had salespeople and managers asking me to “Just have the customer sign this new Buyer’s Order but don’t mention the rebate”. Big ethical “no-no”. Consider the ramifications of a customer complaint afterward and the potential loss of their future business not to mention your reputation. *Payment Leg Yep, this dishonest practice still exists in some dealerships and shows no sign of receding anytime soon because the temptation is just too great to resist by those who don’t view it as wrong. If you work in a store that closes exclusively on payment-as most do-then you should be getting the deal with a fully disclosed rate, term, and payment that comports with the bank approval guidelines. But if the deal arrives $50 higher per month than the true base payment then it’s likely someone desking the deal has taken liberties to boost the payment leaving room for an FIM to use to his advantage. Sounds innocent enough. The customer is closed at an affordable payment and all you have to do is bump them another $20, include a handful of products, and you’re the hero. The customer thinks they got a VSC, GAP, PPM, etc. for only $20 a month. I’ve worked with customers from competing dealerships who balked at my VSC offering because they got a 6/100K for “only ten bucks a month” from the last store they bought at. F&I manager was quoted as saying “We have a special going on this month and can use a coupon”. *Straw Purchases As often discussed, and as many times as we’ve beaten this dead horse subject, one would think this fraudulent practice would have long since gone the way of the dodo. But just mention it on social media and a bevy of ‘opinions’ will surely follow as to exactly what defines it. More about that in a moment. This term and ensuing law were written to prevent purchasing a handgun for another party to use without their name on the registration. This is likely because the third party might have a felony conviction and unable to lawfully own one. While not originally nor directly attributed to auto financing, finance companies have borrowed the term and disallow third-party purchases for obvious reasons. It shouldn’t strike an odd tone with dealerships to believe banks want the driver of the vehicle to be financially obligated Back to dealer ‘definitions’. Because everyone is eager to see the next car across the curb, it can be easy to don blinders like Sargent Schultz of Hogan’s Heroes famous line “I know NOTHING!” But that doesn’t relieve you from your responsibility to the Dealer/Lender Agreement your dealer signed when he agreed to do business with them. Unfortunately, the ‘definition’ varies wildly but it’s generally understood to mean the driver of the vehicle should be on the contract. Yes, there are extenuating circumstances such as a child in college receiving full financial support from the parents. But knowingly omitting a 35 year old kid whose divorce adversely affected their credit and just signing the parents is going too far. Never forget that you’re the ‘eyes and ears’ of the bank as well as the dealer you work for. Yes, this places you smack in the middle between the sales department, the customer, the finance company, and your employer. But we’re not here to make friends and looking the other way. When these things arise, you have to object. And one more point on this subject, knowingly participating in a straw purchase deal is a fraudulent practice. And with a stretch, an investigator could add other charges though the likely scenario would have your employer buying the contract back from the bank. Even if the customer got educated at another dealer, your employer could still be required to repurchase it. This is why it’s smart to ask questions. When a 78 year old guy with a cane barely able to make it to your office accompanied by his 25 year old grandson insists he’s buying this new Mustang GT with a six speed transmission for himself. 7
*Pre-Loaded F&I Products Another common practice is pre-loading F&I products during payment negotiations. It seems only natural to discuss with customers during the sale negotiation and some dealers are even incentivizing the practice. Like rustproofing and paint sealant, some products are non-cancellable and therefore either disallowed by some finance companies as a line item on the RISC or required to be included in line 1. The problem with this is deal documentation should be contiguous whereas all documents that can reflect individual product pricing, should do so especially the agreed-upon sales price which should reflect on line 1 of the RISC. In short, the Buyer’s Order should itemize these adds. Every effort must be made to prove the payment wasn’t packed by the dealership. Naturally, any hard adds such as bed liners, running boards, etc. would become a part of the vehicle but allowable soft adds should be itemized in section 4. Margin compression and competition-not to mention F&I-is a large part of why pre-loads have gained traction. Nothing wrong with selling a protection product at the sales desk but how it’s disclosed throughout the deal and documented, does matter. Listen, in everything you do in the F&I office, all effort to maintain the ethical integrity of each deal should be practiced to such a degree that you’re not consciously thinking about it. Our actions observing ethics should be so automatic as to avoid these things in the first place even to the point that all staff is fully trained and aware. Training and accountability will prevent a hairy deal from ever making its way to your desk in the first place and that starts with you. Don’t expect the sales department to have the same convictions and understanding when tripping over these things. Make it your place to train them but also explain why certain things must be off-limits. You have to remember that customers always want things to go their way and often do not care what you have to do to accommodate their wishes. We must adhere to ethical practice else we become like the dealers we read about in trade journals writing those big settlement checks with some even going to prison. F&I 8
The Revenue River F By: Tom Wilson &I professionals are always growing and evolving as business marches forward lest they become stagnant and fall behind the learning curve. The balance of customer satisfaction, product penetration, and credibility have never been higher in demand. And about the time you think you’ve got everything under control, manufacturers introduce another high-tech option that causes you to change your objection handling techniques. Think about it, who would have thought-even a few years ago-that cars would not only drive but park themselves as well? Pretty soon they’ll be baiting our hooks too! Adding to our malaise, the internet explosion has evolved carrying information more securely and offering instant answers to the most complex of questions. Customers recognize it and are using this tool to their advantage. Because of this, the business model has changed drastically with off-site digital document signing, home deliveries, and a rapid move to a virtual marketplace. Tech has taken such a major part of the design and build of today’s vehicles that the Drivers Ed classes of tomorrow won’t deal as much with steering, gas & brakes but which button to push and when. So, what’s an F&I pro to do to keep up? Go fishing; that’s what! Yep, stand on the bank and take a good look at your F&I Revenue River. Where does it begin? What “tributaries” feed into it along the way? Is it still flowing along the same path as it did a few years ago, or has it changed course? Do you need a different kind of bait? How many different “springs” are in your F&I office that feed into your river? Yes, we all know the stock offerings of Service Contracts and Gap are necessary. However, have you really looked at the other valuable offerings you have that trickle money into your revenue stream? Let’s face it; we’re not making the front-end grosses on car sales that we did years ago. Yes, the semiconductor chip problem has caused widespread panic buying with artificially propped up grosses, but it will not last. Outside banks and aggressive credit unions makes it tough holding rate. That died years ago. Being the strong closers that you are, you pivoted, adapted, and looked for more offerings to present. Listen, today’s cost-conscious customers are looking for value. They know their ownership experience is going to cost a lot more than ever before so you need to present packages that match their driving habits. Dave Sipus once said “A little plus a little plus a little equals a lot. Many manufacturers are offering complimentary maintenance to entice buyers. Pre-Paid Maintenance policies that extend or expand the factory maintenance are huge across all brands with a high acceptance rate. Customers who are pre-budgeting to keep their monthly automotive expenses in line know that today’s cars require more maintenance than they did 10 years ago. So, unclog the PPM creek and let it flow. Now, we often hear about our transportation infrastructure being in worse condition than ever before. And technology has led to lower profile tires improving handling along with lightweight aluminum wheels. Many potholes are deeper than most tire side wall heights. Combined, this is the perfect storm for tire & wheel damage. Let a good tire & wheel policy rain money into your stream. Technology is astonishing in today’s new vehicles. Everything right down to the key fob in your pocket requires a battery, a chip and programming. If you’ve seen the price of a replacement key fob lately, your customer is at the mercy of little Bobby playing, “drop mommy’s keys in the toilet.” True story from one of my customers. With the current chip shortage, do you think that chip-driven components like key fobs are going to go up in price or down? A good key fob replacement policy adds another high value, low-cost item for your customers plus more money to trickle into your brook. Listen, I’m not giving you anything more than you already have. I’m just reminding you to invite customers to more closely examine what’s being offered because they need it now more than ever before. The late Dave Sipus once said “A little plus a little plus a little equals a lot. By diversifying your offerings, you’ll continue to add more and more money to your bottom line and create a loyal base of repeat customers with a steady stream of income so you don’t have to rely on VSC’s and Gap alone. Happy Sailing Selling! 9 Tom Wilson is a Sr. District Manager for Hyundai Capital Insurance, covers Virginia, Maryland and West Virginia, and is a 30+ year veteran of the car industry.
Save the Date September 21-22 8:30-5:30 Embassy Suites-Denver Downtown www.ethicalfandiconference.com Randy Henrick Auto Dealer Compliance Terrence O’Loughlin Director of Compliance Reynolds & Reynolds 10 Rick McCormick National Director Reahard & Associates
Win or play by the rules? I By G.P. Anderson recently posted in Ethical F&I Managers facebook group an interesting and thought-provoking question- “Which is more important: To win or to play by the rules?” Pretty straightforward question that should be easy to answer. Naturally, you could expect many responses from readers, and though a few were waxing philosophical about the definition of rules, most universally agreed you can’t have one without the other if you’re committed to doing things the right way. In fact, the consensus was the satisfaction one will experience playing by the rules. So, back to the question. Winning and playing by the rules at the very least is arduous to the point of exhaustion. I mean, we all know there are shortcuts in anything and quite often the temptation to take the easy way can have its rewards. You can generate both but at what expense? Just ask any professional or Olympic athlete who has an asterisk (*) by their name or have been banned from the sport if it matters. While they may brush aside the question if asked, you can bet they privately ache concerning the question. The amount of time spent to reach super stardom levels through competitive physical activity and maintenance is taxing to say the least and some just can’t resist cheating. Consider the hard work of improving one’s abilities and skills at the highest level by doing things the right way. These cheaters were obviously too impatient or wanted to win so badly, that they threw the rule book away preferring a faster route. But the rules caught them. Lance Armstrong is the most famous rider in cycling history, but for all the wrong reasons. True, he won the sport's most prestigious event-the Tour De France-seven consecutive times from 1999-2005 and that should be what he’s known for. However, his reputation was ruined when he admitted to a doping scandal that led to him being stripped of all his Tour De France titles after his retirement. Think about it. He prepared and trained upwards of 1,000 miles a week even after surviving stage three testicular and brain cancer. He was no slouch and worked hard reaching the top but as with all things, it takes continued dedication to remain there. I’ve often wondered how many titles he would’ve won had he not been doping. We’ll never know but I have a feeling it would’ve been more than one. So, with all his experience and team strategy, why did he succumb to cheating? My first thought is the high of being number one in the world was something he couldn’t get enough of and one far more addictive than anything else. Most cheaters are clever believing they’re smarter than everyone else. Armstrong was no exception, and he dodged the bullet well into retirement that is, until he was outed by a former teammate. Up until that time many of us believed hatred and jealousy from other teams was driving the accusations. I mean, here was an American Texan taking it to the French on their home turf. The crowds thronged him all along the bike routes and the excitement around him was effervescent. He had a whirlwind relationship with superstar Sheryl Crow and was sought after by everyone on the celebrity circuit. The fame must’ve been intoxicating. I don’t know what he thinks of himself today after the scandal has faded but you can bet, he isn’t proud of doing things the way he did. Sure, he’s still worth tens of millions but at what personal cost? Well, that’s the real question before us. If winning is so important that you would sacrifice your reputation to achieve stardom in your craft then, you’ve already lost no matter your accomplishments. Human nature is the essence of who we are collectively as human beings. This means the traits, behaviors, and characteristics including ways of thinking, feeling, and acting that we humans are said to have naturally. So how is this relevant to me? Pertinent skill sets within the Finance and Insurance office include written and verbal communication, customer service, interpersonal skills, document management, self-management and organizational skills. These are the building blocks of a pro but there's one more. It’s called ‘character’. That honest attribute you practice when no one is watching. Skeptical people question winning or playing by the rules each day as though they must make a choice. On the finance manager's island where no one is watching, you're defined by the quandary to do both, win and play by the rules. True professionals in any field of endeavor experiences the knowledge or skill gained as a result of that occupation. But it’s character that truly defines them. Win or play by the rules? So, how do YOU answer this question? Your customers, employer, and family are counting on you to get it right. 11 GP Anderson is the Finance Manager at Thielen Motors in Park Rapids, Minnesota
The F&I Prophet-George Angus-has something to say……. When the Boss Returns From a 20 Group Meeting It’s 20 Group season and many dealers are going off for a few days to meet with dealers having similar demographics to share ideas to help improve dealer operations and profitability. And they may even come back with some good ideas. However, they may also come back and start telling you about those other F&I managers who are doing better than you. Right? And it’s easy to get defensive when you are criticized or compared to other F&I managers. So, when this happens, the natural reaction is to defend yourself with some excuses and explain why you suffer handicaps those other F&I managers might not have to contend with. I have gathered some of the better excuses I have heard used in that situation. Of course, I’ll make some suggestions that might help with those issues. "You don’t understand, our customers are different here". One of the things you hear quite often, not just from F&I managers, but even from General Managers and Dealer Principals is " Our customers are different here!" And to a certain extent, they may be right. As you can imagine, every geographical area has a somewhat unique demographic. And every model line and type of vehicle tends to have a different demographic makeup, as well. Suggestion: Quite often, F&I professionals are simply expressing their frustration with an F&I process that still relies on trying to "up-sell" F&I products to an increasingly impatient, skeptical, and sales resistant customer. I wrote an article about this as far back as 2009. You can read it at https://www.autofinancenews.net/ sometimes-its-just-in-your-head . The article speaks for itself. You don’t control your demographic makeup. All you can do is keep a positive attitude, hone your skills, and apply your process to every customer, every day. "We are not selling enough cars". This is certainly a frustrating problem for the F&I department because F&I can’t do much about it. We don’t control the number of units sold, the sales department does. So, let’s talk about what we do control. 12
Suggestion: Make more on the deals you DO have. Let’s say that a dealer is selling 100 units per month. If the F&I manager can figure out how to increase the F&I Income Per Retail Unit by 50%, (Our average increase after first adopting our process is 63%). Is that not, for the sake of your paycheck, the same as selling 150 units at your current performance level? "Half the people here pay cash". Again, there’s not much we can do about the demographic we have walking through the door. It is what it is. However, it’s what we do with those cash buyers that can make a difference. First, I have chased down a plethora of alleged cash conversion techniques over the years that, while sounding good in concept, simply don’t work for most F&I managers. So, they stopped doing them. Suggestion: We have had some results using a simple cash conversion technique we developed a few years ago. Some F&I pros are successfully converting 20% to 25% of cash buyers to dealership financing. And the process takes just a few minutes. There’s a step-by-step explanation of the process in an article I wrote for F&I and Showroom Magazine a few years ago at http://www.fi-magazine.com/article/story/2014/07/ converting-the-ca-h-customer.aspx http://www.fi-magazine.com/article/story/2014/07/converting-the-ca-hcustomer.aspx Give it a try. It works. "The lenders are capping all my deals and won’t let me sell any products". Suggestion: Here’s what you do. Rather than complaining to your boss about capping, keep a detailed log of the deals that are capped, make a note of how much income was lost because of it, and then present this information to your Dealer Principal or General Manager at the end of the month. Don’t whine, just give them the numbers. You see, the lenders do have some flexibility here and a call or a meeting with your boss is sometimes all it takes to get them to loosen up on capping. The lenders need your business, but they will cap your products as long as they feel they can get away with it. Many times, your boss can fix this. Money always talks. "The sales department isn’t turning people over to me at the time of the sale". You don’t run the sales department. The Sales Managers do. If they are not turning people over to you it’s because they don’t have to. Suggestion: Here’s the way to solve this. It’s all about money. As we suggested in the capping solution, you need to keep a log. Every time someone is not turned to you, make a note of it on your log. Then, at the end of the month, multiply those people you didn't see by your average income per financed deal. Then show the Dealer or General Manager the potential income lost, simply because they weren't turned to you at the time of the sale. Believe me; the numbers will speak for themselves. The problem will get solved. "We don’t have the right inventory for these buyers to get financing". There is no question that the right inventory is essential in the current lending market. However, you need to get involved. 13
Suggestion: Have you told the GM and Used Car Manager what cars you need? Have you gone to the auction with the buyer and pointed out the kind of inventory the lenders are looking for? Have a meeting with whoever buys the cars for your store and give them some guidelines. They certainly want to buy cars that can be easily financed. You just need to take an active role and let them know which units those are. "My pay plan stinks". If you can get your Dealer to give you more money, great. Suggestion: Challenge yourself. One of my favorite quotes from one of our top F&I performers was “Give me a pay plan and I’ll give myself a raise”. We work on commission. Get some training. Learn how to sell more stuff, make more money. "These products are too expensive. People won’t buy them". Let’s face it. F&I products are expensive. They need to be to pay for the benefits that they provide. However, the way in which you present them is the key. You have heard me discuss the futility of trying to “sell” or “create value” when presenting F&I products. F&I is not as much a “selling” process as it is a scientific one. Suggestion: Evoking the proper “Psycho-neuro” response is the result of a carefully structured process. Top F&I performance is not about weak and strong; it’s about smart and dumb. Evoking the “primary motivators” without creating sales resistance is the key to eliminating price conflicts. "I’d like to learn some new techniques, but my dealer won’t pay for training right now". Let’s face it; your dealer needs a reason to spend money. And if they have ever paid $2-3000 to send somebody to an F&I school and not seen any improvement in the F&I income, they aren’t going to spend precious money on that. Suggestion: If your dealer is hesitant to pay for training, talk to the agent that sells you your F&I products. Tell them you want some training. They will be willing to help you. After all, if you sell more of their products, they make more money. "I hate training". I understand. Especially if they make you do videotaping and role playing in front of the group. And the training you have previously attended may have been boring and ineffective. That’s why I try to make our training lively, fun, and most importantly, effective. Suggestion: Rather than making excuses, reset your attitude. Remember how excited you were to get that first F&I “manager” job? Your attitude is controlled by you. Training. You can’t rationally expect to improve your results doing everything the same way you’ve been doing it. My Dad had a saying I’ve never forgotten. It was “Learn something new today or you’ll be just as ignorant tomorrow as you were yesterday”. Let your dealer and product agent know you want all the training you can get. Then, work to improve those numbers. The best way to eliminate criticism is to become the top performer in your 20 Group. George 14
Daily Decisions T Employee Did the salesman know he was violating a law? Or did his actions fall into a gray area with less well-defined parameters? Did he understand the implication of his actions? Did he realize that, if caught, he could be charged with a federal offense and his employer fined millions of dollars? As it turns out, the salesman had allegedly been running a scam for seven years that involved actions that go beyond normal dealership procedure and can only be described as fraudulent. The story, however, calls attention to an issue at the front lines of dealership compliance. Too often, we find employees bending the rules because they’re “just trying to get a deal done,” or, “it benefits the customer, so it seems like the right thing to do.” For example, making small changes to a credit application, not booking the vehicle accurately, overlooking a statement made by the customer that the bank would need to know, or coaching the customer to ensure they can receive rebates or incentives. The decisions may be made with a lack of understanding of the consequences or a belief that, if caught, the result will be a simple reprimand. Dealership employees need to be aware that what may seem like a small compliance violation could lead to the loss of a job, potential loss of a relationship with a finance source, increased scrutiny from a federal or state agency, or federal charges being filed directly against them. Dealership Following the rules protects the dealer, the employee and the customer. In the case of the salesman charged with wire fraud, was the dealership aware of his actions? Did management look the other way because of the increase in sales volume, income or recognition from the manufacturer? How many other employees knew what was happening and chose not to say something? Gone are the days when we can only be concerned with our customer interactions, turning a blind eye to what our coworkers are doing. We all take equal responsibility in protecting our employer and, by extension, our livelihoods. A key step to protecting the dealership, its employees and customers is appointing an individual to implement and oversee a compliance management system (CMS). It’s an ongoing process that requires training and maintenance. Equally important, a strong ethical culture must come from the top down. Dealers should clearly define expectations so employees understand that illegal and/or unethical behavior will not be tolerated. Departments should work closely and cohesively to communicate about compliance objectives. Employees should be provided with a working knowledge of the rules that allows them to meet performance objectives using compliant practices. And, they should recognize their responsibility to speak up if a colleague is jeopardizing the dealership by violating rules or ethical standards. Times are a-changing. Our industry is being watched now more than ever. Both dealer principals and employees are being held accountable for their actions. What may seem like a small compliance fudge could result in a big fine or class-action lawsuit. Federal and state agencies have made it clear that ignorance is not a defense. The solution is simple; training and culture – knowledge of the rules and zero tolerance for noncompliance. It’s not rocket science. 15 by Shannon Robertson Executive Director AFIP he news about a car salesman in Detroit charged with wire fraud and conspiracy and the resulting $8.7 million fine for his employer raises questions concerning his actions, the dealership’s processes, and whether his colleagues were aware of his criminal behavior. Federal prosecutors recently arrested the nation's top Fiat Chrysler Automobiles salesperson. He was charged with helping orchestrate a wire fraud conspiracy that cost the automaker $8.7 million. Parkway Chrysler Dodge Jeep Ram salesman Apollon "Apollo" Nimo, 34, of Macomb Township was charged with wire fraud and conspiracy to commit wire fraud for allegedly orchestrating a scam that involved illegally selling employee discounts to non-qualified buyers. He could face up to 20 years. The complaint describes a lucrative conspiracy that started in 2014 and netted Nimo $700,000 in payments from Fiat Chrysler, which compounded the automaker’s loss of revenue. The alleged conspiracy was discovered by Fiat Chrysler investigators who learned that employee numbers were being bought and sold in private Facebook groups that served as an online black market.
Are you a thinker? B by: Mad Marv rick by brick, my fellow citizens, brick by brick—Emperor Hadrian, allegedly said this while urging his people to re-build Rome after a horrific fire, pushing them to do so in a patient manner so that it would stand the test of time. From pictures and for those of you who’ve visited Rome, his leadership and encouragement obviously was heeded as it has indeed lasted. Sound advice then and sound advice today for any task that seems herculean and mind-boggling in size. Assessing a problem of any magnitude demands an open mind that filters out personal bias. When the worker begins to apply logic instead of emotion, progress can be made. This sounds much harder than it really is because we’re being tasked with drilling down below the surface. Listen, we’ve all experienced huge tasks in our offices from time to time and I’m not talking about getting backed up five deep with customers. Everyone gets slammed from time to time with this and can be easily solved with the aid and assistance from teammates. Enter Critical Thinking. This has long been the basis by which intellectuals approach a problem or expand on already delivered solutions. The bedrock of this thought process also provides a way to improve established practices or product utilization. And it’s no secret that we’re not born this way. These adaptations of process thought are acquired and built upon as a brick mason would, “one brick at a time” as Hadrian encouraged. So, how do you apply this in F&I? Well, the first place to begin is with an honest and unbiased analysis of your department in the areas of deficiency. This can be as wide-ranging as you need it to be. Everything from contracts in transit to the average time you sit with a customer. Everything you do on a daily basis, leads to some eventual conclusion. Yet because of the human condition affecting our judgment, we tend to dismiss the intellectual logic when it suits us. This logic is needed to arrive at the right conclusion by dismissing our emotional investment in what we’re now doing so we can affect a positive change. After an analysis, let’s say you’re struggling to identify the more difficult customer types where an A-type opts for your platinum package versus an F who wouldn’t buy the VSC if it was a dollar. You apply the same presentation to these two types who both have the same needs i.e., miles driven per year and length of projected ownership. One makes a quick decision making you feel like Tom Brady while the other one leaves you feeling like Patrick Mahomes in the super bowl unable to get the ball in the end zone. No matter what area you’re struggling in, you can’t reasonably solve it until you begin to critically assess the “why” and this involves tossing your emotionally driven excuses in the trash. It’s easy to focus on the F and you remember their names just like Tony Dupaquier says. And they’ll wreck your day if you let them! The secret is learning to quickly identify them by observing their behavior. You start out with your usual professional presentation and before you’re halfway through, they’re folding their arms and quietly shaking their heads sideways then reply with, “I just want the car-nothing else”. A couple more attempts and they reaffirm what they already told you as they’re looking at their watch. Time to shut it down, print the docs, and move on. And don’t go around whining about it afterward. Let's say your T&W penetration is languishing in the 15% area and it seems like most everyone is tuning you out. Drag out your enrollment contract and begin reading the fine print under the benefits section as a way to handle objections. You know it’s a good product, but they often need more information to make a buying decision that works for them. Learn and become a product expert to address their concerns ahead of your own. No matter what area you’re struggling in, you can’t reasonably solve it until you begin to critically assess the “why” and this involves tossing your emotionally driven excuses in the trash. If others are doing well with the product, then you can too. Critical thinking has always been the engine that drives any industry to improve on already established principles. We see this in computers and the tech sector. The key is seeking to constantly improve while driving down costs. Just about the time a product is introduced to the public, it’s nearly obsolete in the design and R&D departments of the companies. This is because they’re already working on the next best way to produce it with more processing speed and for less money. Simply put, if you’re not progressing, you’re digressing. Listen, a necessary part of your job is to be constantly looking at every area of your job, seeking ways to get better no matter how small. start laying some bricks! Good luck and keep closing. In doing so, you’ll never get stagnant. So, get out your mortar trowel and 16
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