The Sales Department sells the vehicle and secures the front-end gross. The Finance Department completes the legal paperwork to deliver the vehicle and secures the backend profit. In order to maximize the total profit both departments must work together on every deal.
The two biggest problems that cause most Finance Departments to lose income are:
- The failure to properly familiarize the customer with a dealership’s financial services and F&I products.
- The manner in which a customer is introduced to the finance manager by the salesperson.
The contributing factors for these problems will, of course, vary from dealership to dealership, but the dealership that best handles them comes closest to maximizing its profit opportunities.
Sales management should make it a standard policy that all customers, regardless of their intentions of financing, must be given the opportunity to be professionally exposed to the dealership’s financial services and F&I products.
The proper introduction of the customer from the Sales to the Finance is critical to ensure a successful transaction. An improper comment from a salesperson can leave the finance manager to discuss his services in an unfavorable environment.
Transitions, whether in life or in business, set the stage for what’s to come. In many cases, a smooth transition can lay the foundation for success from one phase of a process to another.
The same is true in automotive sales. The transition of the customer from the salesperson to the finance manager is critical to ensure a successful transaction. Without a proper introduction at the appropriate time, the customer will be ill-prepared for the final, and arguably, most important aspect of the sales process. The best strategy is a well-practiced, seamless sales process. Customers must never sense they are working with two separate departments.
There are two traditionally accepted methods of turning over the customer to the F&I manager. One system calls for the salesperson to escort the customer to the Finance Department, while the other entails the Finance Manager meeting the customer on the showroom floor or at the salesperson’s desk. The key is consistency. Whichever policy is in place should be followed with each and every customer to ensure a winning game plan. The Sales Department and the Finance Department must always keep in mind that they are playing for the same team. In order to win, the transition needs to be handled flawlessly.
The proper time for the introduction is at the point of sale. A premature introduction could scare off the prospective car buyer; if they’re not yet committed to the new investment, how can they consider the additional products and services designed to protect that investment? Conversely, if the introduction occurs too late, say at the time of delivery, the customer probably has already made arrangements for financing and other insurance needs.
There are purely psychological barriers that could inhibit a smooth transition. Salespeople are protective of “their” customer, and are aware that the sale they worked so hard to achieve could conceivably fall apart in the Finance Office. Consequently, their reluctance to introduce their customers to a third party that was not directly involved in the vehicle’s sale is understandable.
F&I Managers can counter this reticence by maintaining open lines of communication. Combat the fear of the unknown – the sequestered transaction between the F&I Manager and the customer – by sharing that information with the appropriate salesperson. That information, however, should not include the customer’s financial particulars. That is a privacy issue that must be protected at all times. The F&I Department can further strengthen its relationship with the Sales Department by keeping it up to date on all deals. When word on a particular deal comes in, whether it’s positive or negative, it should be passed along. Processing all deals quickly and efficiently is also conducive to healthy inter-departmental interaction.
The salesperson, in turn, can prep his or her customers for the F&I experience. If the customer has knowledge of the process, he can mentally prepare for it. That means he won’t be surprised, or upset, when he is asked to spend another 30 minutes at the dealership in the Finance Office after he already has spent hours making his deal.
Educating the Sales staff on the importance of the F&I Department and the value of its products can serve a dual purpose: it can help salespeople sell more vehicles, and can pave the way for increased backend profits. Today’s increasingly competitive marketplace means that few dealerships make any profit in the vehicle contract anymore. With incentives and sales down, profits must be made elsewhere. The selling of products and services has become a necessity. The bottom line is that cooperation between the two departments is essential, so that the left hand knows exactly what the right hand is doing.
Be sure to stay tuned for Part II: Working with the Sales Team!