Right Products to Right People

Las Vegas — Finance and insurance managers who sell the right products to the right people will see customer satisfaction index scores rise, says David Cole, chairman and CEO of The Warrranty Group.

It's a question of human nature. “You'll increase your CSI because you are satisfying a need,” Cole says. But an F&I manager first must discover those needs.

“Don't be afraid to ask customers questions or to let them talk,” says Cole, whose automotive career began as an F&I manager at a Ford dealership. “Customers will provide all the information you need, if you give them a chance.”

He says the number of F&I products and services available today is “staggering.”

They compete with each other for shelf space, he says. “There are so many products, it is hard to determine which ones to present.”

That's why it's important to learn customer needs — and sell with those in mind. “You can't sell all 12 products to one person,” Cole tells an F&I Management and Technology conference here. “But you can make a bit off a lot of people, and it will increase your CSI.”

Knowing the customer means understanding that a person who just put down 40% on a vehicle doesn't need gap insurance “because there is no gap,” Cole says.

Likewise, it wastes valuable selling time in the F&I office detailing a high-mileage extended-warranty plan to a customer who doesn't drive much.

“Each customer is different,” Cole says, emphasizing the importance of selling products that “add value to the ownership experience.”

F&I as a designated dealership department started in the 1960s when dealerships began offering credit insurance on vehicles.

“When credit insurance took off, it required someone to manage that department,” Cole says.

But credit insurance today is a smaller part of the business, a victim of government restrictions. “Credit insurance was the bread and butter, but it has become one of many offerings today,” he says.

Current F&I top-sellers are extended warranties and gap insurance, followed by pre-paid maintenance and care-care programs.

The average F&I department contributes to 30% of a dealership's gross profits compared with about 23% in 1996, according to the National Automobile Dealers Assn.

“It's a vital piece of dealership profitability,” Cole says.

But as F&I profits increased, so did government regulation and compliance requirements. Compliance is now “a given,” he says.

“When I started in 1973, no one heard of compliance. We had to do some things pertaining to disclosures, but there was no organization out there looking at compliance. The number of regulations today is mind-boggling.”

Consequently, it's not only important for dealers to offer compliance training to staffers, but also “measure that employees are applying the training,” Cole says. “The ultimate responsibility is with the dealer because it is your business.”

Modern technology will streamline F&I operations, improve accuracy and enhance product presentations, he says. “Technology will assist you but not replace you.”

As much as video presentations today help sell certain “intangible” F&I products such as extended warranties, “product presentation will always require interaction with the customer,” Cole says.

Cole oversees a warranty company providing underwriting, administration and training to major industries, including automotive, in 33 countries.

F&I issues — ranging from compliance to modern-technology shifts — exist on a global basis, he says. “But the U.S. is leap years ahead.”