Improving Car Buyer Trust with F&I Transparency

by Lance Gurganus | Original Content, Financial Content, Insurance Content, Sales Content

Improving Car Buyer Trust with F&I Transparency

Anyone who has ever bought a new or used vehicle from a car dealer has most likely dealt with the F&I Manager or their department. F&I or finance and insurance Managers are an essential position in an auto dealership.

Introduction to the F&I Manager Position

Unfortunately, the subjects of finance and insurance tend to complicate anything they touch. And not just in car sales. As I’ve often explained to new insurance agents and advisors over the years, “keep it simple, complexity leads to confusion and mistrust.”

The F&I department is no stranger to this issue. This is why, after writing about it for years, I decided to create an overview on improving car buyer trust with F&I transparency along with an introduction to the F&I Manager position.

What is the F&I Department?

In the world of car sales, the F&I department (finance and insurance) plays a critical role in the successful operation of auto dealerships.

The primary function of the F&I Manager is controlling the sales process through vehicle delivery. A car salesperson handles the initial steps in the sales cycle and eventually helps a buyer pick out the type of vehicle, colors, and options, but the F&I Manager handles everything else.

Job Duties of the F&I Manager:

Control the Sales Process – Once a buyer commits to purchase a vehicle, the F&I Manager will step in to handle the rest of the sale.
Secure Financing – F&I Managers act as middlemen between the bank or financing company and the car buyer. Experienced managers will work with banks to find the best rates for their buyers based on their credit rating.
Add-on Products and Service Sales – The F&I Department directly influences a considerable number of departments and profit centers in a dealership. From warranty and vehicle service plans to value-added after-market products such as truck bed-liners.
Handle Vehicle Delivery – the F&I Manager is also responsible for the sales documentation, along with making sure the right vehicle gets delivered to the customer.

Since every car buyer eventually ends up in the F&I Manager’s office, the job they do has the potential to influence the opinion of every customer that buys from a dealership.

F&I Best Practices

F&I is an important position. So how do auto dealerships maintain impeccable standards and the use of industry best practices within the dealership F&I Department? After all, one bad day for an F&I Manager can haunt a dealership on social media for months or years.

Profit Motivations of F&I Managers

It’s no secret that F&I Managers are often the highest-paid dealership employee behind sales managers or owners.

The F&I Manager position involves hard work. But the pay level also lends additional insight into the importance of this job within the dealership operation.

According to the salary and income website, payscale.com, F&I Managers have the potential to earn a significant income.

Average F&I Manager Income

F&I Manager annual pay ranges from $33,346 to $145,461. That includes salary, bonus, profit-sharing, and commissions. (Payscale, Average F&I Manager Salary.)
Experience directly influences annual income ranges for F&I Managers. The national average salary increases to $83,000 annually when it factors in the amount of expertise. (Payscale, Average F&I Manager Salary.)

We’ve covered the various job duties, income, and strategic roles of the F&I department. Now let’s discuss how to improve the transparency of the F&I process to help improve car buyer trust.

Fundamental Distrust

The profit motivations of F&I Managers are frequent discussion topics throughout the internet, especially in scenarios where disgruntled customers feel slighted by their buying experience.

Unfortunately, this leaves the F&I manager in a vulnerable position that could negatively impact both sales and the performance of other departments within the dealership.

If the customers of a business have a fundamental distrust of the sales process, then that business won’t survive.

Skepticism and Mistrust

Your customers need to trust that you have only their best interests in mind. Otherwise, they will find someone that does.

When that trust doesn’t exist, the relationship is adversarial. Everything you do or say meets skepticism and mistrust of your real intentions. It also removes loyalty from the sales equation.

Service-Driven Customer Loyalty

Without customer loyalty, you are essentially turning your business into a commodity operation. Competing solely on price might work for Amazon, but car dealerships need service-driven customer loyalty to remain profitable.

So how do you fix this? You can talk all you want about how building car buyer trust is your goal, but words are cheap.

You need transparency in the dealership sales process, including F&I, before you can build trust with customers.

F&I Manager Transparency

The F&I department handles complicated finance issues for a dealership. As I mentioned above, anytime you complicate something it adds a level of mystery for customers. Unfortunately, that can also lead to a general distrust of the entire process. People don’t trust things that seem overly complicated or takes a lot of time to understand.

F&I Manager Transparency can be accomplished in several ways:

Utilization of new advancements in technology and equipment, such as transactional video recording.
Introduce customer training to focus on the needs of the customer. Servant leadership training is an excellent resource for this.
Management should include the F&I Manager in future discussions about incentivizing bonuses and compensation plans. You might be surprised by the quality of the ideas generated.
Create behind-the-scenes videos, explanation videos, and “how things work” long-form content, similar to this article, to show customers how everything works at the dealership.
Put yourself in the shoes of your customer and anticipate their questions and points of confusion. Then create content to answer those questions before they even set foot in the dealership.

Focus on What Makes Money

In any sales compensation structure, employees quickly learn to focus on the activities needed to earn the most income.

Thus, if you tie your F&I Manager’s pay and future employment prospects to product sales metrics, then increased product sales is what you will get.

Protecting the F&I Manager’s Income

If the F&I Manager has nothing to gain out of a particular sale, they can easily adjust the terms. Fortunately, most F&I managers look at the bigger picture and do what’s right for both the customer and the dealership.

Motivating your employees to do what’s right for the customer is essential to your success — unfortunately, many dealerships design F&I compensation without understanding all the possible outcomes. So protecting the F&I manager’s income becomes a source of contention instead of motivation.

For example, let’s say you had a customer with bad credit that turns down every product sale offered. In this situation, the F&I Manager might be less motivated to close the deal when they consider the extra work required and the negative impact on their PVR (per vehicle retailed) ratio.

Safeguard the Integrity of the Sales Process

Many experienced F&I Managers have workarounds and other techniques to pull from to put the customer in a car without taking a hit to their income or performance numbers. Newer managers don’t have that skills set built yet. Either way, it shouldn’t be an issue in the first place.

That’s why it’s crucial to Implement various transparency steps to safeguard the integrity of the sales process. Otherwise, how would a dealership know that this was happening?

TRAINING TIP:

Transactional Video Recording offers dealerships an additional safeguard to protect the sales process and build employee integrity. For example, your F&I manager may have ideas for solutions that can save deals like the above example, without the negative income aspect. Video provides an additional benefit since the F&I manager can show examples of situations where their ideas would work in real-time.

F&I Manager Tips and Tactics:

Understand compliance requirements and be the F&I expert for the dealership.
Be aware of their profit goals for the dealership while also protecting the interests of the buyer.
Control and guide the sale through the dealership.
Be accessible to sales staff to answer questions that might help them close the buyer before they reach your office.

082619 0526 ImprovingCa2 | Copybrander

TRAINING TIP:

Ask your manager to practice their F&I presentation and sales process while on camera. Invite them to do this alone until they start to feel more comfortable with the process. Then you can slowly introduce other dealership staff to review videos but only allow positive feedback. A poorly executed or ill-timed joke, regardless of the intent, has the potential to destroy any progress you’ve made. Eventually, your employees should be more comfortable on camera.

Consequences of Inaction are Far Worse

Achieving real transparency in your sales and F&I process is possible only with the buy-in from every employee. That takes time to introduce and train properly. Without it, the essential trust aspect will always be missing from your organization.

The consequences of inaction are far worse than the perceived costs associated with the time and resources necessary to implement a program such as this.

Any unhappy customer can broadcast their negative opinion of your business via the public bullhorn of social media. The reputation damage can take months to fix and cost thousands of dollars in missed sales.