I recently heard the 1980s classic, "Don't You (Forget About Me)," by Simple Minds. The song was being used in a TV promo for a returning show on the USA Network. It got me thinking about the always-entertaining relationship between the sales department and the F&I office.
The major ongoing issue, as you all know, centers on how sales departments consistently put together deals that have no regard for F&I profitability. No doubt we could have a lengthy discussion over that issue, especially as the sales process continues to migrate online. So, rather than have a debate neither side will win, I'd like to focus on a couple of things F&I offices can do to maintain profitability after the customer takes delivery of the vehicle.
Yes, the name of the game is to get the customer to agree to a product at the time of purchase. However, with the exception of products like GAP, which has to be included in the deal at the time of purchase, there are several other products that can generate incremental gross profit in F&I. All it takes is a little post-sale marketing. Let's take a look:
Extended Warranties and Service Contracts: In most cases, a customer has the option to purchase a service contract up until the expiration of his or her factory warranty, which means you have a good three-plus years to sell an extension or VSC. So, does your dealership have a marketing strategy to promote those products via e-mail, "snail" mail, text or phone? Is there an offer available that would motivate a customer to purchase a service agreement? Are you checking service repair orders to identify customers whose factory warranties are about to expire? If not, you're missing a great opportunity to market those products.
Aftermarket Accessories: It's amazing that an industry based on car buyers wanting to express themselves by customizing their vehicles is worth $28 billion a year. It's even more amazing that car dealers are only cashing in on 5.3 percent of that market. One reason may be that customers typically add accessories to their vehicles six months or more after taking delivery. Maybe they need to save a little money before pulling the trigger, or maybe that's how long it takes for them to realize their vehicle looks similar to thousands of others on the road. Whichever the case, you must identify your accessory touchpoints to capitalize.
Service Plans: Have you considered developing and deploying your own prepaid maintenance plan? These programs represent an additional revenue stream, and they provide a firm guarantee that you won't send your service department's bread-and-
butter business to the local Jiffy Lube.
New Products for Old Customers:
As you work to expand your product lineup and services in the finance office, don't neglect products and services that don't need to be purchased at the point of sale. Remember, the name of the game is incremental gains. There are plenty of good products available that will help you market to your past customers. I know it sounds overly simplistic, but I also know how difficult it can be to implement a strategy that can pay dividends further down the line in a sell-it-now dealership environment.
But how great would it be to know that, based on your efforts, you can eventually realize an extra two to four service contracts, one or two accessory sales, a couple of PPMs and, just for kicks, the sale of that new vehicle-recovery system you brought in? I always love opportunities that don't force the store to reinvent the wheel to pick up a few extra dollars. So get started, get going and get it done!