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MDCE 2016 - The Foundations of F&I Profit

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Myril Shaw

on 23 September 2017

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Transcript of MDCE 2016 - The Foundations of F&I Profit

Three I's Driving F&I Profit

Inspiration
Infrastructure
Implementation

The Foundations of F&I Profit
Why Your Vision Matters
Today's Agenda
Questions And Answers
Agreeing On Goals
Agree On Goals For Today
Inspiring Your Team
Your Vision For F&I
Goals And Targets
Aligning Your Team
Infrastructure For Success
Lenders And Lending Relationships
Backend Products
Physical Environment
Implementation And Process
Advertising F&I
Training
The Sales/F&I Handoff
F&I Sales Approach
Sell The Unit Versus "Strong But Graceful"
Anytime, Anywhere
Interrupt
Throw Something (Soft)
Lot's Of Interaction
Educational
Fun
Actionable
Energizing
Can We Agree...If This Session Is...
Your Time Is Valuable
You Made An Investment To Be Here
What Do You Intend To Get Out Of This Session?
Coffee Alone May Not Be Enough At 8:15AM
Must Have Stimulating Content And Interaction
The Time Is Too Early And The Topic Too Serious Not To Have Some Fun
And This Is The MDCE 2016 Party
Learn Something New
Leave With An Insight
Strategies, Processes, Insights That Can Be Used As Soon As You Get Back
The Beginning Of A "Must-Do" List
Profitable
If It Doesn't Make Money - It's Just "Interesting"
Can You Use What You Learn To Increase Your F&I Profit?
Energizing
Fun
Educational
Actionable
Profitable
That This Will Be A Great Use Of The Next 80 Minutes?
Vision
Articulating Your F&I Vision
F&I Goals And Targets
Implementation
Vision
Mission
Alignment

What Is Your Opinion?
Is it more important that F&I:
Drive Profit
Facilitate Sales
Do You Think They Are Mutually Exclusive?
Key Messages For Your Team
F&I Is A Critical Profit Center
Contributes Roughly 50% Of Store Net Profit
F&I Adds To Sales - F&I Never Costs Sales
"Aggressive But Graceful In Retreat"
Every Single Customer Meets The Delivery Coordinator
Visible, Concrete Goals And Targets Matter
Set Them - Write Them - Publish Them
#1 - 100% Handover To F&I
No matter what, every single customer sees the Delivery Coordinator.
Every Customer Gets A Full, Menu-Driven Presentation Of Backend Products
Cash Buyers Are Presented Finance Options
#2 - 57% Of Customers Finance In-House
Fact: 70% Of Customers Finance All Or Part Of Their Boat Purchase.
Your Financing Capability Must Be Front And Center In Front Of The Customer
Website
In-Store
In-Message
#3 - 47% Of All Deals Sell Backend
Every Customer Must Receive A Presentation On Backend Products.
Menu Based
Sufficient Products
Knowledgeable On Products
Trained
#4 - F&I Gross Profit 5.5% Of Store Sales
F&I Penetration Drives This Target. When Over 50% Of Deals Are Financed, This Is Achievable.
Maximize F&I Penetration
Maximize Reserve Per Deal
Maximize Backend Pentration And Profit Per Deal
#5 - F&I Cost Less Than 22.5% Of F&I Gross Profit
All The Cost Elements Of Running F&I Should Never Exceed 22.5% Of F&I Gross Profit - For Example, If Your F&I Gross Profit Is $200,000, Total F&I Cost Is $45,000 At Most
#6 - F&I Net Profit Makes Up 45%+ Of Store Net
Rigorous Management Of Every Aspect Of F&I Makes F&I An Equal Partner In Your Store's Net Profit.
Maximize F&I Penetration
Maximize Reserve Per Deal
Maximize Backend Pentration And Profit Per Deal
Control F&I Cost
Costs Include:
Salaries/Benefits
Infrastructure
Compliance
Processing
Goals And Targets
What Do You Think?
1) 100% Handover
2) 57% F&I Penetration
3) 48% Backend Penetration
4) 5.5% F&I Gross Profit Relative To Total Store Sales
5) 22.5% F&I Cost
6) 45% Of Store Net Is F&I
Sales And Finance Alignment
Sales And Finance Are Not Two Teams With A Customer Handoff, They Are One Team With Aligned Goals.
Sales Puts Every Customer In Front Of The Delivery Coordinator
Sales Introduces Products Without Foreclosing On Profit
The Delivery Coordinator Protects Every Unit Sale
The Delivery Coordinator Maximizes Profit
Everyone Is Rewarded And Compensated
Sales And Finance
How Are They Related In Your Store?
Are They Independent Entities?
Are They Interdependent?
How Do Your Policies And Processes Drive This?
F&I Success tools
Lenders
Products
Environment

Lenders
Who Do You Use? How Do You Choose?
Are More Always Better?
Do You Track Your Lender Results?
Quiz Time: When A Customer Applies For Credit, What Are The Three Most Important Credit Qualifiers?
How Many Lenders Do You Need?
You Need Exactly Enough Lenders To Get You The Best Rate Across All Viable Credit Profiles Based On Their Programs and Lending Profiles.
Key Lending Profile Criteria
Min Credit Score
Max Debt To Income (the hidden deal killer)
Max Loan To Income
Max LTV
Min Income
Min Trade History
Co-Apps/Co-Signers
Min/Max Loan
National, Regional Or Local?
For Prime Customers, The Large National Lenders Almost Always Offer The Best Terms - After That...
Key National Lenders
Prime
US Bank
Bank of the West
Bank of the Ozarks
MB Financial
Mid-Tier
Aqua Finance
Non-Prime
Medallion Bank
Merrick Bank
Backend Products
What Do You Offer?
Are You Menu Selling?
Do You Present All Your Products To Every Customer?
Thank You!
For Digital Downloads Of Materials From This Session, please visit www.marinedealerconfernce.com/profitfoundation.
Myril Shaw
First Approval Source, LLC
myril@firstapprovalsource.com
678-866-9954
http://www.firstapprovalsource.com
The Minimum Set Of Backend Profits
Multiple Products Are Important - The Same Product With Multiple Suppliers Is Not (With Specific Exceptions)
The Critical Minimum Set Of Backend Products
Extended Engine Warranty (In Addition To Manu. Specific)
Extended Accessory Package Warranty
GAP
Environmental Protection
Tire and Road Hazard
Pre-Paid Maintenance*
The Physical F&I Presence
Is Your Delivery Office Equipped To Provide Fast, Compliant And Profitable Results?
Key Considerations For Review
Compliance And Office Environment
Loan Processing
Contract Preparation
Compliance And Your Office
There Are Physical Requirements Along With Documentation And Training.
Red Flags Manual And Training Program (Available As A Take-Away From This Session)
Locking Office
Locking Filing Cabinets
Shredder (Cross-Cut Preferred)
Dedicated Scanner,Fax And Printer
Note: Lending Criteria For National Lenders Is Included As A Take-Away From This Session.
Loan Sourcing And Processing
Finance Acquisition Must Be Quick And Convenient For The Customer - Efficient For You.
Consumer Credit Application
Paper (Must Always Be Locked Up When Not In Use)
Online (Must Be Secure - https://)
Sourcing Loans - Submitting Credit Applications To Lenders
Some Lenders Still Accept Faxes (US Bank Does Not)
DealerTrack
AppOne (Wolters Kluwer)
Recommended In Conjunction With Supreme Software's DealershipTracker
Contract Generation
AppOne (Wolters Kluwer)
Recommended In Conjunction With Supreme Software's DealershipTracker
The Environment For F&I Success
Failure To Equip Your Delivery Coordinator With The Minimum Necessary Tools Ensures That The Targets Will Not Be Met.
Do You Have The Necessary Lender Coverage?
Are You Offering Enough Backend Products?
Are Your Processes Efficient And Compliant?
Is Your Office F&I Friendly?
When The Answer To All Four Questions Is "Yes" - You Are On Track For F&I Success.
advertising
Training
sale's Role
approach


Inspiration
Infrastructure
Advertise Finance
If Don't Know You Can Deliver, They Won't Ask - In Fact, They Will Look Elsewhere
"Competitive Financing Available"
On Your Website
On Signs In Your Store
In Your Email Signatures
The Sales Message
Ask For The Credit App Early
"Let's Get Your Credit While We Are Finding Your Boat"
Make Backend Visible - Signs And More
Subliminal (Or Not So Subliminal) Advertising For Backend Products
Extended Warranty Products
Brochures In Every Display Unit
GAP
Picture Of Train/Subway Station With Message, "Mind The GAP - If You Stumble, Don't Fall In - Ask Us How"
Posters In Multiple, Visible Locations
Let Them Know About The Value Of Backend Products Without Saying A Word
More Backend Visible - Signs And More
Subliminal (Or Not So Subliminal) Advertising For Backend Products
Environmental Protection
Vendor Display Units Of Spilled Wine, Spilled Coffee, Fake Tears
Tire And Road Hazard
Flat Tire And Ruined Rim On Prominent Display With A Sign - "Don't Pay The Price For This"
Let Them Know About The Value Of Backend Products Without Saying A Word
F&I Training
F&I Is A Profession - Trained Professionals Deliver Professional Results - Untrained Amatuers Deliver Amatuer Results
F&I Training Must Be Mandatory
Online Training Available
Outside Trainers Available
Do It Yourself
Backend Product Training
Use Your Vendors
The Role And Training Of Sales For F&I
There Are Three Possible Roles That Sales Are Allowed And Encouraged To Play - Only One Maximizes Profit.
1) Sales Is Sales, Finance Is Finance - Sales Does What They Can And Turns The Customer Over To Finance
2) Desk Your Own - Sales And Finance Are The Same Person
3) Sales "Primes The Pump" For Finance And Gets Rewarded
Sales Is Sales - The Island Approach
No Alignment, No Mutual Interest, No Concern By Sales On Maximizing F&I Results.
Easy But Profit Killing
Each Island Has Their Own Interest At Heart
Requires No Training
Minimizes F&I Profit
What Do You Do At Your Store?
Desk Your Own - The Personsal Approach
Personalized Treatment For The Customer - Very Challenging For The Sales Person, If F&I Profit Is A Goal
Great For Customer Relationship
To Be Successful Requires Extensive Training On Boat Products, Backend Products and F&I Techniques
Very Rare Combination Outside Of Highline Automotive
Tendency Is To Protect The Unit Sale At All Cost
Difficult To Test High Reserve, High Backend Profit Opportunities
"Prime The Pump" - F&I Success
Sales And Finance In Complete Alignment - Shared Goals, Common Values
Sales Introduces Finance And Backend Products
Compensation Aligned
Sales Trained In Introducing Finance And Backend
Never Quote Rate, Never Quote Price
Know The Stories That Sell Backend
Once The Customer Is In Love With The Boat, Handoff Is To The Delivery Coordinator
"Prime The Pump" - The Sales Story
Sales Tells The Stories
Sales Does Assumptive Close On Financing
Sales Has And Tells Stories For Every Backend Sign And Demo
"What Rate Can I Get?"
"There Are Just Too Many Factors, Even Beyond Your Credit Score - Our Delivery Coordinator Will Have That For You!"
"How Much Will That Cost?"
"Sorry, I Don't Have Those Rate Sheets, I'll Make Sure That Our Delivery Coordinator Goes Over That"
"Prime The Pump" - Sales Training
Sales Needs Backend Product Stories
Sales Knows Stories About Customers Happy With Backend Products
Sales Knows What Not To Do
Quote Rate
Quote Price On Backend Products
"Prime The Pump" - Aligned Compensation
F&I And Sales Are Compensated For The Others Success With Their Deals
Sales Compensation
Standard Comp On Sale Of Unit
1%-3% Commission On F&I Profit ($100 Minimum On Financed Deal)
Profit Point Bonus
All Sales People Get 1 Point Per $1,000 Of F&I Profit Per Deal
Scores are Tracked and Publicly Posted
Each Quarter, Top Sales Get Management Defined Bonus
Finance Compensation
10% - 15% Of F&I Profit
1% Of Sales Comp On Sale Of Unit (The "Skin In The Game" Bonus)
The F&I Approach
The F&I Hypocratic Oath - First Do No Harm!
Sell The Unit - Then Maximize Profit!
F&I Is Aggressive While Graceful In Retreat
Maximum Reserve
Objection From Customer
"That Is Our First Return, Let Me See What Else We Might Get"
Maximum Backend Profit
Working Down To What The Customer Loves
Focused On Best Profit Products
RULE 1 - NEVER LOSE THE UNIT!
RULE 2 - NEVER GO FOR LESS THAN THE MAXIMUM PROFIT!
Wrapping It All Up
F&I Profit Is Not A Thing!

F&I Profit Is A Holistic Approach Beginning On Your Website (And Maybe Before) And Continuing Until The Customer Takes Delivery.

F&I Profit Starts With Articulating Your Vision, Continues With Providing The Tools And Structures Needed, And Comes Home WithImplemented Process That Drive Success.
It All Starts With Teamwork
Goals Require Execution
How Success Looks
Why Your Vision Matters
Full transcript