You know you might be in for a rocky time when you start your speech by asking how many people in the room hate you for what you have been writing about, and more than a few people actually raise their hand.
Such was the case for Jim De Luca, V-P of Digital Road to a Sale Inc. and a regular contributor to Canadian AutoWorld.
De Luca gave the keynote address to the crowd at BMO’s business manager conference in Niagara Falls, Ont., in early March. Though he has extensive history in the automotive sales and F&I training arenas, he has been a proponent of the growing trend of reimagining the role and function of the F&I office. The change of heart, thanks largely to efforts by dealership groups south of the border, also comes at a time when customer-buying behaviour has drastically changed.
He mystery shopped Sonic Automotive’s One Sonic-One Experience model at a dealership in North Carolina and wrote about it for this magazine last fall. Since then, he has explored the role F&I plays and how its programs and processes need to evolve with the modern customer.
And while it might seem like De Luca was asked to speak to the lions directly from the den, he wanted to stress that his message is actually positive for business managers willing to change.
“I firmly believe that the automotive space has changed more in the last 10 years than it had in the previous 100,” he said. “And we, as an industry, have to deliver more value to the consumer, when they want it, and how they want it.”
To prove his point that customers are looking for value, he mentioned a recent deal from a dealership he works with in Tilbury, Ont., which is about 50 km east of Windsor.
They had a lead from an Ottawa-area customer who asked three questions about a 2013 Grand Cherokee they had in stock: How does it drive? Has the trailer hitch been used for towing? What’s the store’s best price?
“We shot a video for the customer where we showed the hitch, talked about the capabilities, drove the vehicle a short distance on the highway and then sent the video to him along with the store’s best price,” he explained.
The next day, the customer drove nine hours from Ottawa to purchase the Jeep.
“I went on Auto TRADER and searched for that vehicle. While there were slight differences, he drove by 15 of them to buy the one in Tilbury. Here’s why: We built trust and offered transparency that saved him time,” he said.
De Luca spent much of his time discussing how he feels seamless integration of F&I into new sales strategies is the future. That means making F&I online and doing personal turnovers using technology that exists today.
He also argues F&I should be integrated digitally into transactions and that video should play a much larger role in informing and educating consumers.
The name he has given to the overall strategy of embracing digital shoppers and offering seamless presentations as customers move between the website and the dealership is “omni-channel F&I.”
Today’s digital shopper has been well documented. According to a 2015 McKinsey Report, car buyers are driving an average of 210 km per purchase and visiting 1.3 dealerships in person.
Nearly 20 per cent of buyers don’t test-drive the car anymore; 83 per cent of Millennials surveyed are more likely to purchase something after watching a video.
Perhaps the biggest kicker for F&I personnel is the MakeMyDeal stat from last year that reveals 71 per cent of shoppers would prefer to do their F&I research at home.
He talked about his mystery shop experience and how Sonic Automotive sales reps with the new system make a base salary of $40,000 a year commissions.
The system, well covered in this publication, calls for one person to handle the entire sale from start to finish in a pressure-free environment. But it is important to stress the dealership group hasn’t eliminate F&I departments, but rather refocused the strategy and renamed them “F&I ninjas.”
According to De Luca, the Sonic F&I ninjas make roughly $150,000 to $180,000 a year and never talk to a customer. They get deals bought and coach and train the salespeople after every transaction about the products they sold and didn’t sell – a fact that certainly raised some eyebrows in a room crowded with business managers.
“You cannot eliminate F&I,” he stressed. “The dealership is simply not profitable enough for that. We need the revenue it generates. But we can shift the focus and figure out a better way to communicate the value of our products to the consumers.”
The key is to start with video.
He suggested finding 10 customers in the dealership database that qualify for an extended service plan. Shoot a short video explaining the deal with a little info and email the video off.
“Here’s the beautiful thing about video, it never get’s demoralized and is virtually impervious to criticism, it doesn’t fear rejection and works for you 24/7,” he said. “If you send out 10 videos a day and you have 21 working days in your calendar and you get just 10 per cent return on that, that’s 21 extra warranties per month sold. If you are grossing a minimum of $1,000 each, that’s $21,000 extra in your department.”
He also said you have to break the rule of all – offering every product to every customer every time.
Instead, do a needs-based presentation that is customized and, you guessed it, mobile for customers to make decisions on their own time. Expedite the process by getting out of the office and interact with customers before they are turned over to the business office, he added.
Shoot handover videos on your phone, he stressed. People will watch it.
The overall message De Luca shared was one not of dissolution but rather evolution.
You need to adapt, he said, otherwise you will be left behind.
“AirBnB is the world’s biggest hotel chain and it doesn’t own a hotel. Uber is the world’s biggest taxi company and it doesn’t own a car. Facebook is the largest media company in the world and produces no content. The future is here.”