Six key considerations for choosing the right F&I partner for your dealership
Dealers spend a lot of time trying to maximize profitability in their F&I departments. The truth is, this is one of the few remaining profit centers that are still within your control — you can still choose your partner, products, margins and strategy that best meet your group’s objectives.
While OEMs are slowly starting to penetrate these areas, as of today, dealers can still maintain some manufacturer independence in F&I.
Finding a comprehensive F&I partner is a big decision. They need to deliver results now and future proof your organization for any upcoming changes within the industry. The F&I of today will not be the F&I of tomorrow. Your partner needs to be as fluid and forward thinking as you are so it’s extremely important to select wisely.
Here are six areas to focus on when selecting the right F&I partner:
Product offering: Consider both the breadth and depth of products being offered. Do they fill the F&I gaps of your customer base? Do they align with your group’s positioning and perceived competitive advantage? Most of the major providers offer similar types of products, such as warranty, appearance protection, tire and rim protection, gap insurance, credit and life insurance, and various “bill of sale”-type products such as etching. The question really is, what products are you planning to sell and what strategies are you going to implement to increase penetration?
Sales process provided: As dealer groups continue to expand by both brand and region, it is critical to have a consistent and unified approach to selling products, including digital selling. An F&I Manager in one store must speak the same language as one sitting in another store, and the sales pitch needs to be the same too. Decisions like whether to use menu selling or step selling needs to be established and supported by the partner you select. The goal here is to allow your business office to present as many of the products being offered as possible. The message needs to be one of support to the customer base. At the end of the day, buying extended warranty or paint protection isn’t going to materially change monthly payments so customers need to feel like they got “value” out of the transaction. F&I Managers need to change their focus from maximizing dealer profitability to maximizing the perceived value proposition. The money will naturally follow thereafter.
Reporting: You will need a comprehensive and robust reporting tool. It needs to offer timely KPIs that can be used to drive operational decisions. Cloud-based tools have now become the standard too. I think it’s reasonable to expect an interactive and dynamic reporting portal from your partner as a minimum. It would also be great if your partner’s reporting tool integrated with your DMS system. This will eliminate error, manipulation and wasted time by your business office. Meaningful and timely reporting is a key success factor.
Training: At the end of day, you will choose a partner because of their commitment to support your team. You need them more than they need you. They are the subject matter experts and they can train your team to be ones too. Some providers offer deep offsite training for days at a time while others rely on virtual courses that can be completed on your own time. You need to select one that fits your company’s culture best. Do you believe in the professional development of your staff? If so, show your support by giving them the training tools they need.
Presence within the dealership: Perhaps the biggest item on the list is your partner’s commitment to in-store visits. Force your partner to prove themselves to you. How many in-store visits will they commit to? What type of support are they offering, how will they work with managers and the F&I team? You don’t want to just hear the words, they must do it! This will be the “game changer” and is directly correlated to improved performance. If your prospective partner offers a consistent and value-added presence in your dealership, choose them. Full stop.
Profit sharing: This last point is important but shouldn’t be the deciding factor. Most major providers offer some sort of profit-sharing model. Some are offshore, some are domestic programs. The key is that they offer a “win-win” opportunity. These payouts will be big once you are fully integrated and maximizing the program. There are some tax issues to consider here too if you are considering an offshore program. It generally takes dealers approximately five years to achieve optimization here so you need to be committed for the long run.
Choosing the right F&I Partner is a “major” decision in a dealership and should not be taken lightly. Using a strategic selection method is key. The six criteria presented above will help you in the selection process. Feel free to use it and tweak it to meet your needs.
The right partner is out there—you just need to find them.
