Improving Car Buyer Trust with F&I Transparency

by | Financial Content, Insurance Content, Original Content

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 over the years, “keep it simple, complexity leads to confusion and mistrust.”

The F&I department is no stranger to this issue. Which 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 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 correct 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 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.

This is where F&I transparency can do the most good in an auto dealership.

Profit Motivations of F&I Managers

It’s no secret that F&I Managers are often the second 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 salary and income website, payscale.com, F&I Managers have the potential to earn significant income:

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

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.

Fundamental Distrust

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. And I’m talking about any business, not just a car dealership.

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 is met with skepticism and mistrust of your real intentions. It also removes loyalty from the sales equation. Transparency builds trust.

Service Driven 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 loyalty to remain profitable.

So how do you fix this? Building car buyer trust might be your goal, but words are cheap. You need F&I transparency in the dealership sales process before you can build trust with your 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.
  • Introducing 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 bonus and compensation plans. You might be surprised by the ideas that are generated.
  • Creating 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.
  • Putting 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.

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 to sabotage the deal. Non-salespeople might find that shocking, but it’s nothing new and absolutely not limited to F&I. Salespeople have been blowing up deals they don’t like since the dawn of time.

Yes, good salespeople understand the need to take care of their customers. That’s sales 101.

It is also important, however, to protect your income. If the deal has the potential to hurt the salesperson, loyalty to an employer and consideration of the benefit they might get out of it tends to become secondary.

For example, 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) number.

Most 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.

This is 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 Managers Should Always:

  • 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.

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.

Trust is Critical for Business Success

It is crucial to realize the importance of increased transparency in the overall sales and F&I process. Without this buy-in from every employee in a dealership, the goal of maintaining or rebuilding customer trust is simply not achievable.

Trust is critical for business success in any industry. An unhappy customer can broadcast their negative opinion of your business via the public bullhorn of social media. That reputation damage can take months to fix. The better choice is to resolve these issues before they become problems.

Transparency is always a good thing. Improving the F&I process has the potential to improve many areas of a dealership. And a happy customer will provide you with years of priceless word-of-mouth advertising.

Author: Lance Gurganus

Powerhouse Content Creator & Copywriter for Complex Businesses at Copybrander Digital. I specialize in content for regulated industries like insurance, finance, healthcare and law.