Digital Retailing: Let’s Talk About F&I

Conversations about digital retailing in the automotive industry tend to center around two things: customer experience and an increase in sales volume. But some dealers feel that it just leads to decreased margins on the front-end in the “race to the bottom,|” and that face-to-face interaction will end in more revenue – whether that's in the front or the back end.

 

With this blog, I'd like to concentrate on F&I and why you don’t need to fear a loss of F&I revenue in the digital retailing process.

 

I often hear from dealers that they don’t want technology to force their stores to become like McDonald’s, where employees simply take orders, and I don't disagree! However, there is much to be said in favor of using technology to help remove friction from the sales process and allowing consumers to make their own decisions. According to a recent article, this can, in fact, lead to increased spending.

 

Remember when the thought of having your inventory online was crazy? Now, you wouldn’t be competitive without it being there. Today, the majority of customers start their car shopping online, and that number increases every year. Why? Because the information sources available continue to grow.

 

It is hard to believe that customers don’t want more information about F&I products before coming into the store, just as they research various vehicle options before they arrive for a test drive. Imagine being the dealer that allows consumers to go online to learn more about your F&I products, to see what products you offer; read about them, and even watch a video explaining each one. That would be a pretty unique value proposition and certainly a differentiator in a highly competitive market that screams the need to be different.

 

Customers have migrated online because they can shop at their leisure and in a manner that is convenient to them. If you put them into a high-pressure sales environment (such as some F&I offices), it can cause discomfort, and they tend to buy less because they don’t understand the products and are uncomfortable.

 

By providing your customers with the information about F&I products up front on your site, they are then better educated when they arrive and less likely to show resistance when they go into F&I, which could translate into higher revenue.

 

In a recent article in Automotive News, Cox Automotive COO Mark O’Neill talked about how F&I offerings should be presented in a way similar to online retailer Amazon's approach. For example, a buyer of a Cadillac Escalade should be able to see F&I products with captions such as "62 percent of Escalade buyers bought this product."

"We would use techniques that customers are very comfortable with, and very used to in other retail shopping experiences online, to present F&I products," O'Neil said. "And the early cases where we've done that in the store with iPads have been very successful in terms of customers taking the time to watch the video and opt-in as opposed to being sold."

Either you tell your customers about your F&I products, or their credit union or finance company will. And that is how you lose F&I revenue. So, don’t make it hard for customers to learn about F&I products before they come in but rather be transparent and allow them to learn on their own. Or you can risk losing that revenue to the fierce aftermarket competition.

It’s time for F&I to enter the realm of digital retailing.

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