Have you assessed your finance department’s return on investment lately? This department is often overlooked because of the relatively low cost of operation. This department has no inventory and a low staff size, so it can drop off the ROI radar. The fact is, this department can and should be producing at least the same gross profit numbers as your service department. In our best dealerships, we see the F&I department producing a net contribution close to 100 percent of our absorption rate.
One thing is for certain: if you are not paying close attention to this profit center, you are leaving dollars on the table. Here is a simple evaluation to assess your commitment to F&I profitability:
• How much do you annually spend on special tooling and technical training in your service department?
• How much do you spend on annual training for your F&I department?
Many of us got into this business because we loved to talk about the latest technology, how cool a new exhaust system is or how to tweak a few more ponies out of your engine. How many of us decided to open a dealership because we loved to chat about extended service contracts, priority maintenance agreements and GAP (geeks excluded)? Because of this, we often overlook the F&I department, unless it is performing poorly or fantastically. Most owners and GMs are more likely to help spin a wrench in service than push paper in a box.
Where is the greatest profit potential for our investment? Review the chart to the right.
The investment we are talking about is time, energy and training dollars. If we are not investing in our F&I profit centers at least to the level we invest in our service departments, why are we surprised at the limited growth? Most of us just try to hire turnkey success. This sometimes works, but is only as sustainable as the employee’s attention span. We need the current knowledge, skill and execution to optimize this profit center.
In sports, the best athletes never stop training. They don’t train by themselves, either. They invest significant time and effort to seek out the coaching and methodology that will provide the biggest return. How many coaches does it take to get a single team to the Super Bowl? How often does a PGA pro have someone critique his swing? Selling is a skill that needs to be constantly honed to stay on top. You must find a coach better than you if you want to improve.
Your F&I product vendor should have training and coaching programs in place and available. If they don’t have a dedicated program, start shopping! Inquire about web-based coaching, on-site implementation and off-site seminars. As an example, RPMOne provides multiple levels of F&I and sales dealer development training to their clients. Interstate National has just launched an F&I certification program that includes a three-day workshop with continuing education through their Star Training Group. Some vendors have been providing excellent training and certification programs for years. From my experience, the best programs go far beyond the F&I office to create a dealership-wide selling culture.
In the end, if the training doesn’t produce profit, change the training. You may eventually decide to replace the personnel, but only do so after giving them every opportunity to excel. You will find a more sustainable and profitable outcome by mirroring your training practices in service. You can have the best margins in the world but will not truly succeed until you can move the volume. Much to our consternation, the products will not sell themselves. Invest in the delivery channel, and you will be rewarded. You may pay a little more for the product or training, but remember to always question every expense as a return on your investment. t
RPMOne is a leading provider of F&I products and dealer development services dedicated to serving the powersports market. Due to its comprehensive experience with dealerships, lenders and insurance companies, RPMOne has created top-tier F&I programs, web-based tools, training programs, and sales and marketing systems to meet the unique demands of the industry. RPMOne’s mission is to increase client profit to its fullest potential.
