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Rebecca Chernek

Author's details

Name: Rebecca Chernek
Date registered: April 8, 2013
URL: http://www.chernekconsulting.com

Biography

Becky Chernek has worked with numerous F&I insurance companies throughout North America and offers in-dealership training to franchises of all sizes. Her continuing education programs have received high acclaim for reducing turnover and helping dealerships build a harmonious team environment. Additional services are available via the Chernek Consulting Virtual Pro platform, which includes video role-play for optimum coursework retention. Visit Becky’s website www.chernekconsulting.com to learn more.

Latest posts

  1. Turbocharge Your Profits by Extracting the Sales Bottleneck — January 26, 2017
  2. Turbocharge Your Profits by Extracting the Sales Bottleneck — January 26, 2016
  3. Is Your Menu Working You or Are You Working The Menu? — September 1, 2015
  4. Integrating Desking and F&I to Boost Sales and Profits — April 21, 2015
  5. The Great Debate – Gen Y and F&I — September 16, 2014

Most commented posts

  1. The Great Debate – Gen Y and F&I — 3 comments
  2. Turbocharge Your Profits by Extracting the Sales Bottleneck — 2 comments
  3. Turbocharge Your Profits by Extracting the Sales Bottleneck — 2 comments
  4. Integrating Desking and F&I to Boost Sales and Profits — 2 comments
  5. Sales Transparency Isn’t Passé — 1 comment

Author's posts listings

Rebecca Chernek

Turbocharge Your Profits by Extracting the Sales Bottleneck

D7B_5371

Bottlenecks are the killers of progress and productivity. Where there’s a bottleneck, there’s a problem! Unfortunately, the vast majority of dealerships aren’t aware that their biggest bottleneck—the one that exists between sales and F&I and brings things to a crawl—can be removed. How? By seamlessly integrating the two processes.

Getting to the root of the problem

Think about how many customers these days are flocking to third-party platforms like TrueCar. The reason why is easy to understand: Buyers have grown tired of the century-old model of traditional auto sales. They want transparency and straight talk. And when given the opportunity to participate in a buying process that offers this—especially a car buying experience that doesn’t require them to sit in the dealership for hours on end waiting for financial approval—they’re only all too eager to snatch it up!

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So what’s the best way for dealerships to combat lost business to third parties? It’s certainly not to go on the offensive against the likes of TrueCar and CarMax. These companies are only offering a service that people want. Instead, the answer is to look within and to take decisive action to enact changes that will bring your dealership up to speed with the most highly performing auto sellers on the planet.

It takes two to tango!

As with all collaborative efforts, the success of my approach hinges on teamwork. Without cooperation between sales managers and F&I managers, success simply will not happen. This is why I urge dealerships to encourage their departments to work together.

It isn’t always an easy task to break tradition, though, so I often recommend that representatives from both departments attend a retreat or workshop together. The NCM Institute makes it easy to get everyone to class with their buy one, get one free option. If you commit to sending someone from each department, they’ll let you send one of them for free!

Not only does the experience serve as a way of building camaraderie, but each will learn how to communicate about the issues related to both of their divisions. Once everyone gets on the same page and stays there, you will begin to see results!

Digital retailing and dealer expectations

Digital retailing puts the customer firmly in the driver’s seat by allowing them to not only shop for cars online but also the ability to secure financing online. Companies like Vroom, Carvana, CARite, and a growing number of large auto dealerships across the country are implementing this radical new approach. In expanding their presence to the digital landscape, these companies are poised to cash in on the long-held desires of auto buyers everywhere: the desire to do much of the heavy lifting themselves—not to mention the ability to walk away if the deal they find doesn’t match their precise needs. Forward-thinking companies and dealerships will secure their position at the head of the pack by adopting these processes and maximizing their profits.

Key elements for desking and F&I success

Once everyone is on board, and a genuine sense of team play has been implemented, the next step is to consider which tasks you want each individual team member to do so that everyone pulls in the same direction. Bear in mind that the approach your dealership takes will vary by your product and marketing, but I recommend that all dealers consider these essential steps:

  • Establish credit criteria early in the sales process. Among one of the most important changes a dealership should consider is when to discuss credit criteria. Perhaps it might be best to bring it up earlier in the sale if the customer has mentioned past credit problems. It certainly makes sense before the customer is landed on the wrong vehicle and either financing is not available or payments are out of reach.
  • Determine the best time to talk payments. Is it something best discussed up front in sales, or is it a conversation more suited to the F&I office? When it comes to selling vehicles, there’s no room for ambiguity. You must decide how sales and F&I can position you for success in menu presentation and improve profit.
  • Identify “The Interview” and clarify why it is so important. An essential component to expediting the sale (and, in turn, cutting delivery time in half) is something I call “The Interview”—a question and answer phase that starts at the initial meet-and-greet. This includes having the F&I manager engage in conversation with the customer early on in discussions to learn the reasons behind potential low credit ratings and slow pay histories. What’s the best way for this team to determine customer creditworthiness and plant the seeds for menu sales further in the process?
  • Getting the paperwork straight the first time. Sending a client into F&I with an incomplete deal checklist and no idea if they will be approved for credit is one of the principal contributors to the dreaded bottleneck. In my workshop, participants will gain an understanding of the importance of getting paperwork right the first time.

Ready to solve your Desking and F&I bottleneck? Join Becky Chernek for her upcoming NCMi® class, Desking and F&I Integration. In this workshop, you’ll learn how to develop a seamless transition that results not only in happier customers but also in dramatically improved sales and profit.

Permanent link to this article: http://blog.ncm20.com/2017/01/turbocharge-your-profits-by-extracting-the-sales-bottleneck-2/

Rebecca Chernek

Turbocharge Your Profits by Extracting the Sales Bottleneck

apptmnt

Everybody knows that bottlenecks are the killers of progress and productivity. Where there’s a bottleneck, there’s a problem! Unfortunately, the vast majority of dealerships aren’t aware that their biggest bottleneck—the one that exists between sales and F&I and brings things to a crawl—can be removed. How? By seamlessly integrating the two.

Getting to the Root of the Problem

Consider how many customers these days are flocking to third party platforms like TrueCar. The reason for this is easy to understand. Buyers have grown tired of the century-old model of traditional auto sales. They want transparency and straight talk. And when given the opportunity to participate in a buying process that offers this—especially a car buying experience that doesn’t require them to sit in the dealership for hours on end waiting for financial approval—they’re only all too eager to snatch it up!

So what’s the best way for dealerships to combat this? It’s certainly not to go on the offense against the likes of TrueCar and Carmax. They’re only offering a service that people want. Instead, the answer is to look within and to take decisive action to enact changes that will bring your dealership up to speed with the most highly performing auto sellers on the planet.

It Takes Two to Tango!

As with all collaborative efforts, the success of my approach hinges on teamwork. Without cooperation between sales managers and F&I managers, success simply will not happen. This is why I urge dealerships to have the departments to work together. It isn’t always an easy task to break tradition, though, so I often recommend that representatives from both attend a retreat or workshop together. Not only does the experience build camaraderie, but they learn how to communicate about the issues related to both their divisions. And, once everyone gets on the same page and stays there, you can start seeing results!

Key Elements for Desking and F&I Success

Once everyone is operating as a team, you much consider what you want them to do. The approach you take will vary by your product and marketing, but I recommend that all dealers consider these essentials when combining the two:

  • Establish credit criteria early in the sales process. Among one of the most important changes any dealership can make to their approach is to start talking credit scores long in advance of negotiations, and well before the customer decides on a car to buy.
  • Determine the best time to talk payments. Is it something best discussed up-front in sales, or is it a conversation more suited to the F&I office? When it comes to selling vehicles, there’s no room for ambiguity here. You need to decide how sales and F&I can position you for success in menu presentation and improve profit.
  • Identify “The Interview” and clarify why it is so important. An essential component to expediting the sale (and, in turn, cutting delivery time in half) is something I call “The Interview”—a question and answer phase that starts at the initial meet-and-greet. This includes having the F&I manager engage in conversation with the customer early on in discussions to learn the reasons behind potential low credit ratings and slow pay histories. What’s the best way for this team to determine customer creditworthiness and plant the seeds for menu sales further in the process?
  • Getting the paperwork straight the first time. Sending a customer into F&I with an incomplete deal checklist and no idea if they will be approved for credit is one of the principal contributors to the dreaded bottleneck. In my workshop, participants will gain an understanding of the importance of getting paperwork right the first time.

Ready to solve your Desking and F&I bottleneck? Join Becky Chernek for her upcoming NCMi® class, Desking and F&I Integration. In this workshop, you’ll learn how to develop a seamless customer transition that results not only in happier customers, but also in dramatically improved sales and profit.

Permanent link to this article: http://blog.ncm20.com/2016/01/turbocharge-your-profits-by-extracting-the-sales-bottleneck/

Rebecca Chernek

Is Your Menu Working You or Are You Working The Menu?

Car key, credit card on a signed sales contract

AutoNation USA, the #1 publicly-owned automotive retailer, opened its doors as a mega “one pricing” pre-owned operation in 1997. It built elaborate showrooms; county records show one was 218,000 square feet. The showrooms included a café, a playroom and an aftermarket display platform.

Kiosks with computers were placed throughout the store enabling consumers to efficiently check out in-stock inventory or to submit a loan application. Customers were greeted at these kiosks by F&I personnel, which meant that all deliveries were made out on the floor. The finance office was used strictly for printing documents.

Most importantly, AutoNation was the principal leader of full disclosure selling in finance—a transparent, upfront sales philosophy. Using this philosophy as its key initiative has served them well. In a recent 2013 article posted by Bernie Woodall in Reuters, AutoNation’s earnings beat Wall Street estimates. Michael Jackson reported that he expects “U.S. industry new vehicles sales to reach the mid-15 million range in 2013, which would mark a rise of about 7 percent from last year and the highest sales total since 2007.” Its F&I profits also reached an all-time record, up 31 percent from the fourth quarter of 2011. F&I Showroom’s February 21, 2013, issue reported that AutoNation’s total revenue reached $4.2 billion, up 13% since last year.

Those are impressive numbers.

You’re thinking that managing $1,300 per car isn’t always achievable, but it might be, if you shared their zero tolerance for deceptive practices. If your customers walk away with any hint of dishonesty, you can almost assure yourself of a chargeback. Your “best practices” application begins with the menu presentation. Where do you stand? Do you disclose every single buying term before presentation of products? Do you try to work the system – and fail to realize that full disclosure selling is the means to significant sales achievement?

Since implementing menu selling for the AutoNation mega dealer in 1997, our division has presented thousands of menus on the showroom floor. The F&I PVR increased significantly year after year. We used paper menus. Unfortunately, F&I managers today are using a variety of online menu versions that inspire “rush” service—service that might not present every part of the menu or full disclosure 100% of the time. The menus are super-streamlined and programmed from one software provider to another; they make a list of claims about your potential to significantly increase your F&I profits, if you use their software. You might. For a time. Especially if you don’t fully understand the reason behind full disclosure selling and why, if the terms are removed from the menu verbiage in the software menu version, the dealer is open to potential law suits.

Inspect the menu version you’re currently using. Does it itemize buying numbers, APR, terms or base payment of the vehicle purchase? Is every product listed with full discloser? Does your state (like California) require the discloser of the base payment prior to presentation of products? Do you take whatever time is necessary with every customer to clearly disclose what they’re paying for the vehicle and all terms?

Tom Hudson, in F&I Magazine, said, “So, even if federal law and the law of your state do not require the disclosure of an optional products menu, would I advise a dealer to use one and to disclose a ‘base payment’ as part of the menu presentation? Without a second thought.”

Menu selling isn’t a time-wasting chore.
Think KISS—Keep it Simple Silly.

To be successful with menu selling, be consistent. Establish a well-rehearsed system that is interactive with your customer. Know the terms; define them with clarity. Don’t pack an endless number of products on the menu. Stick to basics. A menu is not a scroll. Itemize all products and offer two payment options. Be upfront and customer friendly. Offer all the products 100% of the time, but stick to the point. Don’t ramble. Throw out the sales jargon, pitches and props, Get rid of the aftermarket sales kits on the walls or your desk. Act like the professional you are, but treat your customer with the same courtesy you would your neighbor. Don’t think of your menu presentation as a gimmick.

If your online menu or next best menu presentation takes longer than five minutes, consider utilizing a printed menu that keeps you on track. Remember, less is more! A delivery should take no more than 30 minutes. Most customers would rather work with an F&I manager who presents a paper menu effectively than an automated menu that promises a quick fix! Automated online presentation technology might represent the paperless, so-called “green” future, but it won’t take the place of hands-on customer service that comes with the presentation of menu products on paper that can be held.

Follow AutoNation’s lead. It has demonstrated convincingly that full disclosure selling is the driver behind their success. They have mastered the F&I office, and their ethical standard of business practices prevails. If you aren’t achieving over $1,000 PVR, ask yourself: Is your menu working you or are you working the menu?

Becky Chernek is a regular contributor to the Up To Speed blog on F&I best practices. To learn more about Chernek Consulting or to find out if your desking process supports full disclosure menu selling, visit http://www.ccilearningcenter.com/, email becky@chernekconsulting.com, or call 404-276-4026.

desking

Permanent link to this article: http://blog.ncm20.com/2015/09/is-your-menu-working-you-or-are-you-working-the-menu/

Rebecca Chernek

Integrating Desking and F&I to Boost Sales and Profits

keyboard

I developed my Desking and F&I Integration workshop to address the single biggest factor limiting sales and profits in dealerships today – the bottleneck that exists between the sales and F&I department. It’s caused by an entrenched “Us vs. Them” mentality that evolved during the F&I industry’s first quarter century. Because “it’s always been this way,” dealers accept it as the status quo.

The lack of integration between sales and F&I yields only negatives. It’s the reason customers like the True Car model. They’re tired of games. They want straight talk. They’re tired of being dragged through the mud. They’re tired of waiting for hours at the dealership, only to find they can’t get financed for the car they thought they’d be driving home that day.

Desking and F&I Integration takes a hard look at the problem, why it exists, and offers proven solutions. My workshop provides a system that delivers a seamless, transparent and resoundingly positive customer experience – while boosting sales and profit! Because it requires teamwork between sales management and F&I managers, I recommend that dealerships send a representative from each department to attend the workshop.

Before you can fix something, you have to recognize why it doesn’t work.

I get workshop attendees thinking about how things work at their dealership – and how they should work. We’ll talk about how important it is to have a meeting of the minds between sales managers and F&I – and the customer.

We address issues that impact the overall customer experience, from how the sales department exchanges information about the sale, to finalizing the deal with the F&I manager. When is the best time to talk payments – before or after the customer goes into the F&I office? We talk about why not having a true meeting of the minds will undermine your menu every time – and reduce profits earned.

We talk about why establishing credit criteria earlier in the sale process helps to properly land the customer on a vehicle he can afford. And why structuring the unit earlier in the process allows for more units sold – while maximizing profits and limiting liability.

I share why it’s so important to conduct what I call “The Interview,” to qualify the customer and establish value points for later menu sales. The Interview occurs during the meet-and-greet and during the transaction review process, but it’s essential to expediting the sale and maximizing profits.

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Besides contributing to the customer’s sense of a seamless process, having the F&I manager engage with the customer earlier in the buying process to learn the reason behind limited credit or slow pay history will pay off in several ways. Getting the story from the customer can result in stronger call-back decisions and fewer declined offerings. And the F&I manager can use information gathered during the meeting at the sales person’s desk to reduce customer resistance to products offered later during the menu presentation. Taking the time to meet with the customer briefly will cut delivery time in half.

How will the customer perceive the introduction to F&I? Will the customer see it as a one- or two-step process? Do old methodologies increase customer resistance? Has the sales department been concise with the buying numbers? Do we have a true meeting of the minds before the customer makes his way into the F&I office?

Why is that important? It’s all about the bottom line. With an F&I bottleneck, it takes too much time to deliver the car… is the paper work straight? Is the deal checklist complete and ready to go? What if the customer isn’t approved?

We’ll talk about why time is your worst enemy – deterring sales and reducing profits. If the dealer expects to use menu selling, how does that work if all the terms haven’t been confirmed with the customer prior to the menu presentation? Would it make sense to confirm the transaction prior to a menu presentation – and why is that so important?

The system I propose takes into account that every customer is different. I offer suggestions for managing subprime customers to enhance the customer’s experience and maximize dealer profit while limiting liability.

The workshop culminates in role-play sessions that allow attendees to practice what they’ve learned. It’s an excellent opportunity for sales managers and F&I people to work through new word tracks and hand-offs to another team member.

The “Us vs. Them” mentality is a dinosaur throwback that only drags the customer, sales manager, F&I manager, and dealership down. Customers and the marketplace have changed – it’s time to evolve and thrive in this new landscape.

Attendees will return to their dealerships ready to implement a system that will speed up delivery, putting wheels over curb in a fraction of the time compared to when your sales team and F&I staff were at loggerheads. Your F&I manager will have been able to present a menu to a trusting customer who appreciates the transparent process and the dealership team that understands his needs. Your satisfied customer will tell everyone he knows, and you’ll be delivering more units in one day than you ever thought possible.

Permanent link to this article: http://blog.ncm20.com/2015/04/integrating-desking-and-fi-to-boost-sales-and-profits/

Rebecca Chernek

The Great Debate – Gen Y and F&I

thumbs

A little while ago I wrote a blog post for NCM entitled: F&I for Gen Y: Their Way or the Highway. This post set off a storm of controversy that continues to generate some spirited conversations between what some would call “old lions” and “young lions.” Or, if you prefer, “traditional” practitioners against those who embrace new methodologies and process when selling and financing vehicles.

The question at the epicenter of the argument is:

Should dealerships change the way they do business in order to accommodate the new generation of car buyers or is such an adjustment unnecessary?

Some say yes, some say hell no. There are some who insist that this generation is exactly the same as previous generations, with the same expectations and requirements. There is also a position that, even if today’s consumer has different expectations, they will eventually adjust to processes designed to “help us, help them.” But as with most subjects, everyone has an opinion.

At the heart of this debate is the resistance among many to the notion that any consumer – young or old, Gen Y or Baby Boomer – has the right to demand that a dealership speed up delivery time. Comments like “It takes as long as it takes” and “You can’t always get what you want” abound. Some have even gone so far as to declare, “These Gen Y customers have a majority of subprime credit over 50%. Who are they to tell us how quickly we respond to obtain bank approval, even if it takes all day?” In addition, the position that “customers have always wanted a dealership to speed up delivery time, so this is nothing new” is also common.

You will find many in our industry who share this viewpoint, from sales floor staff to F&I pros. The belief is that if someone wants to buy a car, they need to cool their jets and learn to wait, just like their parents or grandparents were conditioned to do in the past. Either the customer adapts, or they simply won’t be buying a car at their dealership. The challenge here is that it’s obvious when you read trade publications that the consumer of today is extremely sensitive to how long something takes and will reject a business far more often than before because said business made the process less convenient or a “waste of their time.”

The espousers of these opinions represent a small and vocal percentage of auto sales professionals that see the concept of change as a threat to the traditional way they’ve always done business. This group gives little consideration to adjusting outdated processes that would prevent the customer from enduring long hours at the dealership waiting for approval. Instead, it’s their way or the highway.

But it’s not all resistance and foot-dragging in the high stakes game of auto sales. Some, like Chris Spensley, an industry professional with nearly 30 years of experience, lay claim to what I see as a clear and vital understanding of how generations change. Whether that change can be considered evolution or devolution is another argument for another day. The fact remains, it’s happening – and dealers who opt to dig in their heels and hold fast to their rapidly aging traditions may suffer for their inflexibility in the long run. Things just aren’t the same way they have always been in the information age.

“Customers don’t have to do anything,” Spensley says; pointing to what he sees as “the most fundamental flaw” in the way far too many in the auto industry think. “Expecting them to adjust to us is a pretty silly notion. We have to adjust.”

Spensley goes on to shed light on the fact that Gen Y auto customers are now exceeding Gen X in vehicle purchases, making it all the more important to gain an understanding of their expectations when they walk onto a car lot. “That starts with coming to the realization that the way we have done things in the past simply does not work in a lot of cases,” he says.

To be clear, nobody is suggesting that dealerships undergo radical changes to their business models. For example, one of the core focuses of the coaching I offer, F&I Training – Nonprime & Subprime, revolves around the critical support for dealerships to understand the benefit of training their staff on the necessary steps to speed up loan prequalification. That’s not reinventing the wheel – that’s refining it. Taking the time to manage consumer expectations and making adjustments in consideration of time and convenience.

Ultimately, the bottom line is this:

If car buying customers are spending any longer than 30 minutes in the F&I office, you should be asking yourself why. More importantly, you should be asking yourself what you could do to change that.

In order to avoid landing a customer on a car they could never possibly qualify or budget for, sales teams must be tasked with establishing basic credit criteria to identify certain awareness-raising flags. It’s as simple as that. When numbers speak louder than words or wishes, it’s absolute folly to take any other approach.

Speeding up delivery time isn’t just about appeasing the customer’s desire to get in and out as quickly as possible. It’s also about future earnings potential. It’s about ensuring that they send referrals back your way, and ensuring that they come back again the next time they’re in the market for a new ride. To accomplish this, it’s crucial that dealerships get their act together. A big part of this involves taking a long hard look in the mirror (and into your existing processes) and asking some pointed questions:

  • What is the customer’s overall perception of your dealership?
  • Do they like you, or are they just suffering your ineptitude because you’re the only lot in town?
  • Are you credible? Will you do as you say you will?
  • Is it likely the customer will return to your dealership anytime in the near future?
  • Did the customer have to endure hours waiting on bank approval, or dreaded negotiation, or the embarrassment of being switched from one car to another – or, worse yet, finding themselves stuffed into a car payment outside of their budget only to experience a serious case of buyer’s remorse?
  • What will be the chance of them telling their friends and neighbors they had a positive buying experience at your dealership?
  • Finally, and most importantly: Do you even care? You should.

According to AutoTrader.com’s 2014 Automotive Buyer Influence Study, Millennials (the 74-million strong generation born after 1980, sometimes referred to as Gen Y) are changing the way cars are bought and sold. Today, young buyers represent about 12 percent of the overall auto buying public. But in the next six years, between now and 2020, that percentage is expected to rise sharply to 40 percent.

Adding to the urgent need to cater to this rapidly growing consumer base is the fact that Gen Y auto buyers today make up for 35 percent of all used car sales – exceeding the 26 percent represented by Gen X buyers and the 32 percent share Baby Boomers account for.

Along with that major shift will come significant changes spurred by the mobile revolution. Already, half of all Millennials say they’ve used their smartphones to shop for cars in the past. According to AutoTrader.com predictions, this percentage will jump to 80 percent by 2020. If stats like these aren’t enough to convince you that young buyers are going to have a transformative impact on the auto industry, you’re probably just not paying attention.

It’s clear I’m not alone in my belief that dealers who espouse an “our way or the highway” attitude will soon be left behind by competitors who see this opportunity for what it is. In many ways, what’s going on today reminds me a lot of the days when Saturn first opened their doors. Industry naysayers proclaimed loudly that: “customers want to negotiate” and predicted within a year, Saturn would fold. It didn’t. It also calls to mind those who claimed menu selling was nothing more than a fad that would never survive the times. They were also wrong.

With the ever-increasing numbers of consumers who are gravitating to transparent online car sales sites operated by corporate giants, it’s clear the industry is experiencing yet another massive shift. Like rock and roll, these new sales methodologies are here to stay. Will you survive the change?


Upcoming course from the NCM Institute: Principles of Express Service Management. Classes begin on September 30th at the NCM Headquarters in Kansas City. Full details here.

exp_service

Permanent link to this article: http://blog.ncm20.com/2014/09/the-great-debate-gen-y-and-fi/

Rebecca Chernek

F&I for Gen Y: Their Way or the Highway

time

These days, slicing and dicing away at the amount of time it takes for a customer to buy a car is the name of the game in the auto industry. It makes perfect sense. You can’t fault consumers for not wanting to spend hours trapped inside a dealership. Especially the Gen Y crowd, that ever-growing consumer base whose attention spans are seldom wider than their feet.

In truth, there’s not a dealer in the world that wants to deal with impatient buyers. But guess what? You’d better get over it. At 80 million strong, Gen Y consumers make up approximately 26 percent of today’s auto buying crowd. And you had better believe that figure is going to grow as Baby Boomers (who remain today’s largest auto buying base) sail into their sunset years, followed rapidly in suit by Generation X.

So what’s the trick to attracting the latest generation of car buyers and getting them into your dealership?

Simply put: doing things their way. Gen Y buyers aren’t just heavy on impatience, but they’ve also got a low tolerance for high-pressure sales tactics – not to mention extra time spent inside the F&I office. The fact is, by the time a Gen Y buyer has approached you, they’ve likely already done extensive online research for the best deals possible. In other words, they know what they want. And they expect you to give it to them.

Big league players like Penske and Morrie’s Automotive Group are wise to this, and they’re implementing changes that are turning the auto sales industry on its ear. These players believe it’s entirely reasonable to time an entire sales transaction within 60 minutes, thus playing straight to the deepest wishes and desires of a new generation of car buyers.

Naturally, this is something that can’t happen overnight. In order to pull this off, a dealer would have to transform into something of a “one-price store” with no handoff to the F&I department. A seamless process would have to be developed and put into place – but it can be done. Throughout my own career, I have worked with a handful of dealers who embraced this all-in-one culture. Interestingly enough, those dealers saw consistently increased sales and profits in both the front and back end.

Before anyone should accuse me of advocating for the abolition of the F&I role, let me make one thing clear: this is not what I’m saying. Yet it stands to reason that total delivery time must become a serious consideration – and that deliveries in F&I any longer than 30 minutes max can and should no longer be tolerated.

In order to accomplish this not-inconsiderable task, you first have to understand why deliveries take so much longer than they should. Often, I conduct on-site dealership analyses to try to determine why customers spend so much time in the F&I office. What I frequently find is both illuminating and a bit frustrating:

  • Messy deals being handed off from the sales department
  • Zero consistency on the sales floor, with deals infrequently closed on payment or price
  • Incomplete checklists that aren’t signed off by the sales manager
  • Missing buyer agreements in deal jackets. This represents no meeting of the minds between the customer and the dealership, and relies too much on guesswork. The salesperson has skipped critical steps in the process – in some instances not even offering the customer the opportunity to take a test drive.
  • Little to no sales floor training on how to properly fill out documentation
  • Inaccurate payoff and trade information
  • Incomplete rebate forms
  • Unverified insurance information
  • A lack of menu usage or any other sort of selling strategy

There are great benefits to the F&I interview process. But unless management actually gets behind the practice with its full support, things rarely go the way they should. A point of fact is that the F&I interview works to reduce – and in some cases, eliminate – the anxiety that a customer feels when talking finances. It builds a common bond, reduces errors, and dramatically speeds up delivery. Not to mention, it also increases dealership profits.

On the other hand, passing a customer off to F&I without first performing the necessary due diligence results in a doubling of the time necessary to close the deal. This puts the dealership at jeopardy of loss of buyer faith and, ultimately, loss of sales.

Lack of menu usage is yet another common issue driving increased time frames. When done right, and when limited to no more than six products, menu presentations are short and concise and take a maximum of five minutes.

Less is always more, even in the car selling business.

The all-too-common practice of spending “as much time as it takes” to go over all products is a foolish endeavor. Time is of the essence. And time spent ironing out details and running information checks that should have been taken care of on the sales floor is a fool’s gamble.

Auto dealers these days cannot afford to fly by the seat of their pants and simply hope for a reduction of delivery time. That’s simply not feasible. Creating an atmosphere where all players are on the same page and where a consistent process is enforced is the only answer. Ultimately, this means having a zero-tolerance rule for “Lone Ranger” tactics which frequently – if not always – undermine results.

This is the bottom line:

If you want to cut delivery time in half and appease the hurried attitudes of today’s younger buyers, you’re going to have to make big changes. Those changes start with ensuring salespeople dot their i’s and cross their t’s before so much as thinking about forwarding a customer to F&I. And every manager must pitch in – it’s a team effort. Sure, this is easier said than done. But it’s far more preferable to losing that rapidly growing segment of potential buyers – or losing out on maximizing your F&I potential.

As Michael Jordan once said, “Talent wins games, but teamwork and intelligence wins championships.” Taking your dealership to championship level means employing a heavily-focused, well-managed process that puts everyone – from the boss up top to the lot attendant – on the same page. It’s only when everyone moves in unison that you can really make big strides forward.

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Permanent link to this article: http://blog.ncm20.com/2014/08/fi-for-gen-y-their-way-or-the-highway/

Rebecca Chernek

Is Transparency Good or Bad?

HonestAbe “Transparency” has been a buzz-word in our industry every since Saturn first introduced the concept of no-haggle pricing back in 1985. AutoNation took it a step further in 1997 when they introduced no-haggle mega-stores offering one-price pre-owned vehicles. And more recently, TrueCar has brought the concept of one-price pricing to the Internet. Today, there appears to be two camps when it comes to whether or not no-haggle pricing and transparency is a good thing for our industry. In one camp are those who insist that car buyers really want to negotiate and “play the game,” regardless of what they might say in an anonymous survey. Whatever value price a dealer offers will never be good enough, the thinking goes. In the other camp are those who recognize the power of real transparency, in both sales and F&I, to attract customers and give them a positive buying experience. Buyers really are tired of playing the game. This thinking goes: the idea of negotiating back and forth with a dealership and running all over town brandishing different dealer quotes is not something that appeals to them.

Paying a Fair Price

Count me in the latter camp. In 2001, I was promoted to run a Saturn store. Even then, plenty of people were saying that the one-price concept would fail, but people loved it so much that we couldn’t get enough inventory to keep up with demand. Of course, Saturn failed in 2009, but this was due to mismanagement on the GM side, not their no-haggle concept. I believe that the Saturn concept demonstrated without a doubt that car buyers enjoy a more relaxed buying experience — and that they’re willing to pay a fair price for a vehicle if they believe they’re being treated “fair and square.” The success of AutoNation and TrueCar are proof of this. The fact is, dealers today that have adopted market-based pricing and a no-haggle sales process are consistently selling more vehicles. One of the problems with the negotiation game from the buyer’s perspective is that they don’t really know what winning the game looks like. Sure, they can spend hours doing Internet research trying to find out what a “fair” price really is. But if they find out later that they paid more than someone else for the same vehicle, their win suddenly looks a lot more like a loss.

The Right Buying Experience

Most buyers understand that car dealerships are in business to make a profit, and they don’t begrudge them for this. Rather than take the time, and expend the emotional energy required to play the negotiation game with dealerships, they would prefer to do business with a dealership that gives them the kind of buying experience they want — a satisfying, trustworthy experience with no gamesmanship or tricks. And the key to providing this kind of buying experience is, quite simply, transparency. Being transparent means that the total price of the vehicle is straight-up right from the beginning. There are no hidden fees or extras added and sprung on customers when they get back to F&I to sign all the paperwork. The sale is a seamless process from the sales floor all the way back to F&I, with the front and the back end of your store working together every step of the way. Some in our industry don’t think that there are enough car buyers out there who truly want to see real transparency to make a one-price or value pricing strategy successful. I strongly disagree. Dealerships that embrace transparency and sell based on value, integrity and credibility — and not on playing sales games with customers — are going to lead the way in the future. But doing so requires a culture change at your dealership, and this change must start at the top. It’s up to the owner and general manager to instill a culture of transparency within the dealership and continue to nurture this culture over the long term.

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Permanent link to this article: http://blog.ncm20.com/2014/05/is-transparency-good-or-bad/

Rebecca Chernek

F&I Best Practices: Pay-Plans

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There’s a saying in the auto sales industry that goes a little something like this:

“Every good F&I manager works a pay plan.”

Okay, maybe it’s not quite as catchy a saying as “the early bird gets the worm,” but you get the point. The special emphasis here, however, is on the word works.

All too frequently, F&I managers pick and choose the products they sell to buyers based on what will secure them the largest commission. Usually, whatever doesn’t, gets kicked to the curb. You can’t blame them; everybody has bills to pay and mouths to feed at home. The result is that more often than not, ancillary sales – like those found in gap insurance, paint and fabric protection, key replacement, or dent and ding fixes – are either glossed over or not even presented to customers because of their lack of value when it comes right down to an F&I manager’s earnings.

This kind of practice is unknowingly encouraged when poorly crafted pay plans are put into place – plans that only concentrate on specific areas of sales results, perhaps like finance reserve and service contract penetration. Even worse, some pay plans compensate the F&I manager a percentage of the total department gross. This leaves virtually no incentive to sell buyers on ancillary products.

As a dealer, it pays to take a hard look at your month-end numbers. When you directly focus on average per-vehicle performance, you may begin to notice a trend indicating most of your dealership’s income is derived from reserve and service contracts. But what if you could tap into the additional revenue derived from the ancillary products there weren’t sold?

Simply because your dealership’s per-vehicle performance is over the benchmark of $1000, doesn’t mean that opportunities weren’t missed. This is an all too commonplace oversight that dealers frequently make, and it’s one that could end up costing you dearly in the long run. Capturing reserve and contract sales is no doubt vital. But losing sight of the opportunities inherent in ancillary product sales could be killing future business opportunities.

Is it possible to determine if your F&I managers are even attempting to sell buyers on ancillary product? You bet it is. It’s as simple as this: If you’re utilizing menu presentation, but ancillary sales aren’t being made, this could be seen as a clear indication that your F&I manager isn’t using it properly. What’s more than likely is that they’re using the menu as a declination tool instead of the way it was intended to be used: for product presentation. If a product is on a menu but it isn’t selling, it’s either because F&I is not presenting it or the product has no value.

So what’s the solution?

If you’re looking for someone to tell you what type of pay plan to institute in your dealership to ensure optimum ancillary sales, you’re not going to find it here. This is something that has to be determined individually, by closely examining the results obtained in the menu program you currently have in place. Doing this will point you in the right direction and will inform what changes you implement in your pay plans.

Put simply, the idea behind menu selling is to present 100% of the products available 100% of the time. When that is not done – and when F&I managers pick and choose products they sell to buyers based on maximum reward – you’ve got yourself a problem.

Ultimately, the most effective pay plans are those that compensate F&I managers on the sales of all products offered, not just reserve. An ideal balance to ensure the following of best practices among those in your F&I department is to institute a pay plan that compensates the F&I manager based on 40% of reserve and 60% on ancillary products sales.

Some dealers like to employ a grid pay plan, which takes into account the per-vehicle retail PVR and the total of products sold per delivery units contracted, and increases the total percentage of payout based on the higher of the two factors. Payout can then be based on department totals or per F&I manager. It’s also prudent to examine the relationships your F&I managers have with outside vendors.  Some vendors will spiff the F&I manager for specific products sold which can also undermine your overall success with menu selling.

At the end of the day, everyone understands that incentivizing your F&I staff is critical to achieving objectives. But if doing so in a lopsided manner undermines the big picture, you’re in need of serious attention.

“Nothing ever comes to one, that is worth having, except as a result of hard work.” Booker T. Washington


Becky will be hosting a workshop titled “Mastering Menu Sales” on May 13th & 14th. Click here for details.
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Permanent link to this article: http://blog.ncm20.com/2014/04/fi-best-practices-pay-plans/

Rebecca Chernek

F&I Best Practices: Menu Selling

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Let’s face it. Consumers don’t trust car salesmen. That may be a bitter pill for some to swallow, but it’s the plain and simple truth. Ask the average person on the street why, and they’ll likely rattle off a list of reasons candid enough to shake you to the core: car salesmen are seedy; they perpetrate deceptive practices; they’ll say anything to make a sale. And on and on. When it comes to the F&I Manager, things aren’t much better. Consumers say, “Just wait ‘til you get into the F&I office. That guy in there will rip your head off! Whatever you do, don’t buy anything.”

So what’s the answer to this epic dilemma? Surely, encouraging yours sales or F&I team to pour another thousand into their wardrobes or forcing them to sit through outdated training tapes won’t make a lick of difference. Neither will slapping up banners that scream sentiments like “100 percent trustworthy!” Ironically, the only proven method of getting over the consumer trust hurdle in F&I, that’s most often completely ignored by dealerships, is the practice of menu selling. The bottom line is, people don’t want to be sold or pitched. They simply want to know they are getting the best deal based on value and trust.

If you’re still reading and are nodding your head in vehement agreement, then we’re on the same page. If you caught yourself rolling your eyes or letting out a heavy sigh, it’s obvious we’ve got some more talking to do. So let’s cut straight to the chase and talk facts.

Industry leaders have been extolling the virtues of menu selling for more than a decade. Since its inception, it has been touted as the chosen path for those eager to seek out alternative methods of increasing sales, reducing charge-backs, and keeping customers coming back for more. When implemented, menu selling ensures full financing disclosure and creates a no-hassle buying experience that consumers appreciate. It’s proven to increase sales and limit liability, and is a standard practice implemented by AutoNation, the number-one retail giant. So why is it that only 20 to 25 percent of auto and RV dealerships use it?

If you’re not convinced adoption is that low, you may not be looking close enough. Sure, you’ll find plenty of industry experts to tell you that menu selling is commonplace. But all you really have to do is take a look at any Facebook, LinkedIn or any other F&I group forum chat, where you’ll find clear signs indicating otherwise. The vast majority of conversation participants admit they view menu selling as an annoyance, or they have changed it to suit their needs so much that the menu has morphed beyond all recognition. Those who sing the praises of menu selling are consistently in the minority, individual shouts drowned out by a choir of dissenting voices. Obliviousness of the benefits of menu selling, it seems, is widespread among F&I practitioners – despite the fact that menu software companies like Maxim Track report a 28 to 33 percent boost in PVR among dealerships who embrace methods of menu selling.

So why the resistance? There’s no easy answer to that question. Many industry professionals rationalize their actions by claiming there can be no such thing as truly transparent selling. That failure to comply with state laws against deceptive practices and payment packing is to be expected from time to time – and that occasional litigation is a mere fact of life that comes with the territory. Some claim those who espouse menu selling rely on fear tactics to scare dealerships into buying unnecessary software programs and holding superfluous training. You’ll even find F&I professionals who insist that the front close the customer on the vehicle price and later “box close” in the F&I office without sacrificing the customer relationship or tearing down the concept behind menu selling. It’s obvious there’s no shortage of justifications for neglect.

And so we’re left to ask some hard-hitting questions. Has menu selling come full circle? Is it a fad that’s burned itself out like last year’s fashion? Was it ever really embraced at all, or is it something only the true mavericks of the industry can appreciate? Is it important to you that your customers know in advance what their base payment will be, that all the costs are clear and concise and that they have a full understanding of their loan terms and APR prior to any other products being presented?

You don’t have to be a visionary to comprehend the enormous differences between surviving and thriving. But it does take an enterprising mind to see that there are steps that can be taken to ensure the latter. If your dealership has any chance at all of achieving the levels of success it’s fully capable of, now’s the time to have a real-world conversation about menu selling. The first step toward that is to open an honest, straightforward dialogue with your staff to determine if menu selling falls in line with your dealership’s sales philosophy.

Henry Ford himself once said, “Whether you think you can, or you think you can’t – you’re right.” This applies to everything in life, car sales included. Menu selling isn’t something that can be pursued in a half-hearted manner. You either do it or you don’t – there are no in-betweens. In the end, the decision lies solely with you.


On May 12 and 13, Becky will be giving a workshop at the Georgia Tech Global Learning Center called Closing Tools – Mastering Menu Sales. If ever there was a workshop to add to your top three list of must-attends, this is it. Click here to register today.

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Permanent link to this article: http://blog.ncm20.com/2014/04/fi-pay-plan-supports-best-practices/

Rebecca Chernek

The Screamer: There’s No Place for Verbal Harassment on the Job

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If you’ve been in the automotive retail business for any length of time, you’re no doubt very well acquainted with The Screamer. He’s the guy everybody loves to hate. The big guy in charge of the F&I department or over the retail operations who can’t seem to communicate a single directive to the group without raising his voice to ear-bursting decibels – as if every increase in verbal volume and every belittling word uttered will ensure his control and push his subjects to perform the way he wants them to.

In the life of The Screamer, this ritual is all in a day’s work. His needs are simple: to take control; to let everyone know who’s boss; to keep his employees in check and to prevent them from walking all over him. But for the people who are constantly forced to endure his offensive tirades, work can quickly become a miserable experience. Most people in the automotive retail industry take a blind’s eye approach to dealing with The Screamer, as if being on the receiving end of verbal abuse is par for the course or business as usual. But is it? And even if it is, does it really have to be this way?

This kind of behavior is especially commonplace in the F&I department, where intense pressures to perform – getting the customer in the box, boarding the deal, getting bank approval, trying to secure a profit and pushing for increased sales – often result in the adult version of a full-blown temper tantrum. More often than not, these outbursts are accompanied by threats of demotion, cut pay, or being fired outright.

All too often, common acceptance of The Screamer’s abusive behavior is bolstered by tough-love sayings like, “If you can’t stand the heat, get out of the kitchen!” or “You’ve got to have a thick skin to survive.” In other words, people are all too quick to accept this mistreatment as just another part of the job they signed on for.

To make matters worse, dealership owners themselves are notorious for not only allowing this conduct to continue, but for giving their silent approval of it. Typically, the solution leveled at those in the F&I department who can’t take the abuse is to find another job.

Needless to say, this is easier said than done. The majority of dealership employees who are struggling to support their families and pay bills just don’t have the luxury of being able to walk away from a steady source of income. Caught between a rock and a hard place, tolerating an otherwise insufferable workplace condition is usually the beleaguered F&I practitioner’s only course of action. Ultimately, this can create an atmosphere that’s rife with low morale and that results in vastly decreased performance – the epitome of a self-fulfilling prophecy that far too few F&I managers and dealers are willing to face up to.

Verbal abuse has no place in the car business today, if it ever did. Your dealership’s ability to attract and recruit talented individuals is crucial, as is your ability to retain an experienced F&I staff capable of performing their jobs effectively. This is the crux of the problem, the proverbial 500-pound gorilla that has to be addressed.

Here’s the bottom line:

The ensured success of your dealership rests on your willingness to effect change where it’s desperately needed. To adopt a new, enlightened mindset that’s conducive to achieving long-term profitability. This means working diligently to cultivate an environment of good will, mutual respect, and utmost integrity where verbal abuse is simply not tolerated.

In the end, if someone has to resort to screaming to motivate his or her staff or to drive them to perform better, this is clear indication that all control has been lost. In that case, it’s high time for The Screamer to either find a new career or take a course in anger management.

In the words of Dwight D. Eisenhower:

“You do not lead by hitting people over the head. That’s assault, not leadership.”

Becky Chernek offers in-house, customized training, specializing in F&I development and desking practices. Learn more about her services at ccilearningcenter.com.

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Permanent link to this article: http://blog.ncm20.com/2014/02/the-screamer-theres-no-place-for-verbal-harassment-on-the-job/

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