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Tag Archive: F&I

Dustin Kerr

Oregon Senate Bill 276 – How Could This Affect Your BHPH Operation?

Government building blog 4.22

The Oregon Senate recently introduced a bill that has BHPH dealers in that state up in arms, and for good reason. The bill would drastically change the way some buy here pay here dealers do business. I am not going to try to debate the merits of this bill, or the lack there of. As BHPH dealers, we have all been discussing and fearing the changing landscape of compliance for many years.

The point of this article is to focus on a couple of the provisions in the bill and ask ourselves, “Doesn’t this just make good business sense?” Keep in mind the old saying “Pigs get fat; hogs get slaughtered” and ask yourself if you are running your dealership as a fat, happy pig or as a hog headed for slaughter.

Here’s a quick rundown of the highlights of the bill:

  • Obtain the same type of license from Oregon’s Department of Consumer and Business Services (DCBS) as payday or auto title lenders.
  • Reduce interest rates to account for the amount of the consumer’s down payment.
  • Stop accruing interest once a vehicle has been repossessed.
  • Cap repossession fees at 7.5 percent of the purchase price.
  • Stop using GPS or starter-interrupt devices.
  • Wait to repossess a vehicle until after 30 days from when nonpayment has occurred.
  • Cap interest rates at no more than 20 percent or the federal funds rate plus 17 percent, whichever is lower.
  • Form a good faith belief that the consumer has the ability to perform on the contract by using underwriting standards passed by DCBS.

I want to focus on the last two bullet points of this bill and ask you, as a dealer, to think about how you are handling these two issues in your state?

Cap interest rates at no more than 20 percent or the federal funds rate plus 17 percent, whichever is lower.

Full disclosure here, I used the state max of 21% for nearly every car deal I ever financed and would have probably charged more if the state would have allowed. My question to you though is this: is it good business to charge our customers more than 20% interest? Every 20 Group meeting I have ever been a part of has included conversation on how we reduce the term of our loans and retain our good customers.

Another big conversation is about the cars not lasting the term of the note. Are we sacrificing a few thousand dollars of gross for a few hundred dollars of interest? Interest income is a big part of this business and I have always been on the side of maximizing the interest dollars collected. Although, when do we hit a point of diminishing returns?

Form a good faith belief that the consumer has the ability to perform on the contract by using underwriting standards passed by DCBS.

Now I have no idea what the DCBS will set as underwriting standards should this bill pass, but let’s look closely at the rest of that statement and change it slightly.

What if the motto of our underwriting department was something similar to this? “Form a good faith belief that our customer has the ability to perform on the contract based on our underwriting and verification practices.” Nearly all BHPH dealers want to reduce charge-off losses and regulators on the state and federal level want to make sure you are not setting your customers up for failure. Having a written underwriting policy in place that is based on industry analytics and your own loss ratios will go a long way towards achieving those goals.

Don’t forget the verification part of the process. An application is only as good as the verification to support it. There is little doubt that there are serious changes on the horizon for the BHPH industry and some that may change the way we do business forever. However, some of these items just make good business sense. Is your business a “fat, happy pig” or a “hog headed for slaughter”?

Learn more by attending these upcoming courses:


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Rebecca Chernek

Integrating Desking and F&I to Boost Sales and Profits


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.


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.

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Rebecca Chernek

The Great Debate – Gen Y and F&I


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’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 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.


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Rebecca Chernek

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


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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Rebecca Chernek

F&I Best Practices: Pay-Plans


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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Rebecca Chernek

F&I Best Practices: Menu Selling


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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Rebecca Chernek

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


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


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Garry House

Is Your Dealership Staying Ahead of the CFPB?

Being exempt from CFPB jurisdiction doesn’t mean you are immune to its actions, especially now that the Bureau has turned its attention to financial institutions and indirect lending.

If the rumblings by the Consumer Finance Protection Bureau have you ill at ease, take heart! There are excellent resources available to automotive dealers who want to neutralize the threat of CFPB intervention by turning the Bureau’s objectives into your best practices.

Recently, NCM hosted a webcast facilitated by Tom Hudson, Partner and Chairman of Hudson Cook, LLC, and featuring Jeff Levine (Partner at Hudson Cook, LLC), David Robertson of the Association of Finance & Insurance Professionals (AFIP), and Gil Van Over III of gvo3.

If you missed it, now’s your chance to get free guidance from some of the industry’s most respected F&I compliance experts. Click the video link below to watch the 40 minute presentation. Share it with your sales team and your F&I staff.  You’ll not only get excellent tips for staying head of the CFPB, you’ll find out about some special resources each of these organizations are making available to dealers upon request.

Watch the video then tell us what you think by posting a comment on the blog.


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Rebecca Chernek

GM’s Shop-Click-Drive Program Drives Home Need for Improved Online F&I Service

typingIn a world where 85 percent of consumers surfing the Internet have made a purchase online, General Motors is hoping its new Shop-Click-Drive program will pave the way for satisfying car buyers who may be craving the opportunity to avoid dealership showrooms and purchase their next vehicle online.

GM’s program is on pace to roll out across the country by the end of 2013, allowing customers of participating GM dealerships to purchase or lease their new ride online.

Meeting consumer demand

But what impact will the ability to avoid the showroom have on dealerships anxious to provide financing and other F&I products to new buyers?

A look at GM’s new program provides some insight into whether or not demand for online vehicle purchasing is a trend likely to stay. Earlier this year, a successful pilot for the Shop-Click-Drive program was launched in Michigan, and it is currently available through about 100 participating dealerships in Alabama, Arizona, Minnesota, North Dakota, Oklahoma, South Carolina and Wisconsin.

GM company spokesperson Ryndee Carney says the program works like this: customers visiting a dealership’s website select the vehicle of their choice, and are then prompted to “create” their deal. Participating dealers must provide concierge service for customers wishing to test drive and possibly take delivery of a vehicle.

Announcement of the program comes at the height of a legal battle where luxury electric vehicle manufacturer, Tesla Motors, is battling accusations it is violating state franchise laws with its direct-to-consumer business model. Tesla’s retail strategy, which allows consumers to buy directly from the manufacturer online, has come under fire in several states.

But Carney argues that GM’s program differs from Tesla since customers are buying vehicles from dealers, not directly from the automaker itself. “So, the vehicle sales transaction must be completed by the dealership. The dealer controls how the application works on his or her dealership website, so it’s compliant with franchise laws,” she explained.

Meeting online demands

About 56 percent of transactions initiated during the program’s testing phase were completed online, a significant amount, but one that shows plenty of room for dealerships to differentiate themselves in the marketplace with updated F&I customer service.

While streamlining the online vehicle shopping experience may help to build brand loyalty, bypassing the showroom may also have some unintended consequences for local dealerships, primarily by way of lost revenue via finance and insurance (F&I) products.

The stumbling block is likely to be in the form of F&I managers not ready to embrace the online buyer than from consumer unwillingness to examine options offered by dealers, even in an online buying scenario. That could be a big problem, eating away at dealer profits as consumers quickly click away to one of a growing number of popular auto financing sites.

It isn’t just GM dealerships at risk, either. Other automakers, eager to stay competitive and build brand recognition with consumers, will likely follow suit in rolling out similar programs.

Risk and Communication

Accepting the reality of the online buyer is the first step dealerships can take in managing risk and realizing return on the growing trend of online purchasing. Dealerships that think offering an online loan application will satisfy the Internet’s vehicle buyers will need to rethink their strategy. Gone are the days when F&I managers could hide behind the curtain, too. Today’s F&I staff need to fine-tune their customer service skills and prepare to communicate with the online buyer, whether through chat window, email, Skype or similar platform.

Begin by reviewing and adjusting your company website to make online purchasers feel welcome and confident about the experience. If current F&I managers are unwilling or incapable of connecting with online buyers, consider dividing your F&I team into F&I online managers and F&I face-to-face managers.  The idea is to make the department accountable- not fight against each other.

Keep in mind, online vehicle buyers — like most online consumers — are looking for the best value and are used to finding it online. Be prepared to be factual and straightforward about a customer’s options, a practice that should spell success for F&I managers on the showroom floor as well as online.


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Rick James

F&I Department 5-Step Process to Improve Gross Profit/Unit

percentAs a former dealer and now a faculty member for the NCM Institute, I know that every franchised new vehicle dealer is looking to impact the bottom line profitability of their dealership, and no department can impact the bottom line as quickly as the Finance & Insurance department.  This requires discipline; putting in place the necessary steps to improve F&I average gross profit per unit to capitalize on every opportunity.

Your F&I Manager, equipped with compliance and product knowledge, should make sure the following steps are in place to maximize his or her opportunity with each customer.

  1. Ensure a smooth Sales-to-F&I handoff.  This requires the sales department  to be properly trained to endorse the products and perform a proper turnover to the F&I department.  To accomplish this, conduct a short sales meeting—with full cooperation of the Sales Manager, of course.
  2. Before the customer enters the business office, a customer interview is conducted.  Introduce yourself, verify the customer’s information and ask questions that will serve as the basis for your formal presentation, gleaning additional information such as how long they typically keep their vehicles or how many miles per year they drive.
  3. Next comes the formal presentation in the business office; start with a well-prepared base statement.  A good base statement should review the Business Manager’s responsibilities, the dealership’s commitment to take care of its customers, and confirm they’ll get a thorough review of all their choices and options and that the paperwork will be fully explained to them.
  4. Use an F&I Menu to ensure the customer has the opportunity to see all available products with the same presentation and with the proper disclosures.  The F&I Manager should have the customer sign the menu and keep it as a permanent record for the deal jacket.
  5. Use a good operating report in the F&I department.  The report should provide data on finance penetration, warranty product penetration, reserve earned, and average gross profit per unit.  This type of reporting will hold the department accountable for gross profit and will alert management if any unwanted trends or issues are developing.

These five steps are sure to improve your F&I department gross profit and your dealership’s profitability.  Take the time to make sure your F&I and Sales Managers understand these steps must be implemented as part of your store’s sales process.  The  experts at the NCM Institute can provide the training necessary to help you implement this and other management best practices designed to maximize your dealership’s profitability. Give them a call at 866.756.2620 or visit them online at


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