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Tag Archive: Finance

Rebecca Chernek

Turbocharge Your Profits by Extracting the Sales Bottleneck


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.

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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

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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Scott Norman

Today’s Hot Topic: Expense Control

Hot topics for Twenty Groups change as much as the seasons change. Recently, the hot topic has been expense control. I decided to recap some ideas that have been discussed over the past few years at some of my meetings in hopes they might refresh your memory or provide you with a different approach to expense control.

As we all (should) know, at a profit to sales percentage of 3%, $1 saved is worth $33 in sales. For instance, if you spend $25 on a policy adjustment the dealership must sell $833 to cover that expense.  The table below shows this impact at several levels of expense:


   Expense Dollars      To Cover Expense  
$5 $166
$50 $1,667
$100 $3,333
$250 $8,333
$500 $16,666

Payables Meetings

Pick one day a month for your meeting with all department heads. Have the payables clerk provide you with the payables folders or invoices for all the checks you will sign during the meeting. As you sign each check, discuss whether the expense is a necessary one and if so, would another vendor be able to provide the same service at a better price.

Vendor Book

Create a book of all approved vendors and establish the policy that any purchase of supplies or services covered in the book are purchased from only those vendors. You also want your payables personnel to review all invoices to be sure the approved vendors continue to use the pricing they quoted when the original bids were taken.

Charitable Request Form

Create a form that each solicitor for a donation must complete for their request to be considered. Only the serious solicitors will take the time and effort to complete the form and return it, thus discouraging “drop-bys.”

Expense control begins with being aware of what goes on in your dealership. For example:

  • Open your mail. Frequent questioning of payables will reveal some “sweetheart” purchases. Review all invoices.
  • Review petty cash receipts.
  • Get bids on everything. (See Approved Vendor Book above.)
  • Invest all excess earnings into new vehicle inventories through your cash management account.
  • Don’t give up on fixed expenses. Simple water, compressed air and heat leaks can
    be plugged. Ask your insurance carrier for a print out showing your reserves for past liabilities.  These liabilities may be obsolete and costing you premium dollars. Review all of the “named perils: for which you are covered to determine if there are any from which you may be virtually risk free.
  • Review your computer hardware maintenance coverage. Is it cost effective considering the cost of replacement equipment? PS never cancel the maintenance on your computer’s CPU.
  • Never give anything away. Charge something for everything. It may surprise you to know that a customer who is clamoring for a 100% adjustment will pay 25% and be entirely satisfied.  If you do have to give 100%, do it loudly. Let everyone know you gave something for nothing.

To involve your employees in expense control, consider taking the agreed upon forecasts and offering all employees a percentage of every profit dollar over that forecast as a bonus in equal portions to each employee. This should make everyone very profit and expense conscious.

Lastly, be consistent in your expense control awareness. Don’t make it a hot topic one month and not the next. One of the many tools available in NCM’s axcessa™ program is the ability to trend and drill down into expenses.


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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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