A Deep Dive Into Our Process
The problem…
Our client was profiting an average of just $700.00 worth of F&I products for each vehicle sold; a mere 70% of the $1,000.00 per whip target.
Step 1: Discover
Our initial discovery meeting with the client was a full house. Dealer Principal, General Manager, and all Departmental Managers were in attendance, and what started as a presentation quickly morphed into drawing out everyone’s existential crises. From a direct revenue standpoint, we zeroed-in on, what the Dealer Principal described as, the “dismal performance” of extended warranty sales.
Slipping 30% behind while tracking to moving over 800 cars by year end, represented a $240,000 annual loss-against-target of averaging $1,000 in F&I sales per vehicle sold (not to mention manufacturer’s target bonuses).
Effective discovery demands going so much deeper than this, because ultimately, profiting an average of $700 vs $1,000 is only a symptom, not the problem. By peeling back the onion so-to-speak (including asking Business Managers to join in on the meeting), we realized a few key revelations:
Customers were generally caught off guard when they entered the Business Managers’ offices where conversations switched gears to protection packages and extended warranties. So how can we address this expectation-setting problem?
Customers would have negative body language, and, even go so far as to make claims like “Extended warranties are just money-grabbing scams.” So how can we address this perception problem?
Sales consultants never once mentioned to customers, protecting their investment at any point from first contact to handoff to Business Managers. How can we fix this communication problem?
Most customers have no idea what their warranties actually cover (and more importantly, what they don’t cover). It looks like we need to tackle this education problem.
You can probably see now, that having another set of eyes and new lenses to examine an issue is invaluable. Before our discovery meeting, the client-dealership’s internal conversations never made it past identifying that they were only hitting 70% of target, and executing knee-jerk-reaction attempts like a waiting-area printout saying “Ask our sales consultants about our extended warranties.”
This is one of the key benefits with engaging with VIDMOTIVE: we provide crystal clarity on your dealership’s challenges and opportunities, regardless of whether or not we end up working together.
Step 2: Process-Design
The first critical step to designing effective processes is two-fold:
Understanding the existing processes (no matter how unstructured).
Understanding what the team-culture is like when it comes to adopting change.
With this client store, the entire sales pipeline workflow was tremendously unstructured. The poor New and Used Sales Managers were acting essentially, like comms-manifolds, addressing every single sales consultant’s incoming issue, approval-req, and random question, and directing them one-on-one on what to do next.
Beyond that, as stressful as it was for the managers, the sales consultants had accepted the status-quo and seemed like drones, awaiting commands to execute, instead of exercising their charisma, intelligence, and industry experience. There were no lines drawn in the sand; no sandboxes to play and be creative in. We saw this as an awesome opportunity:
With this new micro-process addressing just F&I product-sales, everyone from bottom to top, would feel less stressed, more empowered, and make more money.
The process we presented to the client to sign-off on, had seven steps:
Sales Consultant & customer explore vehicle/test drive.
As soon as customer interaction pauses, send templated email with video linked in template.
If customer decides to purchase vehicle, validate videos have been watched and handoff/introduce to Business Manager.
Business Manager does not sell; instead, asks customer if they have any questions about protection packages and extended warranties (since the video has given them a great springboard of knowledge).
If customer shows interest, but has some resistance, use approved incentive closing tool.
Walk through “F&I Product Checklist” so customer, physically puts pen to paper and both checks off what they would like, and, signs that they acknowledge declining everything else.
Signed document marked with small hot-pink sticky-note for ease of identification and placed into file for easy future identification and dispute reference.
With the micro-process signed-off by the Dealer Principal, and all required assets completed, we were ready to execute against the plan.
Step 3: Implement
With proper planning, execution and implementation is a straightforward process. Here is a full list of deliverables:
F&I Products Video (Title: “Warranties-Shmorranties!”)
Web-optimized version for email links
iPad-optimized version for impromptu Business Manager office viewing
Subtitled silent version for in-store TV screens
Microsoft Outlook E-Mail Template (to make life easy for sales consultants; load template with linked video & succinct copywriting, edit-in the customer’s name, hit send)
Business-Manager Editable F&I Checklist Form (so changes in products can be reflected immediately and stored on server for access by all Business Managers)
Training Documentation (dummy-proof to follow and, explaining in no uncertain terms, the entire process, why it’s important, and best practices).
Ultimately, all deliverables were executed in order to solve the four problems identified in the discovery phase: an expectation-setting problem, a perception issue, a communication challenge, and a customer-education problem. So… did all of this work yield the desired results?
Step 4: Measure
In the first four weeks of implementing our process and videos, the average F&I sale per car sold increased by a whopping 20+%; from $700.00 to nearly $850.00. This, taking into account, the sales team experiencing typical growing pangs with any newly implemented process was tremendously encouraging.
With continued dramatic 15%-20% increases in months two and three, month four of implementation saw the client store blow their target out of the water: hitting an average of $1,088.00 per vehicle sold. 2020 was the first year this dealership hit their OEM target.