September 10, 2001 17:43:54
E-Commerce in the F&I Office
President and CEO of AutoLincs, Inc.
There are a number of opportunities in the F&I office utilizing the internet. Some are very helpful and others are just noise. Those that support the mission of the dealership - to sell more cars at a reasonable profit - are, or should be, welcome. Those that take up time without significant results or that actually reduce the profitability of the dealership probably should be avoided.
Referrals of potential customers usually go to the sales department, and, depending on the aggressiveness of the sales follow-up, often result in additional sales for the dealership. Many of those internet referred sales give the F&I office an opportunity to provide financing. Whether the particular internet referral service being used in the dealership is cost effective is another matter, and does not directly affect F&I unless the customer shows up pre-financed, effectively making him a cash buyer. Of course, any F&I office worth its salt should be able to redirect the customer to dealership financing due to its convenience, the availability of back end products, better service to the customer, etc.
Ideally, it seems to me, an internet customer referral would be one that delivers a potential customer who is interested in the type of vehicles that the dealership sells and who is pre-qualified for financing with a lender that the dealership is using. Also, the dealer should be informed that the customer is pre-qualified, with which lender, and the “payment” call, leaving the F&I office the responsibility for structuring the deal. There are a few referral services that provide such information and you would make money for your dealership if you ferret them out and sign with them.
There are many tire kickers out there using the internet. However, a customer who goes to the trouble to apply for financing shows more commitment to a purchase resulting in the dealership having a better opportunity of closing a sale. The temptation that needs to be avoided is taking advantage of the customer on the deal. As this customer came to the dealership with no significant advertising cost, there is an excellent opportunity to provide a customer friendly structure while still preserving an adequate profit margin for the dealership. Although it seems to be of little importance to a few dealerships, most appreciate return customers and subsequent sales. A satisfied customer who has been treated with respect has a much higher propensity to return to the same dealership for their next purchase. That's money in the bank!
The next area of importance and a frequent delaying factor in contract funding is proof of insurance. Having the ability to bind insurance coverage in the dealership through the internet is very close to reality. Again, ferret out the providers with this functionality as this will simplify the process and speed the receipt of cash from your lenders. A quote is available from many sources; a binder provided by an insurer is a little more challenging.
Now, if we could get proof of income, job and residence online, lenders and dealerships would have it made. Well, the industry is working on it!
E-commerce has not, so far, brought quite the revolution to as broad a range of industries as some self-proclaimed visionaries expected; but, it can be mixed in with the other tried and true methods of operation in the dealership, including the F&I office. The dealerships that will reach the greatest success are those who critically evaluate all options available and methodically choose the ones that are the most effective. That philosophy has always held true and will continue, including the offerings of E-commerce providers.
Unfortunately, it's not unusual for e-commerce businesses to design an entire business plan without consulting its prospective customers. There are any number of people that have had some experience in the automobile or automobile finance business who sincerely believe that a new improved process has been designed that will revolutionize the car business. There have also been numerous examples of such ideas that received no significant “traction” in dealerships as the ideas were either not practical or added no value to the process. So, the mission of the dealerships wasn't being seriously taken into account. Success is measured in units sold and profit booked, front and back end. Any vendor who does not understand and manage to that end is missing the boat. Seek out the vendors who will help you accomplish your mission of selling and financing cars.
James W. (Jim) Bass is the founder, President and Chief Executive Officer of AutoLincs, Inc. AutoLincs, Inc. is a Dallas-based corporation that has developed proprietary and advanced technology that can provide both automotive loan and insurance approvals to automotive dealers or consumers in less than 15 minutes. With its versatility, this technology, AutoLincs™, provides “first-to-market” proprietary applications, products and services with multiple revenue streams in both the commercial and consumer marketplaces.