Cash Buyers Buy F&I Products Too!

- By Ronald J. Reahard

• “How can I make any money in F&I when all we’re getting is cash buyers?”

Most F&I managers dread seeing a cash buyer, because their income per retail unit is typically much less on cash customers than on finance customers.  In many dealerships, the grizzled old veterans dump the cash buyers on the new, inexperienced F&I managers, since they’re not going to buy anything anyway.  Give the newbie the cash buyer until he or she gets some experience.  Once they learn how to sell, then they can take the “regular” customers.  Cash buyers are the lepers of F&I.  Nobody wants to go near ‘em, because they eat away at their penetration percentages and profits.

Yet cash buyers buy F&I products too.
In fact, if a customer can pay cash for a vehicle, they easily can pay cash for F&I products.  The monthly payment is certainly not going to be a concern, because they don’t have to worry about a monthly payment.  They can write a check for it.  If anything, selling F&I products to a cash buyer should easier, not more difficult.  If a cash buyer sees the value of a product, affording it is not an issue.

So why are cash buyers the bane of almost every F&I manager?  One reason is because of the type of people who pay cash.  Typical cash buyers are not in their 20’s.  Most are in their 40’s, 50’s and 60’s.  They’ve made their money, invested wisely, and now don’t need to finance their vehicles.  These people have heard every sales pitch ever invented, and they can smell commission breath a mile away.  The tired old feature-advantage-benefit sales pitch that works great on an 18 year old first-time buyer doesn’t work at all on that 65 year old last-time buyer.  They’ve heard it before, and don’t want to listen to it again.  They just want to write a check and go home.  In the F&I office, old age and skepticism beats youth and sales pitches every time.  Consequently, we don’t “sell” cash buyers much of anything.
 
And we never will, as long as we continue to make sales pitches.  The problem with pitching financing to a cash buyer is that they immediately recognize we are trying to sell them, not help them.  So they turn off, tune out, and stop listening, and now we don’t sell them anything.

A cash buyer doesn’t want to be sold.  They want to make their own decisions.  Cash buyers want someone capable of answering their questions, someone who can help them to make informed decisions about their options, based upon their unique needs, with no pressure to buy anything.

Don’t Try And Convert First!
The most common mistake most salespeople, sales managers, and F&I managers make when it comes to cash buyers is that they try to convert them to dealership financing as soon as they discover they’re planning to pay cash for their vehicle.  That is the absolute worst thing you can do with a cash buyer!

Of all the products we have available in the F&I office (and financing is a product!), financing is the one product a cash buyer doesn’t want, and doesn’t think he needs.  So why on earth would you start by trying to sell financing first?!?  If anything, financing should be the last product we try to sell a cash buyer, not the first.  If they can afford to pay cash for a vehicle, they can certainly afford to pay cash for our products.

If a customer wants to pay cash for their vehicle… don’t try and talk them out of it!  Not until you have an opportunity to present all of their repayment, risk management, and vehicle protection options at the same time… on the menu.  Let them know it’s perfectly okay if they want to pay cash, and congratulate them on their ability to do so.  “Here at ABC Motors, we’ve never turned down a check yet!”

That doesn’t mean we won’t give them the option of dealership financing.  We will.  But the option of financing should be presented on the menu, just like every other option.  Otherwise, we kill our credibility.  Once you try to sell a cash buyer the one product they don’t want and don’t think they need, their defenses come up, and now we can’t sell them anything.  Because they recognize we’re not trying to help them, we’re trying to sell them.

Good Needs Discovery
Needs discovery is the foundation upon which we must build the sale of every product, including dealership financing.  Whether or not we’re able to convert a cash buyer to dealership financing depends on quality and size of our needs discovery foundation.  We can discover customer needs by examining the buyer’s order, the credit application, and the credit bureau report.  The best way, however, is by asking a few open-ended questions as you begin inputting information into the computer and completing their paperwork.  Always compliment the customer on his/her financial acumen prior to asking any open-ended questions:

• “How long has it been since you financed a major purchase?”
• “What do you like about paying cash?”
• “Any particular reason why you want to pay cash for this purchase?”
• “What type of return are you getting on your investments?”
• “How long will it take you to replace the money you’re taking from savings?”
• “What type of credit do you have established in your spouse’s name?”
• “What impact will this have on your retirement income and cash reserves?”

Keep in mind, customers don’t buy F&I products or dealership financing because we want them to.  They buy F&I products because of what those products will do for them.  We have to discover a need that product will fill, or a problem it will solve, so there is basis for our discussion of financing with the customer.  In order to do that, we have to utilize open-ended questions that will enable us and the customer to answer that all important question; ““How will financing their car help this customer?”

Offer Financing On The Menu
Presenting a menu to cash buyers that includes the availability of dealership financing ensures a consistent, non-confrontational, consultative approach that allows every customer to make a well-informed decision about the various products (including financing!) available in connection with their purchase.

Like any other form presented to the customer, a proper introduction and explanation is critical.  “Nancy, before we finish up the paperwork, I do need to go through this disclosure form with you.  I’m required to review your repayment, risk management, and vehicle protection options, and answer any questions you may have.  Would that be okay with you?”  The menu must be properly introduced and a reason given for its use prior to reviewing it with a customer.

Now instead of “pitching” financing or other products, we’re simply reviewing the options available in connection with their purchase.  “My job is to review your options and answer any questions you may have.  And I did take the liberty of working up some repayment options, just to let you see what is available.”  Customers want to know what their options are.  They just don’t want somebody trying to “sell” them something they don’t want, and don’t think they need.

Follow The Customer’s Lead
After presenting the customer’s options, it’s critical that the customer feel that they’re in control, and not being “sold” or “pitched” financing or any other F&I products.  We must follow their lead by first discussing those products they’re interested in.  If they want to know what environmental protection is, we explain environmental protection, and why in their situation it might be especially important.  Or, if they indicate an interest in tire and wheel road hazard, we need to discuss why tire and wheel road hazard might be of particular benefit to them.  

After your initial needs discovery, you should have several good reasons why the customer needs your products, including financing.  Concentrate on helping the customer, based upon the needs you’ve discovered.  Always start with the product they need the most, not the product you make the most money on.

The key is to make the customer want to know more about the product(s) we’re offering, so we’re responding to their request for information vs. making a sales pitch.  We do that by making a statement that piques the customer’s curiosity and makes them thirsty to know more.  That way, we’re helping the customer, not selling the customer.

Show How It Will Benefit Them Specifically
The whole idea of needs discovery is to allow us to show a customer how a product will benefit them specifically, versus making a generic sales pitch.  Every customer is unique, and every customer has unique needs.  Our challenge with cash buyers, as with any customer, is to demonstrate how our products will benefit them specifically.

As a Financial Services Professional, your responsibility is to use the customer’s past to help them make informed decisions about their future.  We want to use a menu to collapse confrontation and create interest in knowing more about our finance and insurance products, and financing is one of our products!  Ask yourself these questions:

• “How will financing through the dealership help this customer?”
• “What end-result benefit will it provide?”
• “What problem(s) will it solve?”
• “What problem(s) might it create?”

As Ron Willingham says in his book Integrity Selling, “People are more apt to buy when you communicate end-results benefits than when you communicate only the product or service features!”  Cash buyers will gladly buy F&I products, including dealership financing, if you don’t first attempt to sell them the one product they don’t want and don’t think they need.  Before presenting F&I products to a cash buyer, you must still discover their needs.  Then you must present all the products (including financing!) on a menu, follow their lead, and remember to communicate end-results benefits, not just features.  As with any customer, it still comes down to that all important question: “How will this product help this customer?”  Once you communicate how your products will benefit them specifically, you’ll quickly discover cash buyers buy F&I products too!