Start Training Your Sales Manager

In every dealership, the sales department and F&I department are supposed to be on the same team. Unfortunately, in many dealerships you wouldn’t know it, because there is virtually no communication between the sales manager and F&I manager on a deal before, during, or after it goes to F&I. The only way to get a sales manager to change his behavior is to get him to want to change it.

Start Training Your Sales Manager!

By Ronald J. Reahard

In every dealership, the sales department and F&I department are supposed to be on the same team.  Unfortunately, in many dealerships you wouldn’t know it, because there is virtually no communication between the sales manager and F&I manager on a deal before, during, or after it goes to F&I.  It seems like no matter how many times you tell a sales manager they should not commit to an exact payment or interest rate until the loan has been approved by a lender, they never seem to get the message, right? 

The first step in training your sales manager is to remember that people do what they do because of the consequences they experience as of result of their actions.  While a person’s immediate needs or objectives begin behaviors, it is the consequences that maintain those behaviors.  While the consequences can be either positive or negative, positive reinforcement maximizes performance, while negative reinforcement results in a level of performance that is just enough to avoid an unpleasant consequence. 

If the dealer pats a sales manager on the back for a record sales month and rewards him with a trip to an exotic locale, that far outweighs a furious F&I manager angry because the sales manager quoted every payment that month at buy rate and threw in a VSA at cost to close the deal.  As frustrating as it may be to an F&I manager, a sales manager’s actions make perfect sense to them.  The only way to get a sales manager to change his behavior is to get him to want to change it. 

Put yourself in the sales manager’s place.  What is causing this behavior or situation to occur?  How can I get him to want to change?  How can I get him to want to help me?  Increasing F&I income depends to a great degree upon your ability to train your sales manager by encouraging him, recognizing his efforts, and through positive reinforcement, so he wants to help you.  Only if you help the sales department achieve its goals, will your sales manager will help you achieve your goals.

Communication

The underlying purpose of any training should be to improve communication between the sales and F&I departments, and every member of your dealership’s team. That means talking to your sales manager about the status of every deal.  Every sales manager and salesperson has to be constantly reassured that you are doing everything possible to put their deal together, hold their deal together, and protect the front-end gross profit.  When you always communicate what you’re doing and why you’re doing it, rather than force them to ask, they will quickly begin to trust and respect your judgment. 

Improving communication also requires instilling the importance of automatic referral to F&I at time of sale.  If the sales manager knows a customer is going to their bank or credit union to arrange their own financing before they agree to buy, it’s critical you have the opportunity to talk to them before they leave.  You may be able to help close the sale!  Plus there is a good chance the customer’s lender will blow the deal or reduce the gross profit by telling the customer they’re paying too much for the car, or they’re not getting enough for their trade-in.  They may also try to sell their own vehicle service agreement and GAP products, so it helps both the sales and F&I department. 

Communicating to your sales manager the importance of your personally interviewing every customer prior to submitting the deal to a lender will also greatly improve our chances of getting more deals approved.  You must interview every customer to confirm the information on the credit application is correct, and learn the circumstances and details surrounding any adverse credit information disclosed by the customer or revealed by their credit bureau report, prior to submitting the credit application.  Every customer has a story, and you have to hear that story, because you only get one chance to convince your paper buyer!  You must find reasons why this customer is now a good risk, and document it, to help your paper-buyer justify an approval or change a tier level. 

It’s essential that you communicate to your sales manager the importance of you evaluating the information contained in the credit bureau report with the customer.  This will to enable you to assist the sales department (and the customer!) in structuring a deal prior to submission to a lender, to increase the chance of receiving an approval, despite the negative aspects of the deal (credit score, negative equity, debt to income ratio, etc.).  Properly used in your customer interview, the credit bureau report can significantly increase your chances of obtaining an approval, and of delivering another vehicle for the sales department.

Compliance

When it comes to compliance, it’s critical that you inform sales managers on the laws and regulations that impact both sales and F&I, and the importance of transparency in dealing with today’s informed consumer.  Installment loan agreements now state “The interest may be negotiable” and that the dealer “May receive a portion of the finance charge.”  Today’s consumer and your state attorney general have zero tolerance for sales people, sales managers, or F&I managers who lie, give customers inaccurate or misleading information, or avoid answering their questions.

A few of the laws, regulations, and information you must provide your sales manager and sales team include the Equal Credit Opportunity Act (ECOA), the Fair Credit Reporting Act (FCRA), credit scoring, how the customer can dispute credit report errors, the FTC’s Used Car Rule, the Gramm-Leach-Bliley Act, the USA Patriot Act requirements, and the Sherman Anti-Trust Act.  For example, does your sales manager know when taking a credit application, you may not ask a customer if they receive alimony, child support, or separate maintenance payments, unless they’re first told that they don’t have to provide this information if they won’t rely on these payments to get credit?  Do your sales people know that inflating a customer’s income to improve their chances of obtaining a loan is not fudging the numbers, it’s a felony?  Do they know what a tying arrangement is, and that certain tying arrangements are considered to be per se illegal activities?

Sales managers and sales people must also understand that every dealership customer is entitled to, and the importance of, a thorough review and explanation of each option available in connection with their purchase, as well as every document they sign.  As an F&I professional, you have a legal obligation to offer every product to every customer every time, and provide a full and complete disclosure of every agreement prior to their signing it.  A professional disclosure will allow us to answer any questions or concerns the customer may have regarding those documents before they leave the F&I office, reducing chargebacks and increasing customer satisfaction.

You must also train your sales managers that quoting inflated monthly payments on the showroom floor as a negotiating tactic, or leaving room in the payment for F&I products, is simply not an option anymore.   Customers are entitled to accurate, non-misleading monthly payments.  In addition, quoting payments that do not include the amount financed, the term, and the APR, have been determined to be a deceptive and unfair trade practice in numerous states.

Your sales manager and sales people need to understand that every time they tell a customer we’re going to get them the “best rate,” they create legal liability for the dealership.  Your sales manager and salespeople need training so they know what they can and cannot do when it comes to quoting monthly payments.

The F&I Process

Sales managers must also be trained on the process we use to sell our products.  What exactly do you do in that office, anyway?  Your sales manager needs to understand the process.  Why do we want to greet the customer in the salesperson’s office?  Why is it important that we bring them back to the F&I office as soon as possible?  Why do we need to review the customer statement and credit bureau with the customer?  And why are you asking so many questions, drawing pictures, and telling stories, when you’re supposed to be SELLING!?! 

You must help sales managers understand the difference between selling tangible and intangible products.  The customer can’t see, touch, smell, taste, hear, or fall in love with financing, credit insurance, vehicle service agreements, or tire and wheel road hazard protection.  They have to feel they need these products, or they won’t buy them.  Selling intangible products requires discovering a customer need by examining buyer’s order, the credit application, the credit bureau report, and by asking open-ended questions.  Only then can we take a customer on a “demo ride” in the F&I office, by helping them visualize a situation where this product would benefit them. 

In the F&I office, needs-discovery is the key to successful selling.  It is the foundation on which we must build our sale, because the customer does not walk into the F&I office wanting any of our products. Understanding the unique qualities of each customer, and their particular circumstances, is what allows us to help a customer “see” they really do need a particular product by using visual aids and painting pictures with words, and putting them in the picture.  Your sales manager must know that our goal in the F&I office is to help every customer by finding and filling their needs, because that is they only way we make a profit.

Belief In Your Products

Success in the F&I office requires that you truly believe in your products, and that you constantly communicate that belief to the other members of your team by your actions on a daily basis.  Bragging that you “clubbed him like a baby seal” when you have a nice deal is not only unprofessional, it communicates to everybody in the dealership that you don’t really believe in your products, you’re just in it for the money.  An F&I professional never denigrates F&I products, because they believe in them, and communicate that belief to those around them! 

The products we offer in the F&I office are the most important products your dealership sells… because they change people’s lives.  Buying a new car doesn’t change your life.  But credit life insurance, GAP insurance, even tire and wheel road hazard protection, can change someone’s life.  If you don’t believe it, ask Bill Cosby.  His son died changing a flat tire. 

It easy to tell whether or not an F&I manager really believes in his products.  He or she buys them!  If you don’t buy the products you sell, you’re basically telling everyone in the dealership you don’t believe it these products, you’re just selling them to make a few extra bucks off their customers.  The perception is you’re trying to sell products you wouldn’t buy yourself, to people who don’t want or need them, just to make money.  You’re not a professional, you’re a hypocrite!  Actions speak louder than words.  What are your actions telling your sales managers about you? 

F&I professionals train continuously, to ensure good communication between the sales department and the F&I department.  They also provide training to help ensure a compliant sales process, and make sure everyone on the sales team knows what exactly it is they do in the F&I office.  Finally, F&I professionals communicate, through their words and actions, their genuine belief in the products they sell, and their commitment to helping every customer.  That’s what makes them F&I professionals.