Commit to continuous improvements across the board and sales and profitability will grow right alongside because leadership has developed a culture focused on customer experience, personal accountability, and efficient, effective dealmaking.
Tactics for Implementing & Measuring Successful F&I Integration
F&I Training Programs and Effective Change Management
One of the most common reasons new behaviors or processes fail is fear of failure. It is a self-fulfilling prophecy that dooms many efforts before they start. Rather than face the initial difficulty of trying something new, the lure of staying in the comfort zone takes over and new habits never get fully or correctly established.
This is particularly true when it comes to disciplines like F&I. Because it’s so vital to the lifeblood of car dealership profitability, and because there are regulatory issues and dealership compliance involved, the responsibility over F&I tasks is typically only entrusted to a select handful of employees. Rather than make a mistake, other departments keep a safe distance and don’t get involved with F&I at any level.
This is a mistake – and a lost opportunity.
Cross-functional leadership doesn’t mean everyone becomes an F&I expert overnight. Rather, it means teams without day-to-day F&I exposure understand the role F&I plays in the business, and learns how to talk about F&I at a basic level in order to enhance customer confidence, trust, and satisfaction.
This, of course, takes targeted dealership training programs aimed at establishing a core foundation of F&I knowledge.
If you’re already creating or working with a collaborative dealership culture, then the matter of proper F&I training for cross-functional teams can be as simple as the below three-step process.
1. SHOW
Demonstrate the function and purpose of F&I across multiple dealership profitability scenarios. Some team members may be unaware of just how much revenue F&I creates for dealerships in an ongoing capacity. Others may not know the nuances behind financing and how to be a problem solver when less-than-textbook deals present themselves. Let employees see these and related tasks in action (Remember shadowing? This is a great hands-on way to implement it).
2. DO
Once the groundwork understanding has been laid, flip the script. Let team members from cross-functional departments demonstrate or practice the art of the warm handoff themselves, always keeping an experienced or knowledgeable F&I partner close by for support.
3. OBSERVE
After a bit of repetition, allow teams to start involving F&I on their own... but keep a watchful eye out to fine tune specifics or correct missteps before they turn into bad habits. It’s okay to keep teams accountable here as long as leadership remains accountable, too.
There is a popular idea that it takes 21 days to establish a new habit... but the truth is that there is no magic number. New processes can catch on as quickly as a day or two (think about the first time you used a smartphone with a touch screen), or can take months or longer to establish (like training for a marathon). The real key is consistency.
Harnessing Data to Measure F&I Performance
Once F&I is functioning as a holistic part of your car dealership profitability strategy, the next benchmark is evaluating how well the new approach is delivering on bottom-line goals. Every dealership employee may love the new process, but if it isn’t yielding results, adjustments need to be made.
When it comes to , data and metrics offer powerful insights that help inform the kind of decisions that need to be made. It is normal for dealership profits to have highs and lows; but sharp spikes and low valleys often indicate there is a problem worth investigating. Aside from trends and forecasting, specific data points can provide additional visibility into F&I performance over both the short and long term.
Use PVR (Per Vehicle Retail) to Track Overall F&I Performance
In a healthy dealership profitability scenario, PVR and sales inventory should move slightly opposite one another. The fewer vehicles sold, the higher the overall purchase should be – both in terms of vehicle price as well as F&I products included in the sale.
When number of sales increases, PVR tends to decline, but shouldn’t decrease so substantially that it wipes out the boost in sales. It’s when both PVR and number of sales are down that it’s time to rethink your approach.
Example: 2023 Vehicle Sales vs. F&I PVR Performance
↑ GOOD: Vehicles sales increased 13.8% from February to March but this dealership was able to largely maintain F&I PVR, with a drop of only 4.9%, and then was able to increase PVR while vehicle sales continued to increase.
↓ BAD: Vehicles sales increased 3.6% from March to April but F&I PVR decreased at a higher rate at -9.8%.
