Did you ever wonder where the concept of F&I came from? Do you have any idea when your job became an integral part of a dealership? Allow me a History/Philosophy lesson with a small amount of poetic license. In light of what I see in the field, and the way some F&I managers misuse a menu, I think it’s important that you understand how the automobile industry went from cash sales only to the multi-profit, multi- career center that it is today. I hope that once you understand how we have gotten to this point that you will, as former Pittsburgh Steeler Head Coach Chuck Noll once said, go back to the basics. Back in the dark ages, around the same time the Beatles flew across the pond and landed on the Ed Sullivan show, or the early 1960’s, the price of new automobiles and homes had gotten to the point that the average person struggled to be able to purchase one. Banks weren’t comfortable lending money to pay for them, except to those folks who really didn’t need a loan. America at this point was still a largely industrial country—we manufactured things for our own use and to sell internationally. The average person had a job that could literally kill them, or at the very least, severely injure them. So banks weren’t filled with confidence that they would see their loans paid back in full. Around this same time, two friends are having a discussion about this, an insurance agent and a banker. As sometimes happens over a few drinks, brilliant ideas are born. Such was the case with Pat Ryan, the insurance agent and Carl Singer, the banker. The question was asked, “What if you could protect the bank from losing money due to the untimely death or disability of the borrower?” Over the course of several years Life and Accident and Health Insurance was introduced to the public with wide reaching positive effects! So wide reaching that the standard life penetration in a dealership was 90%! But there was still no F&I manager or indirect financing. That didn’t happen until later. Initially, the customer had to go directly to the bank for their loan. Of course, any good sales person is always looking for ways to improve and several started spiffing bankers for directing their customers to their dealerships to buy cars. Not to be outdone, other sales people found a way to work with the bankers over the phone and to hand write the contract at the dealership. It worked well until it got to be too time-consuming... Welcome the F&I manager. Oh, not the F&I Manager of today. This person was in a virtually dead-ended job that was considered a plug-in position: You plugged him in and when he burned out, you unplugged him and plugged in someone else. There wasn’t much to sell: the banks paid very little in the way of reserve. Fortunately, the extended service contract was added to the F&I product line.. This was, and still is, a product you could sink your teeth into. Life and A&H were an assumed sale...until we were told they could no longer be. The name they gave this was “payment packing”. So now you had to present each product to the customer individually—known as step-selling. As you fast-forward through time and other products are added to the F&I department to sell, step-selling became ineffective and cumbersome. So a man named George Angus stepped in with a paper menu and the idea that if you explain your products well, customers would be smart enough to see their value. Of course, that evolved into the electronic menu that most of you now use. But here’s the rub: explaining your products well. Mr. Angus is a marketing genius who studied wording, crafted processes, and test-marketed word tracks to improve the effectiveness of menu selling. And every F&I company has adopted at least the basics of his work.
So why do we think that we don’t need the process, training, or presentation that has been so thoroughly researched? If you are not reaching your goals I strongly encourage you to work with your Jeram representative and/or trainer to go back to the basics of the F&I menu sale and build on the tried and true processes that will maximize your sales opportunity and minimize your dealer’s liability.
Comments