All Ears podcast | Tips to refresh your F&I practices in 2023

Ellie Harris, senior director of sales at Ally Financial, shares tips that can help dealerships evolve their F&I practices and exceed changing customer expectations.

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Emma Hancock, Automotive News: Hi everyone. Welcome back to the All Ears podcast. I’m Emma Hancock, host and strategist at Automotive News. This podcast is sponsored by Ally Financial and produced by the Automotive News Content Studio. In each episode, we explore topics that are important to leaders in automotive retailing. Our guests include experts in their field from Ally, plus dealers from around the country, and we cover tips and explore insights that can help dealerships successfully navigate the transformational changes taking place in our industry. So on that note, let’s get into our topic for today. We’re going to be discussing some great tips to help dealerships evolve their F&I practices and make sure they’re in step with changing customer expectations. Our guest today is Ellie Harris, senior director of sales at Ally Financial. Welcome, Ellie. Thanks for being here.

Ellie Harris: Thanks, Emma. Happy to be here.

Emma Hancock: Great to have you here. So, Ellie, with so many F&I products to choose from and consumers’ expectations for a speedy transaction, what can dealers do to evolve the way they present F&I products to customers?

Ellie Harris: Great question. And time is money. And when customers come into the dealership, we’re asking them to spend a lot of money. Hopefully you’re not spending too much time. So I don’t think time and money spent for a car is a positive correlation. I think the more time a customer spends at the dealership, the more frustrated they get with the process. And it’s really important to make that process seamless for the customer so they come back for service or future sales. Customers today are going to come in with extensive research on the type of car they’re getting, maybe even payments. But F&I products is probably something that’s not on their list of things to do a deep dive on. What we really recommend for dealers that do business with Ally is to introduce F&I products early in the process. So whether that’s introducing products, brochures or information or even including it as a really visible placement on the dealership’s website, I think it’s really helpful to start the conversation as early as possible. Another thing we encourage is the salesperson to start planting the seeds. So as you go through the different aspects of the sales process, whether it be just the initial call or the test drive, you’re having conversations about F&I products, learning more about what their needs are. So, in an ideal world, when you hand off that person to the F&I manager, the manager has the information to do a very effective customer interview and develop that targeted menu for the right presentation. Another great time to have the F&I product conversation, I think, is a service tour. So as a customer is waiting for an F&I manager, the salesperson takes the customer through the service department to give them the tour. “This is where you bring your car for service. Oh, by the way, here’s a couple of products that you know, based on our conversation, we should look into.” Having that information available to the customer even before they go into the box is very important because you don’t want the first time the customer to know or hear about our products to be right in front of the F&I manager — it is very overwhelming. And with a number of options today, you’re going to face choice overload with the information the salesperson is provided, the F&I manager can create a curated, targeted menu just for that customer and really make it a lot more simple to present the finished products, what value they bring to that customer and really make it a quick and seamless process. It should feel to the customer that this is a conversation: We’re being transparent and really just trying to find value to meet your needs rather than feeling being sold to you. And I think that’s something that the customer is going to walk away with a good feeling. You know, they’re already at a high because they’re buying a new vehicle, so you don’t want to bring them down during that process.

Emma Hancock: Yes. I mean, it goes back to wanting that speedy transaction. And in order to have that speedy transaction in that final moment of excitement, you know, you have to get ahead of things. You know, there’s so much planning and time that goes into making that transaction speedy in the end. And we talked a little bit about numbers and affordability. Finance rates aren’t what they were just 24 months ago. What might an F&I team offer customers in terms of more flexible financing to help increase affordability?

Ellie Harris: Great question. I mean, finance rates aren’t really where they were 12 months ago. The number and the size of the rate hikes in the last year forced the dealers to adapt quickly to the changing landscape. I mean, even me personally, I bought a new house in June, and I think from the moment that I got my pre-approval to the time that I actually bought, my rate went up to 4{e3fa8c93bbc40c5a69d9feca38dfe7b99f2900dad9038a568cd0f4101441c3f9}. So I even personally felt what that looks like for our customer. And this, along with the supply chain issues, have driven average payments to new highs. I think I remember that Cox Automotive reported that typical new vehicle payments are in the mid- to high seven hundreds. I looked at about a year ago, and it was in the mid- to high six hundreds. So, a full hundred dollars over the course of 12 months.. I think that looking at extended terms, a lot of lenders are offering it and can put together a deal. But I think it’s also getting back to the basics about structuring the car deal and really working with your lender on developing that relationship with your buyer, where you can really look at each deal and say, “How do I optimize this for the customer? How do I make this the best situation?” For instance, maybe you can change the down payment a little bit and get a little bit lower of a rate. Again, just going back to relationships, having conversations, your lender could be a great resource for that. Going back to F&I products — that’s kind of my world that I live in. Pretty natural to think with the increased rates it would be harder to get products as part of the deal. But I think when you’re talking to a customer about affordability, it’s a great opportunity for F&I products because you’re talking about, “Can you afford a big outlay if something were to happen to the car?” Also with maintenance, you’re locking in today’s rates — today’s labor rates and today’s costs. Again, going back to current inflation, I mean, it feels like it wouldn’t be a great opportunity for us and our products. But I think it really helps the selling and adding the value of F&I to the end customer.

Emma Hancock: It really does. Affordability and F&I are so linked, and really protecting your investment, helping your customer protect their big investment. So let’s talk about vehicles as it pertains to F&I. Let’s talk about EVs, which is a hot topic. EV market share is expected to continue to grow in 2023 as the market evolves. What are some tips for dealers who want to make sure their sales and F&I teams are continuing to expand their product knowledge? Could there be a benefit if dealers also educate potential buyers as part of that process?

Ellie Harris: Absolutely. EV technology and the evolution that’s happened over even the last few years, the new entrants into the market, all these different options — and really getting back so that affordability discussion — EVs are becoming more affordable, and with that, they’re going to be at a higher adoption rate. Dealers serving as the trusted advisor during an EV discussion is huge, right? And how do you do that? Training is key. You have to make sure your people know about EVs, know about all the latest things that are happening in the industry, making sure that your salesmen, your F&I managers, your whole team are up to speed on that. And then your service department, they have all their certifications so they can fix the EV cars that come in. And bringing customers into that, or adding that knowledge transfer to customers, is really important as well because, honestly, unless you’re in the industry, you’re probably not going to know too much about EVs. For instance, the weight of the battery is going to cause increased wear on your tires. That’s going to be an expense that you’re going to occur quicker on an EV vehicle versus a nice that knowledge and sharing that with customers. And then again, I’m back to my F&I product world really selling the value of an EV VSC [vehicle service contract] to cover maybe those higher expenses from the technology of any vehicle and the additional wear and tear that you’re not going to see on an ICE. I don’t think a lot of end customers know those details, so it’s really important to bring that in.

Emma Hancock: Well, Ellie, I love what we’ve covered here today and we’ve talked about the best ways to present F&I for customers in these changing times. We’ve talked about affordability in 2023 and we’ve talked about product knowledge, specifically EVs. I want to thank you so much for your great insights and tips. And that is it for this episode of the All Ears podcast. I hope everyone found this helpful. I certainly did. On behalf of Ally Financial and the Automotive News Content Studio. Thanks for listening and bye for now.

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