Monitoring and evaluating the performance of your Finance & Insurance (F&I) department has never been more critical than today. With the increasing number of products available and rising interest rates, the traditional metrics are no longer sufficient to gauge success. To ensure your F&I department is performing at its optimal level, it is essential to monitor several key areas beyond the usual Profit per Vehicle Retailed (PVR).
Overall, Per Vehicle Retail
In addition to profit per retail, you should monitor the following areas monthly:
- VSC – Profit per Service Contract: The profit per service contract (VSC) will vary for each dealership. Setting your goal should consider factors like the manufacturer, current performance, penetration levels, and vehicle type. Utilize 20 Group comparison reports to benchmark your performance. Establish clear goals and review the results with your F&I managers mid-month and at the end of each month.
- Products per Deal: Today's market offers many high-quality F&I products that add value to the customer's purchase, providing peace of mind. With rising vehicle and repair costs, customers are more receptive to products that limit their exposure to accidents, key loss, major repairs, and theft. Statistics show that an increase in products per deal leads to higher per vehicle returns. Ensure your team makes quality presentations, bundles products effectively, and provides customers with the necessary information to make informed decisions. Top F&I performers average 2.5 to 3.0 products per deal.
- Per Vehicle Retail on True Cash Sales: It's a common misconception that cash customers are less interested in F&I products. Adopt the mindset that every customer, regardless of their payment method, can benefit from these products. Track your income per cash sale and aim to improve penetration in this area. Quality presentations to cash customers can increase your income almost immediately. Consider offering products such as appearance protection, diminished value coverage, tire and wheel coverage, and windshield coverage. Set up contests among F&I managers to drive performance in cash sales and observe the improvements.
- PVR by Sales Personnel and Managers: Individual performance tracking is crucial and should be reviewed multiple times a month with salespeople and managers. Sales recommendations significantly impact customer purchases of F&I products. Most Dealer Management Systems (DMS) provide reports for income by salesperson or manager. Regularly reviewing these reports in sales meetings can motivate underperformers to improve. Finance managers should identify and train those who need help in endorsing products effectively.
- Post Sale VSC: If you are not currently marketing VSCs to service customers or unsold customers at the time of sale, consider adopting a post-sale program. Companies like APC (Automotive Product Consultants) offer programs to help you capture unsold customers before third-party companies do. Contact your local Vanguard Dealer Services office to start soliciting unsold customers in both service and sales for vehicle service contracts.
- 100% Menu Utilization: Using a menu is crucial for presenting all products to every customer. Your goal should be to present 100% of products to 100% of customers. Reviewing monthly menu utilization reports ensures comprehensive product presentations. Dealers using APC for post-sale VSCs often capture more sales that might otherwise go to third-party companies.
- Actual Production vs. Goals: Establish clear goals and expectations for your finance managers. Define minimum standards for each product offered and compare actual performance to these goals at the end of each month. If goals are consistently surpassed, redefine them and offer incentives for achieving new targets. Your local agent can assist in setting and monitoring these goals.
By diversifying the metrics used to evaluate your F&I department, you can gain a more comprehensive understanding of its performance and identify areas for improvement. Regular monitoring, clear goal setting, and leveraging available tools and programs will help drive your F&I department towards greater profitability and customer satisfaction.
Contact Chris Hochstein today at chochstein@ezvds.com or visit his LinkedIn to learn more about different ways to increase your dealership's profits.