Top 10 F&I Best Practices for
Increasing Revenue and Profitability

For new car dealerships today, optimizing the F&I department is one of the most effective and reliable paths to increasing both total revenue and overall profitability. As profit margins on new car sales continue to shrink, dealerships must adapt their businesses to include an aggressive focus on F&I product sales. Failing to optimize your F&I processes means money left on the table and competitive advantage being lost.

The truth is, most dealership managers today do not have sufficient training or expertise to really operate an optimized F&I department. Many managers are still stuck in the mindset of moving cars, without considering other paths to making money. These outdated ways of thinking won’t last long.

If you’re struggling to get the most out of your F&I department, here are 10 best practices to start making more money from F&I products.

Number 1: The 300% Rule. Present 100% of products to 100% of customers 100% of the time! This is the most fundamental starting point for F&I optimization. Although it may sound obvious, few auto dealerships are actually achieving this basic target. You can’t sell something if the customer hasn’t heard the pitch!

Number 2: Improve Your Product Training. At most car dealerships, few employees are actually deeply familiar with the full line of F&I products being offered. Your team must know every product including all the features and benefits. Your team must also know the limits of coverage to ensure that customers are being presented with truthful information. Your team can’t sell it if they don’t understand it!

Number 3: Focus on Compliance. F&I products make dealerships money, but that profit comes with a requirement to adhere to complex laws and regulations. Dealerships that forget, ignore, or disregard the complexities of F&I compliance are setting up massive risk for the future. Don’t risk a million dollar fine: take the time to understand the rules and train your team.

Number 4: Include F&I Products on Your Website. The information age is here and today’s car buyers are digital buyers. Your website has to include everything important about your business and this includes your F&I products. Don’t fall into the trap of thinking you can win on under-informed customers. In the age of Amazon, customers expect to be able to research products before visiting a store and your dealership needs to adapt to this environment to be relevant in the future.

Number 5: F&I Product Merchandising. Most dealerships only have F&I product information within the actual F&I office. This is because most dealerships treat F&I products like an afterthought! To really move F&I products you have to include brochures and sales material in your showroom. This means visual sales materials - a bent rim to sell wheel and tire protection, a treated interior/exterior of a car to promote sales of paint and fabric protection, and more. For intangible products, seeing is believing and consistent merchandising will dramatically improve sales.

Number 6: Following Up. Following up on unsold customers is perhaps one of the most basic aspects of salesmanship. Why do most dealerships simply forget about this concept when it comes to F&I? When customers decline F&I products, your dealership should have an automatic process in place to record which products they did not purchase and follow up afterwards, perhaps with a discount or modified offer to help close the deal. Customers may actually be more likely to purchase once they’ve got a shiny new car in the driveway they want to protect!

Number 7: Offer Service Contracts in the Service Drive. Selling a service contract when the customer is already having their vehicle serviced sounds like an obvious opportunity. However most dealerships miss this concept, perhaps trying to upsell specific services themselves rather than thinking about the underlying F&I product potential. This is a mistake as the F&I product is often more appealing to the customer at the time and more profitable as well.

Number 8: Offer 0% APR Financing For Service Contracts. Nothing helps close the sale like 0% financing! Offering 0% APR will greatly reduce friction in bringing customers onboard to service contracts. Make this offer to customers in the service drive who may not have funds otherwise for the contract, but also want to be protected against future issues. This is also a great product for customers that pay cash for cars.

Number 9: Dealer-Branded F&I Products and Programs. It’s been proven that having your own branded F&I products improves almost everything about the offer, including customer acceptance rate, gross profit, and customer retention. It’s important for customers to understand that your dealership is offering a quality product that you believe in, and not just suggesting someone else’s product!

Number 10: F&I Product Reinsurance. Owning a separate reinsurance company is a powerful wealth-building mechanism that should be employed by all dealers. This allows you to own an asset beyond the dealership itself and improves your ability to manage risk in your F&I product offering while also maximizing profitability.

These 10 best practices should put you on the right track towards building an efficient and profitable F&I department. Looking through this list, how many of these concepts is your dealership following today? If the answer is “not enough!” then consider contacting Max Zanan for an F&I tune-up of your dealership today.