Blog and News Area
It’s easy for finance managers to jump to conclusions when customers reject product choices. But jumping to conclusions is a dangerous proposition that can lead you down the road to lost income potential.
All too often, quick assumptions can lead F&I managers to do irrational things. Like stretching terms in an attempt to meet the customer’s budget, or foregoing product offerings because you’re fairly certain they won’t be able to afford them. When you fly blind in F&I, you’re bound to find yourself far off course. Asking questions keeps you on track.
Conducting a thorough interview can tell you a lot about why a customer may decide against a product. Knowing how long they typically hold onto a vehicle, including their daily driving habits, can tell you a lot about whether or not a service contract would benefit them. It can also give you plenty of insight into what they’ll find of value. Learning how to ask questions is the key to improving F&I product sales.
The fact is, customers always buy when the value of the product outweighs the cost. This applies to all products: cars, homes, jewelry, and even clothing. Recently, I spied a striking red dress at a Las Vegas Nordstrom. I was in town for an important event and I wanted to make an impression. The dress had my name written all over it. I tried it on. It fit like a glove. But when I looked at the price tag and saw $1,295 staring back at me, I quickly made my way out of the fitting room and hung the dress back up.
Once there, I was greeted by a salesperson. I informed her that the price was too high. It cost even more than my first-class plane ticket had! What the salesperson did next was as close to genius as anything I have ever experienced in a clothing store. First, she acknowledged my concern. Then, she proceeded to ask me questions.
Where did I intend to wear the dress? What was its purpose?
I explained to her that I was about to attend an important conference. I needed a dress that would make a powerful impact. That’s when her face lit up like a Christmas tree.
You’ll want to look your best, she told me. A function such as the one I was set to attend was no place to take chances with my attire. If I was there to make an impression, the best thing I could do for myself was to find a dress that would truly dazzle.
Before long, I began to visualize myself wearing the dress in front of hundreds of people – all prospective clients. In my mind, I began to see the potential impact the dress could have. And in that fleeting moment, the value of the dress began to outweigh the cost. So I bought it.
It was an experience that taught me a valuable lesson that stays with me to this day. Customers will buy only when the value of the product outweighs the cost. When you are able to talk to a customer on their level – acknowledging their concerns, asking questions, clarifying their needs – you will be in a significantly better position to guide them to a clear understanding of the potential consequences of not taking advantage of the product. Any product. Whether that’s a stunning red dress or an extended service warranty on a new car.
This is the psychology of F&I selling. And it all starts with the interview. It may not work every single time, but it will certainly increase your chances of closing the F&I deal. It will also greatly decrease the chances of profit slipping through your fingers.
The interview helps you build rapport with your customer. Open-ended questioning techniques are the best way to start. Not only do they help you gain a keen insight into precisely what the customer’s needs are, but they also help the customer understand their needs.
How many years does the customer plan on keeping their vehicle? How many miles do they drive every year? Will their driving habits remain the same?
Once you have the basic information, you can then begin to ask more specific questions. If the customer rejects a service contract, your next question should be: Why? You already know their driving habits; you have an understanding of their needs and their concerns. Now you’re in a better position to be able to counter their objections with information that applies to them.
Did you have a service contract with your previous vehicle? What about it did you not find valuable?
If they explain to you that they feel sufficiently covered by a manufacturer’s warranty, explain to them the benefits of an additional service warranty. If they tell you that the price is too high, talk to them about the money they’ll save in the long run. If they say their previous warranty didn’t cover enough, go over their coverage options again. Sometimes, questions lead to more questions – and ultimately, to answers that can help you underscore a product’s value over its cost.
Nine times out of ten, customer objections are the same. You’ve no doubt heard them all before. Why not prepare yourself in advance for what you know you’re likely to hear – all the better to zero in on a successful closing?
Effectively emphasizing the benefits of a product and being able to explain why it makes sense to take advantage of can result in miraculous turnabouts. But if you don’t ask questions, you’ll never know what direction to go. Listen to what the customer tells you. More often than not, what the customer tells you will lead you right to the sale.
Sign up now for my 3-day F&I Training – Closing Tools and Mastering Menu Sales Workshop taking place January 19 through 21 in Alpharetta, GA! You’ll learn how to remove pressure tactics from the F&I selling process, how to dramatically reduce the time customers spend in F&I, while mastering the F&I sale. Chernek Consulting has been offering F&I Training since 2001 with hundreds of satisfied auto dealers throughout the United States and Canada. Visit www.chernekconsulting.com for the full agenda. Seating is limited, so register soon!