Overselling can hurt F&I sales

June 3, 2024

Getting the approach just right is what counts in the F&I office. Overwhelm your customers and they buy less

A December 2023 white paper by CDK Global sheds light on some evolving dynamics in automotive, particularly in the world of Finance and Insurance (F&I departments). 

This document, rich with insights, provides a detailed analysis of buyer behaviour and satisfaction and highlights the need for dealerships to adapt their strategies to meet changing consumer demands.

One of the key findings of the white paper revolves around the effectiveness of F&I managers in pitching products. 

It notes that “When presented with one or two products by the F&I manager, nearly half (49 per cent) of buyers purchased those products.” 

While an overall 39 per cent of those surveyed felt they were being oversold on products, this sensation increased based on the number of products presented. When three or more items were offered, the feeling of being oversold jumped from 26 per cent to 56 per cent. 

This figure significantly increases with the introduction of more products, with a mere one per cent of consumers opting to buy when six or more products are presented. This statistic illustrates the importance of a focused approach in product pitching, indicating that overloading customers with options can be counterproductive and overwhelming.

The demographic breakdown of purchasers provides further insights into the market. The data shows that different generations have varied preferences and purchasing patterns. 

Additionally, the white paper highlights how buyers perceive their interactions with business managers. A robust 84 per cent of shoppers reported being either “somewhat or extremely satisfied” with the time spent with their F&I manager, underscoring the critical role these individuals play in the customer experience. 

The positive perception is further reinforced by the trust placed in F&I managers over salespersons, with 65 per cent of buyers preferring the guidance of F&I managers for recommendations on warranty and post-sale products. 

The trust is built through transparent communication with 83 per cent of respondents feeling that F&I managers facilitate good communication and 82 per cent perceiving them to be honest.

The demographic breakdown of purchasers provides further insights into the market. The data shows that different generations have varied preferences and purchasing patterns. 

For instance, older millennials (ages 34-42) are more likely to buy the most F&I products compared to other age groups, indicating a potential focus area for targeted marketing and product offerings.

Moving in a specific focus on the behaviour of Generation Z, as more and more of this demographic enters the market, the white paper reveals some intriguing trends that set this group apart from previous generations. 

Gen Z’s purchasing decisions are heavily influenced by price, which emerges as the most significant factor, overshadowing brand loyalty or traditional paths to vehicle protection. 

This generation also tends to show a lesser inclination to invest in such products as scheduled maintenance packages, despite the logical benefit of managing future costs. 

Instead, the data suggests that they prioritize immediate, practical benefits such as theft protection and GAP insurance with 23 per cent and 26 per cent of Gen Z buyers choosing these options, respectively. This shift highlights a trend towards more immediate, value-driven purchasing decisions.

Moreover, Gen Z’s engagement with the F&I process reflects their comfort with digital tools and streamlines processes. A considerable number of these young buyers appreciate a mix of digital and face-to-face interactions, which align with their expectations for efficient, transparent transactions that do not compromise on personalized service. 

To that point, the CDK white paper indicates that, where available, young buyers are more likely to complete their entire transaction online.

The rhetoric telling dealers to always refine and evolve may sound like a tired mantra at this point, yet truly understanding and anticipating market shifts is what sets dealers apart. 

This end-of-year CDK Global white paper provides directional insights that can anchor these refinements in data-driven reality rather than subjective assumptions. 

Using these insights to help build your roadmap ensures your dealership isn’t just reacting to trends but proactively shaping a future-ready business model. 

SOURCE: CDK Global. F&I at the Dealership. CDK Global, Dec. 2023, [https://www.cdkglobal.com/insights/fi-dealership]

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