Friday, November 26, 2010

Objection Handling - PrePaid Maintenance

Just a refresher on a prepaid maintenance close that pretty much always works:

Objection: I don't want my payment ANY higher!

Handled: I do appreciate that Mr/Mrs customer because I feel exactly the same way. By prepaying for required maintenance, you will never have to worry about adding oil and filter changes and other items into a tight budget.

The fantastic news is that for only $_____ more per month, you will be able to budget these expenses at today's guaranteed prices rather than taking a chance on how much they are going to go up next year - much less 2 (3, 4 or 5) years from now.

Objection: So I'm only prepaying for oil changes?

Handled: Prepaid maintenance is much more than just an oil change program. While your car is in for service, you will receive safety inspections to alert you of potential problems, tire rotation and air filter changes.

Most important, you'll have the peace of mind knowing that only factory-trained technicians are touching your car. They'll spot potential problems that most other mechanics are going to miss.

Next Post: More on the US Fidelis fiasco


Friday, November 12, 2010

US Fidelis and Attorneys Generals Reach Settlememt

I'm following this story mainly out of my intense loathing for US Fidelis.

Pennsylvania Attorney General Tom Corbett has announced that he and 10 other states AG's have reached a settlement with US Fidelis. The St. Louis-based vehicle service contract provider was forced into bankruptcy in April after being charged with deceptive and misleading business practices.

Nils Frederickson, spokesman for the Pennsylvania Office of Attorney General, said that the case and the settlement represent a solid victory for car buyers and a cautionary tale for unscrupulous marketers.

“This case should serve as clear warning: There are lines you can’t cross,” Frederikson states, "The rules that are in play, if you look at it from our perspective, are to benefit everyone.”

At the heart of Corbett’s investigation were claims that US Fidelis repeatedly and systematically ignored federal Do-Not-Call rules, among other violations. (I personally added my cell phone number to their database as a "hot lead" in early 2008 - I got called at least six times)

The company had been under investigation since 2008, a year in which US Fidelis employed more than 1,000 workers and generated $246.5 million in revenue. .

There soon followed a flood of reports from customers to the Better Business Bureau, each accusing US Fidelis of either pressuring or misleading them into purchasing a service contract or failing to pay claims. The company became the subject of more than 33,000 inquiries and 1,100 complaints from all 50 states in a 36-month period.

Read the rest of the article HERE:

The terms of the bankruptcy settlement will require the company’s owners, brothers Darain and Cory Atkinson, to surrender at least 90 percent of their assets. That includes a stake in 20 related corporations and $10.5 million dollars’ worth of personal property, including Darain Atkinson’s 40,000-square-foot Missouri mansion, a 50-foot yacht, and 35 other boats, cars and motorcycles.

Check out: "The bidding starts at 4.75 million for Atkinson mansion":

Serves 'em right!

Next Post: Toyota Dealer Bans the F&I Office ???


Wednesday, September 29, 2010

Toyota Dealer bans the F&I Office???

Well, I'm still not sold on this - but I have been hearing a lot about the concept of letting the salesperson complete the transaction from start to finish with a customer. This report is from a sales trainer who I respect - but in this case, don't agree with.

"For most dealers nationwide, a one-pricing sales strategy is a tough concept to accept. To even suggest that their sales staff should be given the authority to finalize every transaction at their desks and include the menu presentation without sending any customer into "the box" is heart-stopping for them. What about banning the F&I office altogether?

Well, one dealer I know is doing just that and very successfully. During these tough economic times, Colonial Toyota in Milford, CT, made a critical decision. The dealer chose to ban the F&I office and let his sales staff take charge of every transaction from beginning to end. He gave them all the title of "sales manager." I applaud Colonial Toyota for realizing that today's customers have changed and they needed to initiate their own changes to capture their business.

I was hired to train these sales managers in the proper and most effective presentation of menu presentation. I was skeptical at first, and then wholly impressed by this dealer's innovative "out of the box" thinking. The sales staff was enthusiastic and infused with optimism. The showroom is humming to a different beat of the drum and the excitement is palpable. Customers are buying and liking the upfront honesty projected by the staff.

Ironically, far too many dealerships still don't understand the necessity for transparent selling. They would rather stick to the status quo and continue to use outdated sales techniques. Their F&I managers tout their use of menu selling, but their process is seldom conducted with proper disclosures. They rarely review the base payment with customers for fear that any upfront disclosure will reduce their personal income. Although there are several great menu software providers on the market, the reality is that individual dealership menus are often changed to accommodate the missing base payment or itemization of cost. Dealers and F&I managers fear they cannot make a profit by being upfront with their customers. It's time to set fears aside.

One-price vehicle sales and the menu go together. Take Saturn, for example. Back in 1989-1990, when they first opened their doors with a brave new concept of "one-price" sales, the so-called experts in the industry said it wouldn't work. Customers wanted to haggle for the best deal. Customer wouldn't pay retail for a car without the bargaining process. Surprise! Customers did buy Saturns with the one-price offer and were happy to do it. The showrooms were packed with customers and the cars were hard to come by"

And look at what happened to Saturn by the way...

AFI's take on this:

I fully agree that the more transparent your sales techniques are - the more money you will make.

I also know that human nature will always take the path of "least resistance".

For example - if a salesperson badly needs his _x_th car to hit a bonus level - and it's the eve of the last day of the month - he or she will give ALL the gross of the car away, work the manager for maximum trade ACV, quote the customer payments at "buy rate" and sell ZERO F&I products.

Prove me wrong.

Some (most) people really can't be good F&I Managers, just like some F&I Managers can't be good Sales Managers. You really don't know until you give it a try.

Like our buddy Obama - imposing his "Grand Experiment" on our country.

I wish Colonial Toyota the best in their experiment and hope it works out.

My opinion is to still have the F&I Manager come out and greet the customers before them coming into the F&I office (building transparency).

F&I Manager: "Hello, congratulations on the purchase of your new vehicle.

My name is _______ and I am the business manager here at _______. My job is to take care of all the legal issues such as your title work and registration, as well as go over the mandatory disclosures related to your purchase.

The process will normally take about 20-25 minutes. To help expedite the process, I have a few questions to ask before I can prepare your paperwork. Can we sit and review those now?

This will lead into the interview. (a good topic for a future post).

Next topic: GAP Objection Handling

Back to the AFI Today homepage

Saturday, September 18, 2010

Objection Handling: GAP Total Loss Protection

Here are some good closes brought to us by Safeguard Products:

Objection: I have insurance already; I don't need more.

Response: I understand ... your insurance company is obligated to provide you funds that are equal to your actual cash value. However, they are not obligated to give you the amount equal to your payoff. If you owed $25,000 on your vehicle, you wouldn't accept a $20,000 settlement, would you?

Objection: I can't afford it.

Response: I understand ... but what would happen if your vehicle was deemed a total loss and you still owed $5,000 after the insurance company settled?

You would be forced to finance that $5,000 into your next car purchase - which would add an additional $100 to your monthly car payment, or you would have to come up with that $5,000 out of pocket.

Wouldn't it make more sense to pay $10 more per month right now for that coverage and peace of mind?

Objection: I have never had a car totaled before.

Response: I understand ... and you are lucky! However, let's say this does happen to you. When your car is totaled, your insurance company calls all the shots, and their goal is to settle as cheaply as possible, often using unfair techniques to determine the value of your car.

GAP protects you from the consequences of this unfair treatment by paying off your loan regardless of the valuation methods used by your insurance carrier.

Objection: I'll check with my insurance company about GAP.

Response: I understand ... however, it is important to note that some states do not allow you to purchase GAP from your insurance agent because there can be a conflict of interest.

Insurance companies often fail to total out vehicles that would otherwise be totaled, simply because the customer has GAP insurance through that carrier.

Rather than pay off your lender, the insurance companies may decide to pay to fix your car, although this may leave you with a greatly devalued vehicle that may be unsafe or uncomfortable to drive.

Objection: I have been with the same insurance company for years, and they will take care of everything.

Response: I understand, and it's great that you have a great relationship ... but did your agent ask you how much you were financing today?

I bet he didn't because whether you financed $5,000 or $50,000 on this car, your insurance company is only going to pay the Actual Cash Value of the vehicle if it's totaled.

You will be responsible for the payoff difference after your insurance company settles. With GAP protection, you are completely covered.

Best Practices

1. Ask Questions: Most customers know very little about GAP, and a simple explanation of what GAP covers in the event of a total loss will make financial sense to the customer.

What do you know about GAP?

In the event your car is totaled, where will you find the money to pay off your loan and insurance deductible?

2. 553 Contract Close (CA only):
Using a current 553 Law contract, point out Outstanding Loan Balance Settlement section.

Say to the Customer: This is a legal contract, and printed in RED is the statement that your insurance may not cover the outstanding loan balance.

Flip Contract Over and Say: You will notice that this has become such an issue that the notice is printed a second time.

You are required to initial this notice as recognition that you understand your insurance coverage may not pay off the balance you owe in the event of a total loss.

*This example refers to Settlement GAP.

Good stuff! - AFI

Next post: How to get $200 additional PRU in F&I: CLICK HERE


Tags: Automotive Finance, F&I, Finance & Insurance,
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Friday, June 4, 2010

What Does It Take for Me To Get $200 More per Car?

From F&I Insight:

It's no secret that you can't continue to rely on just rate or Vehicle Service Contracts to bring in more money per vehicle. However, with pressure for even more profitability in F&I, how can you bring in $200 more per car?

Selling more ancillary products is the key to success. But, what seems like a no brainer requires a careful approach. The first step is to have five core F&I Products that you know can get you 20 percent or more penetration.

With the plethora of products and partners available out there, it may seem daunting to find the right mix. The thought of changing your line-up or or adding new products may seem like overkill right now. However, a customizable, comprehensive and competitive mix is what will bring in that extra $200 per vehicle.

Finally, you must deliver your menu presentations with confidence. When was the last time you participated in Menu Selling Training? Is your interview solid? Are you presenting the menu in the best way possible? And, what about objections?

With strong products, thorough customer knowledge and a solid, innovative partner, $200 more per car is definitely attainable.

Make 2009 your year! - AFI

Next Post: US Fidelis


Tags: Automotive Finance, F&I, Finance & Insurance,
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Thursday, May 27, 2010

US Fidelis Collapse Sparks Service Contract Debate

Remember those sickening comercials in 2009 with Rusty Wallace - smiling - "I would buy the extended warranty on all my family vehicles ONLY from US Fidelis".

It killed me too - as crappy a year in the F&I box that 2009 was - listening to customers compare the prices of my esc's with US Fidelis.

Anyway, check out a good article from Jim Henry: Automotive News


The March bankruptcy filing for US Fidelis, the high-profile company that marketed extended service contracts directly to consumers, has rekindled debate over whether customers are best served by bypassing dealerships.

Customer-direct "is a growing business, to say the least," said, Marc Kamin, a spokesman for AA Auto Protection, of West Deptford, N.J., which markets extended service contracts online.

"Our position is a lot of people didn't know that a service like ours is available."

Saturation-coverage TV advertising for US Fidelis, including a NASCAR sponsorship, fixed that problem by raising awareness, Kamin said.

AA Auto Protection is a broker for the administrators that actually sell extended service contracts, Kamin said. He compared this to an independent insurance agent who offers policies from several companies.

"We're able to give the best prices directly because dealerships mark them up. We can sell them more cheaply," Kamin said.

He estimated that the average consumer could save 40 to 60 percent off the price of an identical service contract bought through a dealership, depending on how much the dealership marks it up. Kamin quoted a price of about $1,800 for "bumper-to-bumper" coverage for a couple of common used vehicles, a 2005 Toyota Camry or a 2005 Ford F-150 pickup.

Kamin said a broker such as AA Auto Protection also can offer service contracts for older used cars with higher mileage -- contracts that dealerships likely would not offer.

Apples to Apples

Larry Dorfman, CEO of EasyCare -- the trade name for Automobile Protection Corp., of Norcross, Ga. -- said in a separate interview that if you compare apples to apples, consumer-direct marketers are not necessarily cheaper.

"Most of these companies claim they are a lot cheaper than a dealer, and the fact is, if you price them for similar coverage, … they are more," he said. Dorfman was commenting in general, not specifically about AA Auto Protection.

EasyCare primarily offers service contracts through dealerships, but it also offers them directly to consumers through a call center, Dorfman said. He said his company first refers all customer-direct consumers to a dealer in EasyCare's network.

Dorfman said retail prices at dealerships, which are set by dealers, range from $1,500 to $1,800 for his company's best coverage, called TotalCare, for an average domestic or Asian vehicle. Contracts have a $100 deductible.Even EasyCare's own internal customer-direct call center would charge an average of $300 more for the same thing, he said. He estimated that competing call centers would charge about the same, maybe $100 more.

Dorfman said dealers and call-center service contract brokers both pay the same wholesale costs for service contracts. That means call centers are middlemen, just like dealerships.

He said a dealership has other profit centers, such as parts and service, which make money in the long run from a service contract customer.

But a call center has to charge more because it makes all its profit from service contracts.

"Over the years, a customer who purchases a [vehicle service contract] at the dealership has always been more likely to service there," Dorfman said.

Buyer (and seller) beware

Dorfman said the US Fidelis bankruptcy should serve as a warning for all service contract providers. No matter what the contractual obligations are, dissatisfied customers understandably blame whoever sold them the contract, Dorfman said.

"If the customer purchases from a dealer, there is brick and mortar to go back to," he said. "Claims and cancellations are a lot easier, and if a dealer is no longer in business, the vehicle service contract providers offered now at dealerships will step up and do what is right.

*** My Point exactly! - AFI

"On its Web site, US Fidelis, of Wentzville, Mo., tells customers seeking a refund that the service contract is between the customer and the third-party administrator, not Fidelis.

Those Bastards.

"US Fidelis has agreements with each of these administrators, and some of those agreements state that when a customer cancels, US Fidelis will reimburse the administrator for part of the amount refunded to the customer," the company says.

However, bankruptcy means US Fidelis may be unable to pay its part of such refunds, the company says.Without commenting on a particular company, Dave Robertson, executive director of the Association of Finance & Insurance Professionals, said extended service contracts sold through dealerships can offer some advantages.

As a general proposition, a cheaper service contract may make it harder to make a claim that qualifies for coverage, Robertson said.

He also said that buying an extended service contract on the Internet with a credit card could be more expensive than it appears, if the buyer doesn't pay it off right away.

"The cost of the coverage plus the cost of credit likely makes the plan more expensive than one purchased in a dealership," Robertson said. "If I was an F&I manager, I'd put some hard numbers to this and use it when pitching vehicle service contracts in the store."

Moral of this story: You always reap what you sow.

Next Post: Road Hazard Tire and Wheel Protection


Tags: Automotive Finance, F&I, Finance & Insurance,
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