F&I talks over video conference a good option for dealers

A human dealership representative still has value in the finance-and-insurance sales process, though that person doesn't need to be physically present, according to three companies with mechanisms for video F&I conversations.

This new approach comes as consumers show interest in conducting more of their auto financing online while retaining some elements of the traditional auto buying experience.

A CarGurus-GfK spring 2022 poll found 70 percent of recent car buyers want to do more of their next auto purchase at home, and 56 percent want to handle financing online. But 32 percent of the respondents also said they appreciate the financing help available when visiting the physical dealership; 64 percent still handled financing in person on their last car deal.

Two-thirds of vehicle shoppers want enhanced digital auto retail tools, according to a Capital One October 2022 survey of 2,210 recent or impending vehicle buyers. Nearly 60 percent of buyers said they want to finish researching the vehicle online before visiting the dealership, and 34 percent said they want to understand their financing first. Three-fourths of shoppers also want more upfront information about pricing and financing.

Meanwhile, 43 percent of dealerships polled in a separate Capital One October survey said they planned to digitize deal structuring in the next six months. More than a quarter thought customers checked what auto interest rate they would qualify for before visiting the store.

However, 92 percent of consumers said they still want to test drive the vehicle, and 72 percent said they want all dealership communication to be in person. Among the customers who had recently bought vehicles, 52 percent said they learned about financing options in person and 59 percent discussed financing and prices in person.

Shawn McCool, co-founder of digital F&I menu provider iTapMenu, said his company went "all-in on people" with a recently launched capability for dealership websites to offer customers the opportunity for an on-demand video call with an F&I professional.

"Your customers will see your people, and your people will continue to be able to do their jobs," McCool said.
Some consumers will buy vehicles completely online, McCool said. But digital retailing had "mostly been a failure," he said.

Dealers adopt software providers only to see no change in revenue or sales volume, then try another provider in what becomes a cycle with a "tremendously high" software churn rate, he said.

McCool said he was "stunned" vendors try to replace "human capital" as if experienced staff didn't know how to sell vehicles or service contracts. He also argued it was insufficient for dealership websites to offer F&I product videos and an opportunity to get a quote.

"We're going to bring the person back into the transaction," particularly in iTapMenu's F&I space, McCool said. He said he was confident F&I productivity would be higher.

The company's old system gave remote customers an interactive F&I menu, allowing them to see their monthly payment under different F&I product coverages. He said iTapMenu had facilitated "hundreds of thousands" of remote menus.

"Not very many people bought anything," McCool said.

He estimated F&I product sales happened less than 10 percent of the time when the transaction was self-directed by the consumer.

"We just recognized ... it's too big of a decision and it's too much money," McCool said.

The new iTapMenu system eliminated the option for a customer to self-select F&I products, and only the F&I manager can remove a product from the deal being discussed via video.

A 2021 survey by Reynolds and Reynolds Co. found 59 percent of customers saw themselves as extremely likely to spend more if they could review and select F&I products online, and 61 percent gave the same response regarding working with a dealership online to determine the exact vehicle payment or price. But 40 percent of car buyers felt it was extremely important to have access to a person to discuss F&I products when shopping online.

Service contracts can cost a few thousand dollars, McCool said. It was unreasonable to expect many customers would select one and accept the higher monthly payments "because of a little video for 15 seconds" promoting the coverage, he said.

McCool said he felt these virtual F&I conversations were more likely to occur near the end of a transaction after the customer has agreed to a vehicle and secured financing, rather than early in the process during the car shopper's online research stage. ITapMenu's dealerships have traditionally used its technology later in the deal, he said.

"That's our roots," he said. "We live at the end."

Cox Automotive offers a means for consumers to buy vehicles completely online and without dealership assistance. Nevertheless, the company in April announced it now offered finance managers and other dealership personnel the ability to videoconference with customers via its partner ActivEngage.

Chad Agler, Cox product management senior director, said the digital retail software often ends up needing a human touch from the dealership anyway.

"Our research has found there that they need chat and engagement, and the customers want help," he said.

He said 52 percent of the would-be self-service online transactions still "require adjustments and conversations and things like that."

The videoconferencing option was added as part of a broader Cox-ActivEngage overhaul of the customer chat system Cox offered dealers, Agler said. However, video was always part of the plan; the need for video became clear during the COVID-19 restrictions.

"Oh my gosh, people do so much better in communication when they can see each other's faces," Agler said.

Customers buying vehicles online have been shown to self-select F&I products — in fact, Group 1 Automotive's digital retail platform Acceleride in April reported better quarterly F&I gross profit per vehicle than the company average. But Agler, a former finance manager, said F&I sales without a visual, human connection would be operating at a disadvantage.

"F&I is all about selling the intangibles, right?" Agler said.

And all F&I training revolves around a one-on-one interaction with a customer, he said.

Agler recalled using visual aids to sell Simoniz to customers, who could see the difference the appearance protection made upon an object. This pitch, he said, wouldn't work via chat, email or text message.

"You need video to be able to do that type of thing," he said.

Agler also "absolutely" saw a role for videoconferencing in financing as well as products. With interest rates rising, customers might not trust assertions about the best way to finance a vehicle.

"I think you want to look that person in the eye," he said. "As a consumer, I want to say, 'How good is his poker face,' because I want to know if that's the best ... you can do for me on that rate."

Agler said the system should also put customers more at ease, as they could always close a chat window or cover their camera any time they wished. "I think it's less threatening," he said.

ActivEngage Chief Revenue Officer Eric Schlesinger said videoconferencing would improve F&I gross profit compared with an in-person interaction.

"The consumer's gonna be in a more comfortable position," he said.

Instead of being in the finance "box" at a dealership "where I already have my guard up," the consumer is within their own surroundings, Schlesinger said. They're more likely to agree with the F&I manager's pitch, he said.

Jonathan Jordan, director of retail strategy for F&I product provider JM&A Group, said his company launched its so-called virtual F&I offering in 2018. He told Automotive News in late January the company had logged more than 23,000 transactions where the F&I manager and customer never actually met — with about 20,000 occurring in the past two years.

The video chat feature at first focused on the notion "customers don't want to come to the dealership," Jordan said. But this hypothesis was found to be incorrect, he said.

"What I like to say is 'it's not that they don't want to come into the dealership, it's that they don't want a bad process,' " he said.

In fact, JM&A has since introduced the remote conferences into situations where the consumer is physically in the dealership. It realized it could use the technology to solve the problem of customers having to wait for the F&I office, he said. If the customer is one of three deals closed at the same time at a dealership with a single finance manager, that consumer might have to wait an hour or more to finish the transaction, he said.

But if a finance manager at another location in the group was free at that time, he or she could connect remotely with the waiting customer.

Jordan said remote F&I also could serve a dealership with too much work for a single manager but not enough volume for two. Historically, the facility would need to rely on solutions such as overstaffing the F&I office or tapping a less qualified person to handle the overflow.

"Overwhelmingly, most of our virtual F&I transactions are when the customer's actually in the dealership," Jordan said.

He said the most common use case is to "fill gaps" such as a "half-a-person volume" or an employee on vacation.

Kevin Hull, director of sales and training, said with a proper turnover from sales, customers don't mind using remote F&I.

"It's still a person-to-person interaction," Jordan said. "Most customers think it's kind of cool."

Remote F&I benefits could extend beyond the logistical. One dealership with a hybrid staffing model — sales personnel also handle F&I on a deal — uses it to train lower-performing employees, Hull said. The staffers in the bottom 20 percent sit in and watch as a remote finance manager presents the menu to the consumer in JM&A's remote F&I setup.

"So now they're reinforcing their learning," Hull said.

After this 90-day training ends, the employees tend to score out of the bottom fifth.

He said this training format doesn't come off as odd. The message, Hull said, is "We're just trying to provide the best experience."