Digital Dealer - Greg Uland - Unique Buyers, Single Playbook

Hi, I'm Greg Uland, vice president of marketing with Reynolds and Reynolds. Now, more than ever, customers expect a flexible car buying experience, even in the complex world of F&I. And the overwhelming message for quite some time now has been "dealers need to be digital retailing and they need to be doing it yesterday". But in F&I, there's a few struggles, a few oversights.

The first one is customers have varying comfort levels when it comes to F&I. Some want to complete everything in the store. And some want to do everything online. And then there's a big chunk that really would desire a hybrid of the two, something in the middle.

Second, accommodating all these different scenarios isn't always simple. How do your current processes and your current technology translate to remote or hybrid situations? Do you have to completely change things? How efficient is that? What does it impact and how does it impact your profitability and compliance?

To make sure we're talking in the same language here, let's start by defining the three different types of buyers in today's world. First, let's take a look at the online buyer. This particular subset of customers has been getting a lot of attention lately, for good reason, but it's actually a very small segment of customers overall. When we surveyed consumers and asked them how much of the car buying process they did online, only about eleven and a half percent said they went through the entire process in a remote setting. But when we dug in a little deeper and asked more questions to really understand what that meant, only about two and a half percent said that they actually never went into the store. They bought the car completely online.

Now, this number is going to grow and you need to be prepared for online F&I options to be more desirable as time goes on. But in today's world, as it currently stands, most people do end up visiting the store for one reason or another and at some point.

So the top reasons consumers purchased online when we asked them were really convenience and less pressure during the sales process. Those are the two big ones. But online options aren't just about a courtesy to customers. They also help the dealership. Buyers stated that they'd pay more for a vehicle if certain F*I services were offered online, 58 and a half percent said they'd pay more if they could sign all the paperwork online in a remote setting. 59 and a half percent of customers said they would pay more if they could review aftermarket products online. What this really illustrates is where consumers place value when it comes to the physical dealership; they don't want or really need to sit across from someone to sign paperwork. They really value other parts of the buying process, more like the test drive or being educated on financing.

So let's move to the opposite end of the spectrum, the in-store buyer. And when we look at the entire automotive sales process, it's important to recognize and understand that fully in-store buyers are really extremely rare in today's world, even more so probably than online buyers. Even those who complete most of the process in-store and come in really early and come in multiple times, typically begin their car buying journey online by looking at makes and models and pricing, searching for inventory. And this shouldn't be news. But when it comes to F&I specifically, when we hone in on F&I, a lot of customers do complete this portion entirely in-store. So let's talk about them specifically.

These buyers really decide to buy in-store for a variety of reasons. They value human interaction, and they feel more trust when they're sitting across from somebody in-person. Many also want to go to the dealership to ensure they can talk to someone and have their questions answered. When we ask consumers, many of them also believed that the signing ceremony, sitting down and signing the paperwork, was something that had to be completed in the store.

So as you can see, very rarely is there ever an in-store buyer. And very rarely is there ever a completely online buyer either. Customers today are really hybrid buyers or blend of the two. And as consumers go further down the sales funnel, they increasingly move in-store to finish their purchases in a natural flow. And although it's important to note that just because this is the norm, it does not mean that buyers can't move back and forth in-store to online, online to in-store.

Suzie, as an example, she may prefer to simply complete the credit application at home on the website and then come into the store for the rest of the buying process, the whole thing. Then you have Jack. He might want to start in the dealership, come in and talk, kick the tires a little bit, and then go back home so he can review and sign paperwork.

And ultimately, you need to be able to provide a seamless experience for your customers, no matter where they decide to do each part of the process. The more flexibility you can offer, the better off you're going to be. And for many, many dealerships, one of the biggest misses is providing a seamless experience for employees, too. It's not just about customers. There's no reason to put an F&I manager through different processes and tools, depending on where the customer is. Often, it just ends up resulting in that F&I manager being rushed and frustrated. And then you end up questioning them the next week about why they're aren't selling more GAP.

So we have a clear definition of each type of buyer, and customer focus is certainly very important. But what about you? How can you, the dealership, maintain profitability and efficiency and compliance while accommodating all these different customer preferences and all these different scenarios? Because if your dealership goals suffer at the expense of customer satisfaction, is it really worth it?

So how do we execute against this? Providing remote experiences adds a whole different dimension to your F&I processes. At first glance, you may think you have to implement completely different solutions and processes to reach online customers. And a lot of us have.

However, adding layers of technology that can complicate the process leads to higher costs and integration issues, especially if they don't work well together. And treating online and in-store customers completely different can cause employee confusion and inefficiencies that hurt your effort and profitability and accuracy. So you really need a single seamless process and a suite of technology backing it, so you meet customers where they are while maintaining profitability, accuracy and efficiency.

Let's break down the pieces of F&I with the most friction points, and we'll talk about strategies you can use no matter where the customer is, to ensure you find a balance between providing flexible options to customers without sacrificing what's important to you. So how do we go about doing this? Let's start with selling, right.

So when we're talking about selling aftermarket products and selling in F&I, you have to be able to establish trust and engage customers. And it can be really difficult when you're not able to meet buyers face-to-face. Things like gauging body language and tone of voice is impossible over email - one of the worst communication channels I'd say. But phone conversations aren't a lot better either. You don't get a lot of that interaction that you would when you're having in-person dialog. And interactivity and engagement is tough. It really is over these mediums, which makes it even more difficult to truly educate the customer, which is what you're really trying to do. Dialog is much more effective than a monologue when you're teaching. You want to go back and forth and you need to be able to do that by sitting across from somebody.

So when you're thinking about that and you're thinking about educating customers on those F&I offerings, discussing complex topics like interest rates and terms and extended warranties, it can be really tough whether you're on email or over phone. Almost 72% of consumers said that they really weren't familiar with F&I products. If they're not familiar with them, how are they going to say yes to them? And an additional 40% said that it was extremely important to have guidance from an F&I expert when they're talking about these types of products. So lack of education, it's not just an issue for the consumer either. When you think about the dealership in your business, profit can suffer when customers don't understand the products you're selling.

And then think about compliance headaches, too. What are the consequences for your dealership when the customer's in an accident and claims you never explained GAP insurance to them? And even if you did, if it was through a phone conversation, it's going to be pretty tough to prove that. And then as an extension of that, thinking about things like rating products, when you're going through that process and even booking them afterwards, manually calculating product pricing and using a spreadsheet or a paper manual or recording vehicle information into the provider's website can lead to issues, right? You have re-keying, you have discrepancies from one place to the next.

And manually booking products can cause issues too. If the customer blows out their tire the day after they drive off the lot and the contract is still in transit for their coverage for the wheel and tire you sold them, that can cause some issues and that can lead to trust problems and CSI problems and all kinds of things.

So when we think about selling, how do we do it? How do we fix it? A quick story. My first commission sales job, I sold 100% over the phone. And it's not an easy job, I think anybody would tell you that. But over time, we worked on the team I was on, we worked to move to video calls and then interactive screens that you could touch and draw on. And ultimately, we built out these sales rooms that really looked like television studios to add an entertainment factor to the interaction. And our sales results skyrocketed, more wins, shorter time to decision. Everything went up. And when you think about your world and how you're interacting with customers, how you enable face-to-face collaborative conversations is really the question at the end of the day.

And video chat is a great way to accomplish it. There are a ton of video platforms out there today. Pick one and use it. There's no better way to at least break down that barrier a little bit. Video chat can help bridge the gap with virtual customers almost instantaneously through this medium. Both parties can really observe tone of voice and body language, and you get more of that dialog. Higher levels of communication, higher trust and engagement. Makes that education process a lot easier, whether the customer is in-store or online.

But when you're talking about breaking down that barrier, you need to be able to connect. If a customer is fully engaged, they'll react to the information you're presenting with. Things like facial expressions and changes to their tone of voice. And they'll have questions, and you'll go back and forth. And all these cues obviously tell you how your customer feels about the topic, so you can respond appropriately. Over phone, it's just a little bit more difficult. Over email, it's even more so. And that collaborative conversation really helps ease the feeling of pressure on the consumer, too.

When asked what could be improved about in-store processes, consumers said that pressure from salespeople was one of the top three reasons. So another thing when you're selling F&I, hopefully this isn't news to anyone, but really making sure that your F&I managers are focusing on problems and not products. And you have to inspect this, too. You can't just expect that they're going to do it naturally. Everybody gets in a hurry. This is not easy. And especially in a remote setting, you got to help them get there. It's different than selling it across the table from somebody.

So thinking about the problems, customers don't have a great understanding of aftermarket offerings. They're looking for guidance. Remember, I mentioned earlier, 71% of people said that they really weren't familiar with F&I products. And if you focus on telling them about the why behind the aftermarket, it really helps them understand the product better. Give them examples of situations where products like an extended warranty would help them. A great way to do this is with sales tools, leverage videos and interactive PDFs so that you can really engage that customer. Sometimes just talking about things alone isn't really enough, especially when it comes to complicated topics like GAP insurance or terms of an extended warranty.

And sales tools also can really help take some of the pressure off the F&I manager. They're a great backup when you've tried to provide an explanation, but it's just not hitting for the customer. They can also increase engagement if they're interactive. So this can help the presentation feel like it's moving a little bit more quickly. The perception is it's not taking as long. And finally, when you're using sales tools, use the same ones online as you do in-store. The ones you have in-store are there because they work. Find a way to use them online.

And like I mentioned earlier, inspect this. I talked with a dealer recently and he was telling me about how he was looking at his F&I managers and how they were performing. And he noticed that they weren't using the tools available to them and they had one F&I manager specifically that hadn't sold, and it was GAP insurance is what it was. He hadn't sold any GAP in over two weeks. And so they looked at utilization, and he wasn't using the tools available to him. And we went down and we worked with them. And I got an email from their dealer the next day said, "Hey, the next deal that he worked; he used that flier and got GAP sold on that deal." So it's a great anecdotal story, but inspect those things so that you can help your team along.

Another piece of this is really being able to electronically rate products when you're going to sell them and then book them on the back end. Do it through your DMS if possible, avoid any rekeying. You don't want to go from one place to a website to key information, and you make sure the pricing is consistent and accurate by doing this in one system really. And that way, also, when you book the products digitally, customers are covered right away. The contracts are not there floating around. And it eliminates some of those issues that we talked about before.

So now, let's talk about financing, which is the next thing. So selling and then financing, getting a deal done. And there's some struggles with financing. First of all, is customer acceptance. Doing this remotely, we're talking about a lot of money for a lot of people. There's just some security and trust concerns. Taking out a loan for a large amount is stressful, and it's intimidating. And they probably aren't used to doing that online. You think about the last time you signed mortgage documents or a large loan there's a tendency to want to read through the whole thing. I remember sitting at a table with my wife and our mortgage folks, and I was trying to read through all the pages of the contract, and my wife is sitting there nudging me, saying, "Would you just hurry up and sign it?" And I didn't want to. I felt like I needed to read all of that because it was important to me to know what I was signing. And that goes into this idea of transparency and providing that in a remote environment is a big deal.

When you think about the consumer's perceived transparency, often looking over the contract, it can feel safer in-store when you have someone there that's also looked at the contract, someone who can guide you a little bit. When you're alone, you can also often feel more pressure to read all the information in front of you, make sure you're not missing something or something's not getting past you. And it's not easy to read typically, right? This stuff isn't simple and straightforward. And if there are questions or issues as a consumer, I want to talk to somebody, make sure that there's somebody available. Additionally, in a remote setting, just like in-store, you want to be able to create different options for customers. What does the deal look like if I do different things? When I'm going back and forth, then I want to see what happens if I up my down payment or I want to switch to all these. What do those things do?

So another piece of this, especially in a remote setting, is getting quick approval on contracts, getting contracts validated ahead of time. If you can't validate the contract, there's just a higher risk of errors on the deal. On the back end, when you send it in, you get contracts coming back, it increases CIT time, and it's just a lose-lose situation for everybody. The customer ends up not trusting you as much. They clearly don't want to come back in. But it's very important to get this done upfront, and it can be complex when moving between the DMS and the lender to make sure that everything is validated upfront.

So how do we address some of these things? What are some of the best practices? And the biggest thing is really just fostering that trust and transparency. Make sure, first of all, that someone is always available for that customer to answer questions when they have them. And then secondly, when you're presenting numbers to the customer, show them the math; this is really just a best practice. If they can understand what they're paying for and they understand how you got to those numbers, it'll be much more impactful for them. If you're going over different options, again, just show them the math. Help them understand where the calculations came from when they're trying to recalculate. Also, make sure the numbers match. So if they come into the store and you've worked a deal and then they go home and they want to look at that deal again, make sure that matches or vice versa. If they've started the deal online and then they've gotten pricing, make sure that when they come into the store, those numbers match. You need to do that if you want to be able to maintain that trust with the customer.

And then when you think about, we talked about electronically validating contracts. This is an easy way to speed up the process. Make sure it's right the first time, and it can really eliminate the use of some third-party portals, which makes a big difference.

So we've talked about selling and we've talked about financing. The next step of this is getting a deal signed. And in a remote setting, this has been, frankly, a hurdle for a lot of people. And it can be a struggle for consumers. It can be a struggle for the dealership. At the end of the day, it can be cumbersome.

When you think about an F&I manager, and if I want to send something to someone via an e-signing platform, pick your platform. Usually I either have to save to a PDF or scan something in, but hopefully I'm saving to a PDF. But then I have to go into the platform and have to mark every place that the customer has to sign. I have to mark where they need to initial. And does it take hours? No. But is it a pain? Yeah, it is. And does it get done right every single time? Probably not.

And then when you think about whether a customer's online or in-store, are those different solutions, is your F&I manager learning two different things and is each one costing something? Is it costing you money to have two separate processes to accomplish the same thing? And then think about once that deal is actually signed electronically because your F&I manager ends up printing it out so that he can he can FedEx it to the lender. That's not an efficient process.

And on top of that, if the signing platform isn't a part of your other technology, you end up working deal information each time you're talking to the customer. It's time consuming. There's room for error. It's difficult. And it's also fairly complicated for customers. Not everybody has an easy way to sign. And, if they're sitting there on their desktop computer with a monitor, it can just be a cumbersome process to try to figure out how to do all this stuff.

So then you end up actually mailing paperwork to customers or trying to get them to sign paper copies by delivering it with the vehicle. It's just inefficient. And you're spending money on paper, you're spending money on toner. If you're shipping them, you're spending money on FedEx. And then the last way to do this that we've seen as well is kind of typed out signatures. And those aren't always accepted by lenders, as many have probably found. So making sure that we're able to execute a signature in a way that is accepted by lenders is extremely important. What's the point of getting a signature if if the deal isn't fundable?

So how do we fix this? And it's really about one contract, one signature, one process. Online or in-store. You think about dealership efficiency. Electronic forms that are ready to go to the customer with little setup behind the scenes on your end. So you shouldn't have to recreate the wheel every time you're signing a deal. And you think about in-store signing and remote signing options. You got to use the same forms and use the same tools. Forms that work in the DMS, so you're not having two different deals that you're working in two different places and there's no rekeying. It really will help reduce those errors, and it saves time.

And then you flip the script and think about customer convenience. When you're talking about a remote signing option, try to make it device-agnostic. Really, everybody has a phone, right? And they're all touchscreen anymore. So allow them to sign there. Use something that makes it easy to access on mobile. That way they can create an actual signature and then apply it to the contract from there.

And also, another one to really look at is accommodating an in-store buyer with a remote co-buyer. This is easy to happen and easy to imagine happening. And you can do it all at the same time if you have a single platform. So making sure that you have the ability to accommodate these different types of scenarios is really a big deal and being able to be alerted if something is missed, right? So if a signature isn't put down in the right place, make sure that you know, that the consumer knows. You can go back and fix it right away rather than having that customer come back into sign.

And then finally thinking about the funding of the deal, no matter where the deal's signed, it needs to push back to the DMS, and you need the ability to do secure electronic funding no matter where that deal was signed. So that's an extremely important part where you're not, again, printing out those contracts and FedEx taking them off to the lender.

So the last step of this is really getting that deal eContracted and that's what we just alluded to. So remember, there's a difference between digital signing, any contracting, printing, a paper deal jacket with an electronic signature on it and FedExing it to the lender is not contracting. So there's some big issues here.

First is the expense of paper. At the end of the day, if you're printing things, that paper costs money, the toner costs money, the FedEx costs money especially. You're overnighting every one of those deals. So that's a decent chunk of change. You have expense in your office personnel. And if you are printing deals, then you're probably scanning them at some point for storage purposes and then shredding it. So realistically, all that paper at the end of the day isn't even needed. So that expense becomes that much more glaring. And if you're not scanning things and shredding them afterwards, then you have storage costs. On top of that, how full is that cage above the parts department where all the deals are stored? And that's not to mention that it's time consuming. Mailing deals back and forth between a lender takes a ton of time. It takes days just to get it funded initially. But if it's not clean, it takes even more time.

Do you know what your CIT time is? A lot of people don't. And they can't track it easily and clearly see how it impacts cash flow. That cannot be understated. It's just money sitting out there and depending on your volume, it can be significant.

So how do we put this on its head and make this something that's accomplished in a remote setting? How do we take a remote deal and get it funded so the benefits are clear? Getting a deal funded by somebody that wasn't even in the store in hours rather than days is huge. It's going to reduce your cost. There's no more paper, no more toner that we talked about, saving money on shipping. We talked about that if you have storage, that all goes away. So the costs are there and that's a pretty easy math equation.

But then you think about the time saved as well. Time saved filing and purging deal jackets. It's time saved printing and scanning and shredding and storing. Time saved getting your money. Time saved getting that cash in the bank.

And that doesn't even mention better lender relationships. There are lenders out there, especially captives, that give preferential treatment to eCpntracted deals that put them at the top of the stack. If you do your floorplanning and eContracted deals, there are incentives out there. So work with your lenders on the options available to move into any contracting environment.

And then, there are obviously, I think the elephant in the room for all of us, is in certain states, a couple of forms here and there, depending on the provider, that does have to be signed with wet ink. And if that's the case, get it done and get it signed, but then scan that thing in and get rid of that paper. So that's one digital deal that can be referenced and used for any time you need to go back to it.

So ultimately, what's in it for you? As a dealer, you want to make your customers happy. You want that that leg up. But at the end of the day, it comes down to profitability and maximizing every customer interaction. We talked about customers being willing to pay more for certain services if they're offered online and to even pay more for the vehicle if certain services are offered online. It's about identifying where your customers see value in-store or online and maximizing those.

Additionally, you can expand your customer base by reaching customers who aren't physically near your store. You can go as far and wide as you want to, depending on how far you want to deliver. And then you can also attract customers who really desire that convenience. Use remote options as an asset in your marketing if you're able to do that. Ultimately, you're going to have an edge over other dealerships. We reached out and asked dealers across the country how many were doing this type of thing. And currently about 30% of stores in the U.S. have a remote F&I option.

Beyond that, you're going to increase efficiency in your store. Digitizing doesn't just help you reach remote customers. It's a benefit to your dealership regardless of where the customer is. You think about even in-store, what it means to be able to electronically rate and book products and to be able to validate contracts ahead of time and all the benefits of eContracting that we talked about. These are important things that translate whether you're in store or whether you're online.

So ultimately, where do we go from here? What are the next steps for your dealership? There's really four steps that we can take here.

The first step is taking a step back and evaluating your current processes. What options do you have today for remote customers? What can't you do with them? What in-store processes are digitized currently and which are manual? What are you still using paper and pen for?

And then even in areas where you do have some technology, it's worth taking another look. Do all those solutions work well together? Do they work in different scenarios? So whether it's an in-store customer or an online customer, really take a look at everything.

And then once you have that laundry list, step two is prioritize it. Decide where to prioritize making changes. What's going to have the biggest impact if you change? Look at the ROI on it. We talked about customers paying more. Where is the biggest impact for you? What do your customers value? And then look at things like contracts in transit. How much money do you have currently tied up in CIT? What does your average time look like to get a deal funded? If your volumes up there, that number is going to be big.

Also, make sure you're tracking usage of your current technology and how that's working. It's very important. And then you can effectively prioritize what goes first and what goes second. And once you've done that, you can start diving in and researching the different solutions that are out there. And when you're doing that, clearly functionality is important, but also you need to make sure that your new solutions work with the other stuff that you have in place. If you have a technology stack, make sure it's going to fit in there and work seamlessly. And again, make sure that it's going to be flexible for remote environments and in-store environments and that they can enable really that single seamless process.

And then lastly, step four that you can't overlook is implementation and then carrying out beyond that. You need to make sure to document a comprehensive training plan, a comprehensive implementation plan. Document it, put it down, write it down, and then hold people accountable to it. And then once you're installed, make sure that you're inspecting what you expect. Put a process in place for your leadership team to really help increase utilization and make sure people are using the tools that they need at the end of the day. Having flexible options doesn't just mean accommodating customers. It also means making sure that those options work for you at the store.

So thank you so much for taking time today. I hope you can take some stuff out of this and go back and make some changes that have a big impact. Thanks so much and have a great day.