The potential to increase profits while reducing legal exposure makes a convincing case for including a menu in your sales and finance process. However, the existence of a menu does not alone facilitate compliance. The menu must be properly designed, and sales and finance staff must buy into the process.
Menus should create a connection between the initial agreed-upon price of the vehicle and the final deal. This idea is core to compliance, especially since some states, like California, have implemented a car buyers’ bill of rights. These measures require dealers to break out the cost of the many aftermarket items including service contracts, theft deterrent devices and surface protection products.
“From my auditing experience, I can say unequivocally that there is a direct correlation between how well the F&I menu is executed and the overall compliance level of the dealership’s sales and F&I departments,” said Joe Bartolone, an associate with gvo3 & Associates, in the Oct. 2007 issue of F&I Magazine.
A recent search of “F&I Menu” on Google totaled approximately 4,590 hits. Clearly, electronic menus are becoming a mainstay in dealer management systems. However, a well-designed print menu can also provide protection with proper execution.
In order to use the menu as a compliance tool, make sure that your menu is legal in the state(s) you do business in by consulting your attorney. Also, a statement that the sale or financing of the vehicle is not qualified on the purchase of F&I products is fundamental.
The basis of a compliant menu is to first disclose the purchase price, base payment and interest rate prior to manipulating payments or adding the available product options. To gain customers’ trust, always make sure they understand this information first.
The menu should introduce repayment, risk management and vehicle protection options. A brief explanation of each product can be included, but let the accompanying marketing collateral handle the sales pitch. By keeping product descriptions concise, the menu can become a checklist that not only assists with full disclosure, but implores the customer to ask questions about the products.
As the customer begins to ask questions and explore their options, a dialogue can naturally begin without the customer thinking that this is a “hard-sell” process. Option packaging can also be used to sell the consumer the product they want plus more additional products. However, individual product prices should be part of the menu. In addition to option packaging, a custom package area could be added to the menu, which allows you and the customer to assemble products specific to an individual customer’s needs.
The menu should provide an additional safeguard by having the customer sign off on these additional products, and it should show the base installment payment and the payment with the agreed-upon products. In electronic menus, it is wise to make sure a date and time stamp is available.
Ensuring that your menu is used to enhance compliance as well as increase your after-market product margins requires a firm commitment and sometimes a cultural change. The disclosure process begins with the sales department and ends with the finance department. If not part of your culture already, it is imperative for finance managers to stop all payment packing practices. In addition, sales personnel must fully disclose the full price of the vehicle and payment options before sending their customers into the finance department.
By gaining confidence through training and practice, finance managers can overcome customers’ objections when presenting additional products. With the addition of a carefully-crafted menu, they will gain customer confidence and increase sales.
