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© 2011 Vernon Blanc – All rights reserved THE NEW RULES OF F&I EVERYTHING’S © 2011 Vernon Blanc – All rights reserved THE NEW RULES OF F&I EVERYTHING’S CHANGED? Vernon Blanc

The Facts… More than 40% of customers who leave your dealership will never return. The Facts… More than 40% of customers who leave your dealership will never return. The New Rules of F & I Dealers who employ an F & I manager or F & I service company will deliver 25% more boats. Sales professionals who understand the role of F & I in the sale, will out perform all others by 35%.

Important Facts… ü The New Rules of F & I 65% will borrow money Important Facts… ü The New Rules of F & I 65% will borrow money to purchase a recreational product. ü 33% of all customers will finance if simply offered. ü 50% will buy insurance products if recommended. ü 75% will buy if sold by an F & I professional.

What’s Changed? ü ü The New Rules of F & I Fewer lenders Lack What’s Changed? ü ü The New Rules of F & I Fewer lenders Lack of desire to lend ü No floorplan ü Lack of liquidity ü Educated consumers ü Lack of professionals ü Major adjustment in credit measurement

What hasn’t changed… 1. The need to discuss payment options with your customer The What hasn’t changed… 1. The need to discuss payment options with your customer The New Rules of F & I 2. Need for a professional F & I system 3. Your customer EXPECTS you to offer to help them with their F&I 4. The dealership’s need for F & I revenue 5. Most lender criteria 6. Multiple lending partners 7. That F & I is a full time job

IMPORTANT The New Rules of F & I The most important element in the IMPORTANT The New Rules of F & I The most important element in the success of any F&I program is the full acceptance by the dealer principal and sales and office personnel that F&I is a vital department and an important source of income.

What hasn’t changed… The New Rules of F & I Whoever is selling the What hasn’t changed… The New Rules of F & I Whoever is selling the boat cannot, should not, must not, try to sell F & I benefits.

Understand your customer 1. 2. The New Rules of F & I Finance savvy Understand your customer 1. 2. The New Rules of F & I Finance savvy Access to financial information 3. Demanding of a good deal 4. Expecting service 5. Confused about boat lending 6. Gets conflicting information 7. Has (private) financial issues 8. Not stupid!

Understand your customer 1. How does it feel when…? The New Rules of F Understand your customer 1. How does it feel when…? The New Rules of F & I 2. Why would you want to…? 3. Will they tell you the truth…? DON’T DO IT!

 The Purpose of the F & I Department 1. The New Rules of The Purpose of the F & I Department 1. The New Rules of F & I Protect the gross profit 2. PROVIDE ONE STOP SHOPPING 3. Control the sale – Close the deal 4. Provide a service for your customers 5. Enhance the dealership image 6. Increase sales volume 7. Beef up the bottom line

F & I benefits… 1. Can take the customer off the fence…NOW! The New F & I benefits… 1. Can take the customer off the fence…NOW! The New Rules of F & I 2. Studies show 70% of the customers who finance at the dealerships resources return for a second purchase. 3. Builds a stronger buying habit from your lenders. 4. Can build revenue by offering insurance products. 5. Capture the lost 40%. 6. Will increase your volume. 7. 8 -10% + additional profit.

To be successful, you must… 1. Turnover 100% to F & I. 2. Operate To be successful, you must… 1. Turnover 100% to F & I. 2. Operate F & I as a profit center. 3. Assume that all customers will finance (somewhere). 4. Properly communicate all finance & insurance options. 5. Offer all products & services. 6. Establish goals. 7. Commit the entire dealership to working together. The New Rules of F & I

Profitability 1. What has changed? 2. What’s the benchmark? The New Rules of F Profitability 1. What has changed? 2. What’s the benchmark? The New Rules of F & I 3. What are the sources? 4. What is the cost?

Profitability F & I PROFIT POTENTIAL Boat Sale A - $25, 000. The New Profitability F & I PROFIT POTENTIAL Boat Sale A - $25, 000. The New Rules of F & I $2, 000 average finance profit (8%) $1, 250 average warranty profit $600 Marine GAP Profit $3, 850 ADDITIONAL PROFIT THAT’S 15. 4% ADDITIONAL PROFIT!

Profitability F & I PROFIT POTENTIAL Boat Sale B - $150, 000. 00 The Profitability F & I PROFIT POTENTIAL Boat Sale B - $150, 000. 00 The New Rules of F & I $6, 000 average finance profit (4%) $4, 500 average warranty profit $800 Marine GAP Profit $11, 300 ADDITIONAL PROFIT THAT’S 7. 5% ADDITIONAL PROFIT!

6 Cardinal Rules of Successful F & I 1. Offer every product to every 6 Cardinal Rules of Successful F & I 1. Offer every product to every customer The New Rules of F & I 2. Always pull credit file 3. Never shotgun applications 4. Hire a full time F & I person or company 5. Assume all customers expect to finance 6. Never ignore the insurance products

7 ELEMENTS OF A SUCCESSFUL BUSINESS OFFICE ü ABSOLUTE MANAGEMENT SUPPORT The New Rules 7 ELEMENTS OF A SUCCESSFUL BUSINESS OFFICE ü ABSOLUTE MANAGEMENT SUPPORT The New Rules of F & I ü AUTOMATIC REFERRAL ü PROPER INTRODUCTION ü PROPER APPEARANCE ü NO PRE-EXPOSURE TO F & I ü NO PAYMENT OR RATE QUOTES NO EXCEPTIONS!

Legal responsibilities…? 1. Red Flags 2. OFAC The New Rules of F & I Legal responsibilities…? 1. Red Flags 2. OFAC The New Rules of F & I 3. Truth in lending laws/Reg Z 4. Disclosure laws 5. Patriot Act 6. Moral laws 7. Murphy’s law

Is there enough business? Things to consider ü Market The New Rules of F Is there enough business? Things to consider ü Market The New Rules of F & I ü Business volume ü Product line ü Business plan ü Cost of employee ü Revenue potential

The cost of ignoring your Financial Services EXAMPLE: Dealership A § $5 million annually The cost of ignoring your Financial Services EXAMPLE: Dealership A § $5 million annually The New Rules of F & I § $20, 000. Average sale – 250 units § Mix of product line – OB/IO/New/Used § Target F & I revenue § 8% of [email protected] 60% penetration $240, 000 potential profit

The cost of ignoring your Financial Services EXAMPLE: Dealership B § $15 million annually The cost of ignoring your Financial Services EXAMPLE: Dealership B § $15 million annually The New Rules of F & I § $80, 000 Average sale – 187 units § Mix of product line – Large, OB, IO, New, Used § Target F & I revenue § 6% of [email protected] 60% penetration $540, 000. 00 potential profit !

In Summary The New Rules of F & I If you continue to do In Summary The New Rules of F & I If you continue to do what you’ve always done… …You’ll continue to get what you’ve always got!

Thank You! The New Rules of F & I Vernon Blanc 727 -324 -1362 Thank You! The New Rules of F & I Vernon Blanc 727 -324 -1362