In the third part of its Q&A series, Trnsact dives further into the finance & insurance (F&I) opportunity for commercial trucking and equipment dealers to discuss how it changes the life of the sales team and what it means to customers.
Brett Davis, president of the construction and agriculture division with Trnsact, has a lengthy career working with equipment dealers and helping them grow and increase profitability. He spent 25 years at CNH Industrial, serving as a president and chairman of CNH Industrial Capital, president of CNH Latin America Financial Services, vice president of New Holland North America, and president of Banco CNH Industrial Capital in Brazil.
In his time at CNH, he observed the missed opportunity to maximize revenue streams through a formal F&I function that adds points to financing and takes advantage of selling insurance, gap insurance, extended warranties and other valuable aftermarket products at the point of sale.
In part 1 and part 2 of the F&I opportunity conversation, Davis discussed the opportunity and the state of the market in equipment and commercial trucking. Now, we tackle how F&I would transform the life of a sales team and customers.
Moderator: If a dealer leans into selling F&I and other aftermarket products, how would that change? Like they're the lives of their sales team? Could we discuss how that approach would impact the day-to-day of a sales rep?
Davis: I touched on that a little bit today with the lack of integration of all these different providers and systems. In other industries, there are "consolidators" or systems that have consolidated the information to make it a lot easier. This [makes it easier] for not only that person who's in front of the customer, the salesperson, but also for the customers as well. There's lots of opportunity you could set up and [technology] like that in our industry.
For the equipment industry — and quite frankly and that's what [Trnsact] has been working on developing — we need technology to solve this problem and bring that consolidator to the equipment industry to make it a lot easier for everybody and [empowering dealers to] generate profit [through F&I].
I can tell you I've heard from dealers that were proud to earn 1/10th of 1 percent of F&I revenue for their dealership. When I talked to them, I said, "you really think that that's good?" … I'm like no, you need to be closer to that 1 percent range to really drive the profitability of your dealership. Now [with higher interest rates], maybe that's a bit much. Maybe it's half a point, but one-tenth is just not [acceptable].
[Regardless of the rate], it all comes down to making it easy, making it fluid, and allowing for ease of use. If that can be solved, then the opportunity to generate that additional revenue at your dealership is clearly the next step.
Moderator: I asked how [F&I inclusion in the sales process] changes things for the sales team, but it also changes things for the customers as well.
Davis: Absolutely. It's easy to quote, and the information is there and they don't have to go back and forth the systems. This wastes their time. [A single system] just makes it easier and it can happen very quickly and very naturally. As opposed to [the current process], where it is "Oh, let me get back to you on a quote for that and they get back to the quote for that." I have to go into the system. I have to get a quote from another [lender or provider], I got to make a phone call here, and things like that….
[The addition of aftermarket products] needs to happen in a very transparent and very fluid way. And I will add, regardless of your industry, the expectations of the sales team and the expectations of the customers are definitely rising. Dealers need to respond.
The thing that I hear most from customers is the ease of use. They want everything easy and that goes for dealers too. They want to work with their service providers, they want to work with their OEMs, and with their banks, and insurance companies. They want these [through easy-to-systems] as well. We all do. That's what we all strive for.
We talked about insurance quite a bit and a little bit we discussed warranties and maybe other aftermarket products that may be untapped the most, In a sense, I would say they're out there today.
I mentioned earlier the attachment rates are pretty low. I honestly believe that if I had a big pool of used equipment that I was selling regularly, I would like to work with an insurance company but [would offer] a creative product that could be customized. That way, every piece of equipment that went out had my maintenance and my extended warranty on it.
As a dealer knowing that customer was covered for the next two or three years or whatever the case may be whatever their needs would call for. So I think that's really critical. It's so often overlooked. There's a wealth of opportunity. Well, as I mentioned the attachment rates are so low, so woefully low...
I think it's just an evolution. It's not one thing or the other you can point to. It's just an evolution in our industry, and I think it's also a little bit of a lack of focus on the industry from certain providers to be able to consolidate this information, as well and make it easy to quote and easy to deliver to customers.
To view part three of the interview, click here. To view the entire webinar, register here.
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