Business Office Success

An Interview with Jake Stacey, EVP, Training and OEM Performance, LGM Financial Services

For dealers, the Business Office, is critical to overall success. Not only has it traditionally served as a reliable profit centre, but it is also a lynch pin when it comes to a dealers’s brand and reputation. A good experience by customers in the Business Office enhances the store’s reputation and is a great tool for building long term trust and retention. By contrast, a bad experience can easily tarnish the dealership’s reputation. To put that into context, statistics show that a bad experience can cause 63% of consumers to reduce spending after a single negative interaction with the Business Office. Furthermore, a resulting social media crises from that bad experience means it can take 2-4 years for dealers to recover, while overall reputation repair can often take at least 12-24 months—which can be hugely detrimental to the the business. It has been demonstrated that dealers who view their F&I department as a customer-focused advisory service instead of just a transaction based entity, can turn their Business Office into a true source of trust and competitive advantage. To find out more about this, we sat down with Jake Stacey, Executive Vice President of Training and OEM Performance at LGM Financial Services. To put things into context, LGM’s F&I training has delivered measurable results, with a 94% increase in dealer confidence [post-training] and an average of $315 profit increase per each vehicle [VIN].

Autosphere: what do you feel are some of the biggest issues facing business offices and dealerships today.
Jake Stacey: I would say there are four key issues that are impacting dealers and specifically business offices today. In both the OEM and dealer space, margin pressure and higher vehicle costs are major issues. In the current operating environment, OEMs are passing on price pressures to dealers and this is creating conflict at the retail level. Another issue concerns staff turnover in the Business Office. Today it’s getting more and more difficult to retain good talent. Another issue is customer skepticism. The current operating environment in which compliance and regulatory complexity is the norm is proving highly confusing. The interference of regulatory bodies is generating all kinds of questions about what staff can say, how they can say it and what products can be advertised and how they should be presented and sold to customers. Another issue is that today, technology is often moving faster than the sales process. When I look at our technology solution here at LGM, our hub, how people can sell, and how the technology works, there are several things that are readily apparent. A good example is the eMenu, which includes OEMs and is very interactive. There’s also a customer analysis worksheet, that can facilitate questions between a staff member in the business office and the customer whose buying the car—these are real, intelligent questions that can start building trust between the client and the dealer. It’s evident today that not enough dealers are really utilizing this kind of technology. For example, if you’re in the eMenu and you look at one of our branded OEM programs, there’s a video there you can click, and it’s an OEM based video that showcases their particular product. In this scenario, it isn’t the F&I manager trying to sell the customer a product, instead it’s an OEM saying, here’s why we have this product, here’s how it works and what it can do for you. Given that today, we’re seeing technology moving faster than the process in the Business Office, there often isn’t time to slow down and learn how to do things the right way. And that’s something, as an industry we really need to address.

AS: It has been demonstrated that it can take as much as 48 months for dealers to recover from bad customer experiences that are shared. But in reality, can, can they actually really recover from this since it is well known that it can take years to build a good reputation and just seconds to lose it?
JS: That is definitely true and we’ve seen that happen with all kinds of businesses. What I will say is that dealers who have experienced this kind of situation have a real opportunity when they own that issue and focus on dealing with it and making improvements. That’s not to say that a tarnished reputation goes away, at least in the immediate future, but if, as a dealer, you acknowledge the mistake and focus consistently on improvements around policy and behaviour, those actions start rebuilding trust with consumers. Those who don’t and continue to make shortcuts—they are the ones that will only exacerbate the damage, particularly over the long term. Today, reputation is everything and word travels quickly. So, again, if you own the issue and take actionable steps to improve things, it comes across as genuine and that’s what builds trust with customers.

AS: When we look at consistency, how do you think dealers can take steps to ensure customers have a positive experience in the business office on a consistent basis? In other words, create a winning a formula?
JS: Essentially you need to make the effort and find out who your customer is. Do they have dogs? Do they have kids? Do they drive a long way to work? Do they work from home? Why are they looking at a specific vehicle? The only way to really get to know your customer is by employing needs discovery and having true empathy. And you need to have a relatable conversation with them in order to do that. The number one mistake I have experienced as a car buyer myself is that no one took the time to relate to me. Now, because I’m in the industry, I can more easily guide the conversation and say, ‘don’t bother talking to me about this,’ but, ultimately, that should matter. You must do a needs discovery on the customer and emphatically relate to them. You need to have that discovery conversation and you need to have simple, customer facing menus that you present to the customer showing what they need, not your opinion. What you present to the customer also needs to align with what you are saying to them, so you can offer a customized solution that fits their needs. Furthermore, when you take a step back and look it through the business lens of a dealer, one of the most important measurements today in F&I is Product Per VIN (PPV). If you don’t have that and aren’t offering an extended protection plan or prepaid maintenance product you will consistently lose customers to independent shops when it comes to service. Another factor is the personal touch. After every customer walks out of the Business Office, the General Manager of the dealership should be shaking their hand. If we go back to the 1980s and 1990s, many dealers were family businesses and you knew the staff, from the receptionist to the general manager. There is a lot to be said in having that personal interaction and I believe dealers that master that, will be hugely successful in both the short and long term.

AS: Can you tell us a little about LGM’s approach to training and how it can optimizing the Business Office experience to deliver meaningful results, based on real world experiences?
JS: In some ways, training is a unique topic because it’s so intangible. And unless you can reach Level Four of the Kirkpatrick Model of Measurement and Training (what an individual is producing revenue wise before and after training) it can be difficult to measure the true impact of that training. At LGM, our approach has been to use Blended Modalities and meet learners where they are. Do they like to learn on their own time? Do they like webinars? Do they like getting together in person such as meeting in a room with their peers? Everybody is different, and while a lot of people will say they want in-person meetings, it is the most expensive modality of training, plus, when you have to pull somebody out of the Business Office for a day to learn, that is when you often get questions and where reality clashes with intention. At LGM, our approach is to meet dealers where they are, and provide customized solutions. Our goal is to never put somebody in the finance office chair that works for us, but we will find the solution that works for your specific F&I staff at your specific dealership. If you want us to utilize your boardroom or your facilities to conduct training we can do that, if you want to utilize webinars or online training, or a mixture of all three, we can do that. No matter how you choose to learn we can help you and our entire sales team has been there, in the dealer environment. I feel that this ability, along with measurable results we’ve consistently seen from implementing new processes, gives us a distinct competitive advantage when it comes to training.

AS: Given the growth we’ve seen in digital and virtual reality tools and solutions, how do you think dealers can leverage these to enhance F&I processes and improve transparency and customer confidence, particularly in era where customer confidence isn’t that strong in many cases?
JS: Augmented Menus can be effective in helping a customer visualize themselves doing a task, such as purchasing a vehicle, or investing in a pre-paid maintenance product to protect themselves from inflation. If you use an Augmented Menu experience, you are enabling and including the customer in their own decision instead of just talking to them. At LGM, we’ve made major investments in Augmented Menus and from that, we’ve enabled dealers to monitor every KPI and share every conversation with that customer. If they don’t have the answer, they can get it from us. At LGM, we make ourselves highly available in order to support the individual buying a vehicle through a digital process. So, whether it’s our technology or the connection of our technology to other technologies, or to a dealer website, it doesn’t really matter. At the end of the day, the most important aspect is helping the customer visualize themselves in making a decision for the right reasons, and that’s really where digital tools and Augmented Menu experiences really drive home confidence for the customer, delivering value for them and the dealership.

AS: Anything else like to mention regarding the business office and solutions to help dealers?
JS: A few things. Firstly, this isn’t the first time we’ve seen a weakened motor vehicle sales marketplace, and in today’s environment, fixed operations protect profitably for dealers more than ever. Both F&I and fixed operations are heavily connected. Today, the person in the Business Office needs to be highly educated, highly competent and be able to have that emphatic needs analysis conversation. They need to understand that what happens in the Business Office today is connected to what happens with that customer and vehicle five years down the road. Dealers who embrace solid programs and quality products that keep customers returning for service work will be the ones that build long term retention. It is very easy to be in the business office and sell a high gross product and hope the customer never uses it. But in reality, why would you do that? It’s not good practice and in today’s environment you need transparency and you need discipline. If you’re looking at it from a transparency perspective and you’re forward thinking in not only analyzing the situation today, but down the road, you are going to win with your customers, you are going to win in terms of profitability and you are going to win in terms of reputation. Ultimately it’s about how you can help your customers both in the short and long term.