The 2.0 Online Experience

As originally appeared in the November 2018 issue of Canadian AutoJournal.

By: Krystyna Lagowski

It’s time for F&I to transition into the digital age.

What can’t you order online any more? From furniture for your entire home to live crickets for your iguana, there’s just no limit.

So it’s no surprise that automobile sales and F&I are going online. “There are a couple of companies that allow you to order your car online, and the consumer can select and price specific F&I products,” says Jeff Schulz, EVP, Marketing, LGM Financial Services. “It’s fairly limited at this point, and the consumer still needs to come in to sign the appropriate paperwork, so it’s not an entirely online transaction.”

Schulz believes the industry is in the early stages of a digital transformation for automobile sales. “OEMs and many dealers are looking at how they can facilitate this new channel for selling their vehicles,” he declares.

Increasingly, consumers will want to be able to complete the entire transaction online. “One of the next steps for the industry is to create an online consumer journey that includes F&I products,” he explains. “Consumers will want to know: How can I protect my vehicle long term? Can I reduce my long term maintenance costs? Can I ensure that if my vehicle is written off, I am able to buy a replacement?”

Learning from the travel industry

The auto industry needs to find ways to help consumers make those decisions online. “We only have to look to the travel industry to see what’s happening,” says Schulz. “Booking travel has moved online, and consumers can use services like Expedia, Trivago and Kayak to help plan their trips and make key decisions about insurance coverage.”

Schulz believes the industry needs to continue to utilize the current sales channels, because they’ve been successful for a very long time. “We need to figure out how to work across multiple channels to provide an excellent consumer experience. The role of the FSM is undoubtedly going to start to evolve. The industry hasn’t figured out exactly what this will look like yet, but I expect that the FSM will be there to answer questions, educate the consumer and conclude the sale.” We can learn a lot from other industries that have already made the digital transition.

Shannon Friesen, VP Dealer Services at Canada Drives, says taking the entire transaction online will depend on the industry. “We have dealers who want to be on the forefront and take every technological advance that they can to better service their customers. Then there are dealers in the middle who are using whatever captive tools they can, and running with those.”

The mentality will change

Then there are those dealers who are stuck on the way they’ve been doing things for many years, and are not willing to change the medium. “That mentality will slowly change over time,” Friesen says.

She also believes there needs to be a big institutional change with banks. “The banks still have to accept an electronic copy. That’s going to need to change as well.”

It’s hard for banks to make that change. “It has been working successfully for a long time,” adds Friesen. “It’s hard to pour resources into something that’s new and less familiar, but eventually, they’re going to see the value.”

The Push Forward

Consumers are behind the move towards more technology and autonomy in the sales process.

The number of Canadians applying for a car loan online from one provider grew by a whopping 20 percent over the past 12 months.

According to Shannon Friesen, VP Dealer Services at Canada Drives, her business saw over 502,000 Canadians apply for a car loan online. “It’s getting bigger every year over the past six years,” she says. “As the Millennials and Generation Z come into the fold and become car purchasers themselves, we’re going to see that trend grow.”

Millennials and Generation Z have been brought up on the Internet as a platform for doing everything. “They’re pushing the trend, and technology has gotten to the point where more of these transactions can be fully done online,” Friesen adds.

And as the desire on the consumer end changes, it will move the trend forward. “Everyone, including the banks, will want to capture that sort of demographic of consumer who wants to move everything online. So that’s going to represent big business,” says Friesen.

Right now, Canada Drives only handles loans. “For us, it’s always about tailoring our service to what our clients are looking for,” Friesen explains. “We always want to be adding value, so if it gets into other aspects of F&I, that’s what we want to do. We’ve always been able to pivot really well, to allow our dealer partners to be able to have the most success.”

But in Canada, at least, completing the whole transaction online is still a few years away.”

The hockey stick curve.

At LGM Financial Services, Jeff Schulz, EVP, Marketing, believes the ability to complete F&I transactions online could start to happen very quickly. “Companies like Genesis already have some information on their website about F&I products,” he says. “Many OEMs are trying to introduce F&I products earlier in the consumer journey.”

Schulz believes the main question is, “How quickly will it happen at the dealership level and when will they start to integrate digital retailing into their current sales processes?”

He says he has been watching different websites, particularly in the U.S. “It’s already starting to happen there, so I think it’s going to happen in Canada soon. The industry is going through a transformation, and the thing about these kinds of transformations is that they usually start slowly, and then they rapidly take off.”

Schulz is describing the classic hockey stick curve. “I think we’re in the flat part of the curve now,” he explains. “It’s just starting to gain traction. We’re seeing more build-and-price tools for vehicles, and we’re seeing an increase in consumers spending time using these tools.

He predicts there will also be a variety of F&I solutions to help engage the consumer as they are building and pricing their vehicle online. “Within the year, we’ll see some good tools to help consumers identify the F&I products they’re interested in. That’s part of our mandate, so we’ll definitely be in that space, working with our dealer and OEM partners.”