"F&I Must Come First!" — 2,900+ Hours of F&I Research Distilled in 30 Minutes | Jason Swiech, Product Marketer at CDK Global
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We all want to be digital.
I think any dealer who looks at their workflow and doesn't want to be in that
digital realm is missing an opportunity to have a better consumer experience.
Today I'm joined by Jason Swick, product marketing lead at CDK Global.
The FNI office is the final battleground of every car deal,
but the best car dealerships in the country are reinventing how it's done.
Enter Jason Swick after eight years studying dealer FNI workflows.
Jason shares what's working, what's broken and what needs to change right now.
A big thank you to our sponsors for making today's episode possible.
Cox Automotive, Repair 360, and of course CDK Global.
And now let's get into the show.
Jason Swick on the CDG podcast.
Jason, welcome.
Thank you for having me.
I'm real excited to be here.
Excited to chat with you.
You have spent over 2,900 days being the FNI guru at CDK.
You're like that.
I did the math.
He said, yeah.
So you said since 2017, I had to keep it interesting.
So I did a quick calculation, almost, almost 3,000 days.
So you're definitely our FNI experts.
That's why I'm excited to chat with you.
How's it been?
How's it been spending, you know, nearly a decade just deep diving
into FNI, where it's going, where it's at?
Well, how's that been like for you?
I love it.
I will tell you that, you know, I've been in this industry for 20 years overall.
And an FNI is a huge portion of it, like you said.
But I will also say that I really try and focus on the entire flow of the front end.
That's my focus for all of our dealers.
And when I talk to dealers and I try and get in stores twice a month
and I talk to dealers every single week.
But when I talk to them, I really want to understand their entire front end.
And that's really what excites me overall.
FNI being a huge part of that and probably the bedrock of the entire front end.
I used to say we're not actually selling cars.
We're simply the cars are the widgets, but we are.
We're warranty, prepaid maintenance, gap insurer and salespeople.
Right. Like that's how the business has shifted
and how the margins have accrued so significantly to that part of the house.
Where are we at today? Right.
We know we are from from my perspective.
The industry is still at near and or close to record profits on FNI.
And this is a conversation we've had at length on my podcast about,
you know, what are people doing to maintain that where it's going from here
from your perspective as someone who's in it on a daily basis.
What is the state of dealership FNI today?
I think it's positive.
Like you said, we're still at near record profits.
But what I also would say is that just like everything else in this industry,
it goes in waves, right? So change is inevitable.
So of course, we could stay at this kind of rate for a little while,
but it's going to change.
The biggest thing that I see from a dealership perspective is dealers
that focus on process.
Those are the ones that are going to maintain those profits long term.
It might not be record, but it's definitely a bigger main maintenance
that they can keep going with if they really do focus on their overall
process and their workflows.
Can you can you define that?
Like when you say process, what are the best performing dealers
doing when it comes to process in the FNI office?
Focus on streamline.
What I mean by that is so if you think about the entire workflow
as a whole, the dealers that kind of take into account
everything in that entire workflow are the ones that I see are being more successful.
So I'll give you an example.
If a dealership is focused on bringing talking about those products
that usually are meant for FNI more in the beginning of the process,
that could increase sales, but it could also get the customer educated
for that conversation in the FNI office.
So they're not bombarded with brand new items when you get into FNI.
That's not a new concept by any means.
We've been kind of pushing that concept for a while.
But dealers who can bring things forward are the ones who can really make
a difference with streamlining the FNI office and can take those time
or reduce that time in the FNI office overall.
It might be a minute or two minutes, but every minute counts
when it comes to FNI into the entire buying process.
And where are you seeing, given you've worked with hundreds of dealers
on these studies and in certain cases, thousands, where are you seeing
at what moment in the sales process are the best performing dealers
starting to educate on FNI?
Is this after the close, prior to the close, you know, during discovery?
Like how early are we talking?
First interaction, I'm a really big believer in having those products
available to consumers to look at online.
It might not mean that they're going to pick that that product right online.
It might not mean that they're going to pick it even with the salesperson,
but that education starts.
So have your salesperson talk about it.
Have your your website talk about it.
And then the FNI manager can still be the closer
if you're a more traditional FNI workshop.
Now, before we get into the survey that you ran here with over a thousand
consumers on just state of FNI trends, what's working?
What's not?
I am curious if you're seeing any big change happening on the digital front.
Right. We know that in the late 2010s and even prior to COVID,
maybe during COVID, really, we had this big rush into what we call digital retailing.
And the hype around that has sort of subsided.
We've reached more stability.
Are you seeing today, right?
If you were to tomorrow to open your own dealership based on what you know,
how are you structuring your FNI department?
Is it self-serve online?
Is it a hybrid omnichannel?
What are you doing?
It's definitely omnichannel.
Digital has its place.
And what I think dealers need to focus on and what I see the most successful
dealers focus on when I go out to them is really having options for their consumers.
If I want to do everything online, I should have that option as a customer.
But if I want to do the more traditional process and come in store and test drive
and talk to an FNI manager, we should have those options as well.
And dealers that give their consumers options are the ones that we see kind of have that success.
So if I was starting my own dealership tomorrow,
I would have that digital retail footprint,
but I would absolutely also connect it to the in store workflow as well,
making sure that anything my consumers do online is the same experience they have in store.
And they're not doing anything doubly, double entry, being asked for things again and again.
Those are really the focus points where I think digital and in store really needs to merge.
Wow. And that's coming from, like I said, you've spent 2,900 hours
on this topic. And so that's a, I mean, that's years of knowledge and experience
and talking to dealers saying that. So that's a, and by the way, I agree.
I think that makes total sense on the channel.
If you can consolidate that experience, you're going to win.
All right. So I want to talk to you a little bit more about the experience
before we dive into the report. Well, I guess technically this is from your survey.
But one of the things that I always look for these heuristics, these just basic kind of
learnings that any dealer can take and implement tomorrow and become a better dealer,
offer a better experience, make customers happier and then themselves make more profit, right?
One of the things that stood out to me was specifically that after 30 minutes of waiting,
based on, again, over a thousand customers surveyed here, car shoppers,
after 30 minutes of waiting, the likelihood to recommend that dealer dropped 25%.
To be clear, that's 30 minutes of waiting to go to start the FNI process.
Can you explain this to us, right? The car buying process takes a couple hours on average.
Here, we're talking about 30 minutes getting into the FNI office.
I'm not sure if that means after the deal was agreed upon or the initial,
the initial pencil was approved or whatnot. But can you explain what this really means here,
this 30 minute mark and how important it is to dealers?
Yeah, absolutely. So when you think about the entire workflow in a dealership,
not every customer is the same. Not every dealership is the same.
So that 30 minutes that they're waiting is made up of the FNI manager trying to get the deal bought.
It's made up of the FNI manager trying to get all the documents ready for signature,
making sure all the pieces that they needed to do for compliance are done properly
and getting the menu presentation ready. So those, if you want to boil it down,
that's what an FNI manager is needing to do. But on top of all of that,
they need to get everything that was done prior to the FNI office in order.
They also need to make sure that the stack of deal jackets that are sacking up on their desk
from the four or five other deliveries they have going on are ready to go.
So all of that adds to those 30 minutes or more that we see that it takes customers to get into
the FNI office. So when I said earlier about every minute counts, every minute that we can remove
from the FNI process, the better, that's what I'm talking about.
If dealers can start to do things earlier in the workflow, if they can start to sign
certain documents, if they can collect documents, if they can present menu items and educate
consumers, then that takes that burden off of the FNI manager a little bit more and could save
those crucial minutes. So why is FNI overall satisfaction dropping then? Because my, again,
our SAR has gone down, right? We're forecasting around 16 million. So we're selling fewer cars.
You'd like to think that FNI managers have a little bit more bandwidth.
Again, it's not a perfect equation here because we don't operate in a vacuum.
But why is satisfaction going down? Specifically, again, I'm reading from your report.
84% was customer satisfaction based on your report in 2023 today where it's 79%.
Customers are less satisfied with FNI. So what's happening there?
I think a lot of that is correlation between what FNI managers actually have to work with
a customer on. A lot of time is that they have to get the deal bought, right? So a few years ago,
it might have been easier to get certain deals bought for consumers. Whereas now, as you know,
it's a lot tougher to get deals that a consumer would want to buy, rates are up,
things like that. So when a consumer looks at the FNI office, that's the thing they see.
They don't necessarily see the salesperson and the test drive and all the excitement that goes
around that. They see someone who's going to work with them to try and get a deal bought,
and it might be frustrating a little bit for that side of it. So I think that there's
outside influences when it comes to satisfaction overall for FNI offices.
I don't necessarily see that there's a big change in processes that FNI has done now
versus before that make those experiences worse. I really do think that it's more
the overall economy that we're in right now and how that is being perceived by our customers or
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So tell me more about that. When you say the overall economy, affordability plays a big part
here. Obviously, you know, like we all know if you drop prices on all your cars and you lose
money on them, customers will be thrilled because they can afford at lower payments. There's a
financing lending and just used cars in general that it's such a tricky thing to manage at scale
because who has ultimately who can veto price changes and who can really adjust those prices
up and down? You adjust prices down, of course, that's the best form of marketing or at the
least the easiest form of marketing. I don't know if best, right? But it's a tricky equation
because the marketing team is freaking out if prices are too high according to them.
And so it's a really delicate balance to manage. So anyway, so that said, one of the things, you
know, we always talk about in this industry is like, you got to control the controllables,
obviously, right? We were not I'm not in control of the Fed funds rate. I'm not in control of geopolitics.
I'm in control of my dealership. Given what you just stated, it seems like that is an
uncontrollable. That's a big picture, whether it be affordability, a macro, a macro data point,
what can the best dealers do to improve that experience other than process? Are we talking
about introducing new products, different products, you know, any any change that you're seeing that
dealers are taking to adapt to this era of like, you know, unaffordability, that just has continued.
I don't know if I was to increase at this point, but it stayed very, it's stable across the board,
whether it be price of vehicle, you know, rates haven't really budged much. So what what can
dealers do in light of what you just mentioned and these uncontrollables that are impacting
customer experience? Yeah, so to your point, I'll take process out of it for a moment here.
One of the things that I think dealers do or the successful dealers do is they really understand
their FNI process workflow. Let me say it that way. They really understand their FNI workflow and
what they're selling. You mentioned before about evaluating your products and what products you
sell. That's one area where a dealership can look at what they do and always evaluate what
they're selling and maybe put new products in that bring value to their customers. That's an item
where it's not a process thing, but if they understand their workflow and understand their
process, they can see where they can add value there. I think also and going back to workflow a
little bit more, look, FNI managers make things look easier than they are a lot of times. There
are a lot of things you have to do as an FNI manager. Forget about the revenue generating side
that you just need to make sure it is done so that the deal gets bought and that you have
your deal is compliant overall. So from a general manager perspective and owner perspective,
it might look a lot easier whenever they're just getting people through the FNI office.
But if dealerships at those levels, the owner, the process controller overall, look at FNI very
deeply, I think that what they'll see is a fractured workflow in a lot of cases. We still see
dealers on the front end completely use seven to eight different solutions on the entire front end.
In FNI alone, three to four of those solutions could be first signing only. That's where you have
to look and say, are you actually controlling the process the way you need to or is it just,
you're just seeing the end result, but you don't really understand what's actually going on where
the consumer might not talk about it directly, but they're affected by those things. So that's
where I would get granular as a dealer and really try to identify that FNI workflow all
the way through and not just look at it from a higher level that we're getting people through
the office. So you're saying too many touch points during the FNI process leading to a weaker or just
a less favorable customer experience? Customer experience, but that includes time and everything
like that. Also, the FNI manager's experience, right? If an FNI manager has to use three to four
to five different solutions just to do their job, what are they eliminating out of the workflow that
could cause the problem down the road? Are they missing a compliance piece? That's obviously hugely
bad for a dealership to miss. Are they doing the menu presentation fully or are they kind of
pulling back on that because of the time constraint that they have due to all these other things that
they're having to do? That ties in with the overall theme that we've discussed about consolidation
where we've added a lot in our industry and we're sort of the pendulum swinging back where we're
going to fewer. So far, we've talked about just process, streamlining the process from beginning,
making sure that our salespeople from the get-go are introducing FNI really, really early on so
the customer is acquainted with it. Then the second thing we talked about here is just streamlining
the process in the FNI office, right? Keeping it fewer solutions, really wasting less time and so
you can do everything a lot faster, make it more efficient for the FNI manager and the customer.
I want to talk to you. You mentioned products. I'm curious if there's been any change there before
you answer that. As you were talking about the FNI office, do you know that there's this quote
riches are in the niches and I can't help but think, wouldn't it be nice to be the manufacturer
that makes those props for the FNI office? You know exactly what I'm talking about.
Yeah, the cup that's over spilled. Yeah, who makes that? Who makes that little alternator?
I want to know who makes that because I want to be an investor in that business. Boy, that's a
different business. Yeah. All right, so I had to tell you that because when you were talking about
that, I just couldn't help but think about that. All right, so talking about our products,
let's just start with, we'll talk about profitability, we'll talk about how things
are changing, but let's start with what is being sold today? Like stack rank it for me,
are we still the classic VSE followed by gap insurance or where are we at today? Stack ranked
tops the most sold products in order. Yeah, basically extended warranties and prepaid maintenance
are the top two. That's the biggest things that we've seen have the largest increase.
Everything else, security systems, paint and dent repair, those kind of items have kind of say
flat or fallen off a little bit, but those are the two biggest items that we've seen an overall
increase in and the main ones that we see sales through the FNI office on. So one of the interesting
insights, which I fully agree with, that we've come across is simply that prepaid maintenance,
it has been a huge lever for dealers to improve customer retention. And so we had one dealer,
and I can't recall his name at the moment, but he was quoted in our recent newsletter
where he specifically said, and I love this quote, he said, if you're not putting at least two years
prepaid maintenance complimentary for your customers on every used car, you're an absolute moron.
And the reason I love that was because at a time where it's tougher to acquire customers,
and everyone is fighting, the market has clearly become much more competitive again,
versus a couple years back where everything was in short supply and you didn't have the vehicles,
but you had the customer. It's so true, right, where you think about the opportunity with prepaid
maintenance. We know warranty, you need a warranty, we get that, that makes sense. But prepaid maintenance
has been the sleeper where you're right, and then I'm curious to hear your take, but you put this
on like a used vehicle in this case for at least two years, that customer comes back to you, and
you are getting them familiar with your service department, you're improving retention, and you're
improving your overall profitability and lifetime value of that customer. So it seems like a no
brainer. What's your take on prepaid maintenance in general? It's very similar to yours. I actually
love it. When I bought my car in 21, my dealership had the same option, and it's so nice to be able
to go into that service department. And like you said, it kept me coming back to that service
department. I didn't make another choice because I knew I already had that complimentary service
there. So it brings the consumers back. But I also think that it helps consumers. I mean,
now more than ever, consumers want to have that security blanket of a budget where they can
know what their expenses are going to be. And a prepaid maintenance gives them that ability.
They don't have to worry that price is going to shoot up for a simple oil change or whatever it
might be for that maintenance option. So I think from a consumer standpoint, it's very valuable.
And to your point, the dealerships that don't offer it, I think are missing out
on bringing those customers back, but also giving them a value add when they're buying a car.
Got it. So talk to me more about the actual FNI role. We spoke about the products
and what we're seeing there, but I want to know your thoughts on the role. There was another
dealer who posted on X, he goes by the car dealer, I believe, and his usual name. And he said,
I believe that the FNI role is the most overcompensated role in the dealership.
He's disguised in acquisition mode. So he's in the process of acquiring another dealership.
I want to say it's a, I believe it's a Kia store. And he said, like, you know, the FNI team over
there is going to be in for, you know, a bit of a rude awakening when, you know, after he completes
acquisition. There's something along those lines, not a perfect quote, but I am curious to hear
thoughts given how this, the role is evolving or maybe not evolving fast enough. What is your
take on, I'm not expecting you to know the exact average compensation of an FNI manager.
But the bottom line is the role becoming simpler? Is it, you know, or is it adding more value,
less value in the overall dealership setting? How do you kind of view the evolution of the role?
Yeah, so it's a good question. The FNI office, let's start there. The FNI office overall is
very complex. When I say it's complex, what I mean by that is there's a lot of partners that an FNI
manager has to deal with in order to get a deal done correctly. You have lenders, you have the state,
you have the compliance aspects of the world. So again, there's a lot of complexity to it.
And on top of that, you're also a big revenue generator for a dealership. So you're trying
to sell products and making sure all those things are working well. So I think that the knowledge
an FNI manager has to have is a real thing. Now, can you argue from a dealership perspective that
there's some other ways that you can interact with your consumers that are not the traditional
model? I think the answer is yes. I also think, and here at CDK, what we're trying to do, we're
also trying to think of how can we make the system smarter so that you don't have to necessarily
have an FNI manager who has 30 years of a history with them to come in and work in your FNI office?
So can we bring artificial intelligence into it to start helping those newer FNI managers
that to the point of that dealership, that dealer that quoted that might not be as high of a
compensation area? So we are looking at those kinds of things. But overall, the workflow or
office itself is still a complex one. So I think that any dealer who looks at an FNI manager and
says, I want to think about maybe replacing them. I don't think that you shouldn't think about
anything. I think you should always look at all of your options. But I think you have to really
look at what does an FNI manager truly do? And how can you take those items and spread them across
the rest of your workflow so that you don't drop in revenue so that you don't have a compliance
issue down the road? This episode is brought to you by Cox Automotive. AI and personalization
are fueling a bigger shift, improved customer experiences. A new study from Cox Automotive
reveals that transparency and feeling informed, supported and in control are the four key drivers
of satisfaction. And dealers who understand what drives satisfaction aren't just improving
customer experiences. They're seeing massive results. If you want to learn more, download
the four key drivers of shopper satisfaction by clicking the link in the show notes below.
Yeah, I think the steelman here is that your back end products are 50% of your margin on a vehicle.
I'm not saying they're 50% gross margin. I'm saying 50% at least, at least of the total margin.
And so the variability is so high and having a great FNI manager yields an exceptional,
did like disproportionate result as opposed to you could have the best vehicle sales person in
the world. But if this is the market price, you're only going to go so high or so low. Again,
that's the steelman. Some people would argue, depending on your store and the type of inventory
you sell, of course this varies, but I can live with that. So talk to me now about digital versus
paper. Where are we at on that playing field and why is everything not digital already at this point?
Well, it goes back to the partners that I talked about in the FNI office. I'm from a state,
I'm from Pennsylvania that still requires a wet signature on an impact printed form, let alone
a secured laser printed form or something like that. So it's really about how many partners that
the FNI office has to work with. We all want to be digital. I think any dealer who looks at their
workflow and doesn't want to be in that digital realm is missing an opportunity to have a better
consumer experience. That being said, what I will say is paper still has its place. I know
a third of those consumers that we surveyed said that they want everything digital. There is still
a group of consumers out there that want to have that paper copy when they leave the FNI office.
So I think the real thing that we have to do as vendors at CDK, and this is what we focus on doing,
is offering our dealers flexibility, is if you have a consumer who wants to have that paper
experience when they walk out and they don't want to have a USB drive, they don't want to have a link
that they have to go on their computer for, you can still give them that flexibility. But internal
processes, the entire workflow, absolutely should be focused on digital as much as possible. It's
just hopefully we can make those partners realize how important it is as well.
And what about single point of contact? To me, I feel like it all comes down to time.
Sometimes digital versus paper can vary depending on who's running it. But what about single point
of contact? Are you seeing a trend in that or no? We see a little bit of a bump. I definitely
know dealers that have tried to put that in place. I'll say that from a CDK perspective,
we don't have a stance on it as far as one way is better than the other. What I will say though is
if you think about some of the benefits, let's say of a single point of contact, is you have
not only a time perspective, but you do have that single point of contact, right? The consumer is
not leaving someone and going and meeting someone brand new, 90% of the way through the process
or 80% of the way through the process. But what I will say about that is most of the successful
dealers that I've seen so far put a single point of contact process in place, still have that person
behind the curtain, right? That is educating that single point of contact, is giving them advice
on how to present products, is getting all the documentation ready. So there's a lot of things
still happening behind the scenes. Now to the end, consumer, they're seeing that one person and that's
the benefit to them. But you still have those complexities. It doesn't get rid of those complexities.
So like I talked about earlier, if a dealership is looking for bringing those things forward,
how can I have one person work with my customer? They still have to take into consideration all
those complexities and make sure it's still part of those workflows, even if the customer gets one
person to work with. So Jason, give us your prediction for the next six to 12 months from a
profitability, from a product selection, from a process perspective. I'd like your holistic
F&I prediction for the next six to 12 months. Yeah, I think dealerships are going to really
be more focused on the entire workflow than just F&I. That's honestly where I see the trend going
and where I think dealerships are going to continue to invest in. Dealers are not looking at just one
area of their dealership anymore. They are not siloing their areas of their dealership. They are
not looking at F&I as this one specific office that they don't have to take into consideration
for the rest of the flow. So I think more and more dealerships are going to take a more holistic
approach. We talked about earlier with that omnichannel approach. I think dealers as a whole
are going to try and merge every one of their processes and should merge every one of their
processes so that anything you do in the beginning is equal to what comes out at the end and that
there's not that double entry, there's multiple solutions. So I think more and more dealers are
going to look for a workflow and solutions that benefit that workflow all the way through.
Well said. Jason, anything I didn't ask you? Anything that we missed? I feel like we covered
profitability, the experience, process, shoppers, dealers. Is there anything else that's in your
mind? There's a stigma with F&I from a consumer standpoint. Anecdotally, you hear about they
just want to upsell or now I have to go and deal with this other person or we go into the office
and that has its own stigma. But when we did our more recent survey and our previous survey
for consumers, one of the things that they told us was that the F&I manager is one of the most
trusted sources within the entire process, especially for dealerships who have that traditional
process. And when the F&I manager is a trusted source and when their experience was good in
F&I, those people, 88% of them said that they would come back and do business with that dealership.
So I think that if you look at the F&I workflow, whether you decide I'm going to do a single
point of contact or have a traditional flow, when you talk about your F&I processes, your F&I workflow,
whatever you choose to do, you have to understand still how much of a bedrock it is for the entire
front end. And that's how CDK looks at is F&I itself is not going away. Maybe how we do processes
is changing, but F&I itself is still crucial to the dealership as a compliance office,
as a lender buying office, and as a revenue generator, most importantly.
Well said. Jason Swig, Product Marketing Lead at CDK Global. Jason, thank you so much. It's been
very insightful. Appreciate it. Yeah, thanks for the time. Great to be here.
All right. Hope you enjoyed that episode. Please give the podcast a rating. Consider subscribing
to the show and check the show notes for links to what we talked about. Thanks for tuning in. I'll see
you guys next time.
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