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14 • March 17, 2014 • Powersports Business FINANCE www.PowersportsBusiness.com www.PowersportsBusiness.com FINANCE Powersports Business • March 17, 2014 • 15 With today's sophisticated buyer, are you guaranteed to drive some great F&I numbers if you hire the best "rainmaker" you can find? What is it about the "rainmaker" that's the differentiator? Can the F&I department (if there is one) perform without a full-time person? If a dealer sells 30 retail units a month, and most of those are cash deals, why should the dealership even have an F&I department? Let's look into these ques- tions, and describe what a true "rainmaker" is. THE "RAINMAKER" He or she averages more than $1,000 Per Vehicle Retailed in F&I, with more than a 100 Power Rating, with under 5 percent chargebacks, no customer complaints and 100 percent compliance. "Perfection" may be much easier to obtain for those larger dealerships with the highest average revenue per unit sold. For those dealerships that average $10,000 or under per sale, $500 PVR would be excellent, with a Power Rating of 75 or more. The Power Rating equals the number of products sold PVR. DEALER EXAMPLES: Dealer A 30 retail deals per month (23 cash deals, seven finance deals) Finance deals are structured and closed by the office/finance manager The salesperson brings deals into the owner or manager for approval. They then price out all fees for the customer, and the customer either writes a check on delivery or brings in a check from their bank, unless they state they would like to finance. PVR for this dealer is $100 or less, and the office/finance manager's power rating is 13 out of 100 (four products sold). Dealer A says there is no reason for a focus in finance, because most of their deals are cash anyway. Dealer A doesn't believe in investing in an F&I department because most of his/her customers like to bring in a check and just take a quick deliv- ery rather than waiting on finance. By the time Dealer A pays for his/her office manager and chargebacks, he/she considers F&I at the dealership a lost cause. Why pay $5,000 or more per month for a finance manager in this situation? Dealer B (After the "rainmaker" is added or trained) 30 retail deals per month (Of the 23 cash deals, 13 were converted to finance for a total of 20 finance deals out of 30) The salesperson gets approval of the deal by the owner or manager, who then reminds the salesperson to turn the customer over to finance for an interview. In many cases the office/finance manager is involved in the sales process early to ensure there is going to be a deal, since the customers are highly educated, and the owner/manager is very well integrated with the office/finance manager and supports the process. The salesperson discusses dealer capa- bilities, including finance deals, and takes the customer's credit application before turning over to finance. The office/finance manager interviews the customer before he/she leaves the dealer- ship or signs the customer out immediately if possible after interview and bank approval. A menu system is reviewed with every single customer in the same manner regardless of whether it's cash or finance. All deals, not just finance deals, are struc- tured and closed by the office/finance man- ager, only the office/finance manager provides details of vehicle fees. PVR for this dealer is $800 with a Power Rat- ing of 80 (24 products sold). The rainmaker in this case is not just one person; it's the entire process! While Dealer B's office/finance manager must be personable, skilled and detail orien- tated, he/she could not have achieved these results without an entire team. In many cases, it takes just one person to drive the process, but if the dealership does not get behind it, they will most likely be left wondering… what if I hired a "rainmaker?" Can your dealership capitalize on a similar pro- cess without investing in an F&I department? Part time F&I is more the norm than the exception if your dealership is only doing 20-30 deals per month. More often, F&I is shared with the office manager and/or sales/ sales manager. If your dealership is currently sharing the position with an office manager, ask yourself — Does he/she have the same types of capa- bilities as one of your salespeople? Does he/she have a friendly outgoing personality? Is he/she capable of closing a tough deal, or is the deal more than likely going to "fall out of bed?" Is this person capable of challenging salespeople to ensure they give him/her a chance on every single deal, or will deals get "railroaded" right to the customers' bank? If your office manager does not have these kinds of traits, think about finding one of your salespeople — not necessarily your best — but one who can exhibit the above traits. While one single, focused, talented person or process works best, as long as the same pro- cess is followed, the F&I position can be shared between an office manager, a sales manager, and/or a salesperson for smaller dealerships with only slightly lowered results. PSB Brian Gallmeier, founder of Income Develop- ment Partners, uses his powersports experience at the retail level to train F&I departments. He can be reached at bgallmeier@charter.net or 612/616-8611. POWERSPORTS BUSINESS STOCKS Stock Price Price Percent 52-Week Company Ticker 2/25/14 1/22/14 Change High Low Arctic Cat, Inc. ACAT $45.45 $43.27 5.0% $61.13 $33.62 ARI Network Services, Inc. ARIS $3.25 $3.23 0.6% $3.51 $1.70 Assurant, Inc. AIZ $63.67 $64.14 -0.7% $68.95 $40.17 Brunswick Corp. BC $43.70 $41.41 5.5% $47.08 $29.92 General Electric Co. GE $25.27 $24.95 1.3% $28.09 $21.11 Harley-Davidson, Inc. HOG $63.99 $64.02 0.0% $70.04 $49.15 Honda Motor Corp. ADR HMC $36.24 $38.00 -4.6% $42.96 $35.15 Orbital Engine Corp. Ltd. ADR OE $2.50 $2.51 -0.5% $5.78 $1.99 Polaris Industries, Inc. PII $129.89 $133.00 -2.3% $146.99 $82.80 TCF Financial Corporation TCB $15.85 $16.59 -4.5% $17.12 $13.34 Stock Price Price Percent 52-Week Company Ticker 2/25/14 1/22/14 Change High Low ArvinMeritor ARM $12.42 $9.41 32.0% $12.49 $4.11 ADP ADP $77.01 $76.97 0.1% $83.82 $60.66 Bridgestone Corp. ADR BRDCY $17.97 $19.05 -5.7% $19.17 $15.10 Carlisle Companies CSL $77.10 $75.75 1.8% $80.21 $60.34 Cooper Tire & Rubber CTB $24.18 $22.46 7.7% $34.80 $20.55 Dover Corporation DOV $90.00 $90.33 -0.4% $97.00 $67.45 Intl. Speedway Corp. Cl. A ISCA $32.32 $35.88 -9.9% $38.01 $29.30 Deere & Company DE $84.05 $85.55 -1.8% $93.88 $79.50 Marinemax, Inc. HZO $14.19 $14.71 -3.5% $16.95 $10.17 Spy Inc. XSPY $1.41 $1.38 2.5% $2.25 $0.50 Speedway Motorsports, inc. TRK $19.30 $19.81 -2.6% $20.75 $16.25 Universal Technical Institute UTI $13.78 $13.27 3.8% $15.16 $9.96 POWERSPORTS BUSINESS INDEX COMPONENTS INTERNATIONAL STOCKS OF INTEREST Source: Wells Fargo Securities LLC Stock Price Price Percent 52-Week Company Ticker 2/25/14 1/22/14 Change High Low BMW AG BMW-ETR 83.95 € 81.97 € 2.4% 86.88 € 63.27 € BRP, Inc. DOO-TSE $28.40 $28.30 0.4% $30.81 $23.41 Kawasaki Heavy Industries 7012-TKS 420 ¥ 468 ¥ -10.3% 496 ¥ 272 ¥ KTM Powersports AG KTM-WBO 75.00 € 78.00 € -3.8% 80.02 € 49.70 € Michelin ML-PAR 88.74 € 77.62 € 14.3% 89.05 € 57.23 € NGK Sparkplug 5334-TKS 2317 ¥ 2448 ¥ -5.4% 2643 ¥ 1296 ¥ Suzuki Motor 7269-TKS 2718 ¥ 2804 ¥ -3.1% 2982 ¥ 2049 ¥ Yamaha Motor 7272-TKS 1534 ¥ 1459 ¥ 5.1% 1825 ¥ 1065 ¥ Yokohama Rubber 5101-TKS 972 ¥ 971 ¥ 0.1% 1312 ¥ 829 ¥ DOMESTIC STOCKS OF INTEREST F&I SOLUTIONS BRIAN GALLMEIER What if we hired a 'rainmaker?' P12x15-PSB4-Finance.indd 15 3/5/14 11:37 AM