Higher Penetration Rates and Higher Profits by Preloading – See the Numbers for Yourself.

Higher Penetration Rates and Higher Profits by Preloading – See the Numbers for Yourself.

Why Preload Appearance Protection? Come See the Numbers for Yourself.

For years dealers have always had the F&I department handle all aftermarket products and warranties. After all, that is what they are trained to do, and their performance is measured by how high the PRU is on each deal. It’s critical profit that dealers need when running thin margins on the front end.

Maybe your store does the same thing. F&I sells everything from GAP to extended service contracts to tire & wheel. But ask yourself this question…what is their penetration rate on appearance protection? You know, the paint & fabric and/or the antimicrobial. Most dealers cannot say they have a penetration rate much above 10-15%.

That’s bad. Real bad.

Those of you who have had to work in F&I know the challenge of convincing a customer to purchase a package that costs $500 or so average. The customer pushes back that the factory probably already applied it and why pay for it again. Or that they can just go to Home Depot and by a can of Scotchguard and do it themselves.

It can be a giant headache and when it’s presented with a menu of 5-7 other high-priced products or protections, it can shut down the customer from ALL the products F&I is selling. The customer gets overwhelmed and says no to everything.

What if we told you there is a better way to increase the penetration for appearance protections while exploding your ROI? If you have never thought of it before, maybe you should…

The Numbers Don’t Lie…

If you move appearance programs to a Line 1 preload on every car you sell, you solve the penetration problem you have within F&I. As a preload, it’s one less thing that the F&I manager has to present. It’s already there either as wet or dry application, and full disclosure makes it stick at a much higher percentage.

Instead of being ok with 10% penetration rates, suddenly that number skyrockets to 70-80%. Few customers will push back if it’s presented properly all throughout the process with sales.

The more they hear about how it enhances their car’s interior and exterior good looks and how it can help at time of trade or resale, they are more likely to accept it as part of the price upfront.

Everyone is happy. But what comes along with the higher penetration rate?

Profits, profits, and more profits.

Let’s Break It All Down…

Your store sells about 100 units per month. In the F&I office, you are hitting at 10% penetration on appearance packages. That’s 10 per month at $495 per deal. $4950 is ok but then you have to remember to subtract your cost of the chemical and labor to add. If your hard cost is $150 per deal, your profits are now around $3450.

Well that sucks.

Now let’s say you preload an appearance package at $295 on every unit. You get to 80% percent penetration at a hard cost of $50 per unit.

See where we are going with this?

80 appearance packages nets your store around $19600 front end profit.

And that is assuming that not everyone will accept the coverage which of course if they did…you’re at $24500. BOOM.

And F&I has nothing to do with it. They could focus on the bigger products that carry bigger margins like extended warranties, GAP, and maintenance. Those products lend themselves to a more consultative sale anyway.

With your store probably still reeling from the COVID-19 shutdown, wouldn’t that extra profit be nice right about now? We think so.

See for yourself using our calculator here. Plug in your numbers and prepare to be AH-MAZED.

Why Aren’t All Dealers Doing It?

Good question. Dealers have historically seen preloads for appearance protection as a tough sell for customers or something that they fear will be viewed negatively. Some states are hostile to preloads and dealers worry they will run up against fines for offering them.

Preloading appearance is still a fairly new concept in the dealer space. Remember, F&I is usually tasked with all the aftermarket product in the box. They have to do the heavy lifting after the customer has been there for hours trying to find the perfect car and negotiate the best price.

The way to overcome this fear of customer pushback or perception that you are trying to pull a fast one is to be transparent early and often. Have the addendum sticker right below the Monroney and have the salesperson talk up the exclusive appearance protection that EVERY car at your store includes. Brand it.

Still other dealers worry that if it’s a ‘dry’ application that somehow, it’s not a legitimate protection to sell. Not so. Every chemical application wears out so eventually all protections are ‘dry’ at that point anyway.

Dealers must think of this as an inexpensive, profitable yet valuable protection for their customer, period. Use chemical at the lot or not but either way your customer has the appearance protection that they need to help preserve the look of their new ride.

A Secret Weapon for F&I…

Preloading a base coverage of 12 months for appearance actually helps the F&I managers upsell to a higher level of protection once the customers come to the business office. Ask the right questions and you can sell a longer protection.

Imagine the couple that comes in to buy the minivan for their family of four. With small kids and lots of family road trips to see the grandparents, they SHOULD have longer interior and exterior protection at 6 or 7 years since they keep their cars at least that long on average.

See how easy that is? F&I is happy because they have an easier upsell and that’s just more profit for your store. And since their kids are messy, the customers are happy, too.

If your store is not sure how to add preloads and is interested in more information, click here or hit us up at info@exogloss.com We would love to introduce you to the full suite of programs available at ExoGloss.

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