The Finance & Insurance (F&I) department of any major car dealership deals with the on-going problem of trying to sell add-on financing and insurance options after a customer has already agreed to a vehicle purchase price. This can lead to an unsatisfactory customer experience and result in low product penetration and lower than expected dealer margins.
Fixing those problems is critical because the typical Finance & Insurance department is at the center of all transactions. Sales are finalized there. Titles are accurately and efficiently transferred, and finance & insurance managers are free to sell additional products and services such as extended warranties, vehicle protection packages and gap insurance.
So how do dealerships ensure that they are providing a positive customer experience and drive organic revenue growth? The answer? Leveraging predictive analytics that target the right offer, to the right customer, for the right price.
Evolving the car buying customer experience begins with a transformation away from the outdated, high-pressured, and time-consuming sales pitches where finance managers typically come into the transaction after a long price negotiation on the vehicle. Then the F&I managers try to sell customers add-on F&I products based on their personal evaluation of what the customers need and their own familiarity with the products.
Creating an innovative, yet dynamic customer experience culminates with a transformation to:
- An enhanced sales experience that makes customers feel empowered, and shortens their time at the dealership;
- Targeted customer product offers based on previous customer purchases, the vehicle being purchased and customer driving patterns;
- Bundled pricing strategies that decrease prices for strategic product penetration and increase prices for higher value products.
For one auto retailer, Revenue Analytics designed a bespoke analytical solution to recommend the optimal products to a customer early in the sales process integrated with a cutting-edge iPad application.
The result: instead of the traditional sales pitch, which focused on subjectively selected and priced products, predictive analytics were used to identify “customers like you also bought” product recommendations. Then, customized product bundles were dynamically created and presented to each consumer based on the products and parameters of their individual deal and probability of purchase.
An initial test of the Finance & Insurance analytics solution was done in several dealerships across the country, and the results were astounding. The client’s test dealerships significantly outperformed their regional peers, achieving a 7 percent increase in Finance & Insurance profits, and improved product penetration by over 6 percent.
With these advanced analytical models in production, the client stands to garner tens of millions of dollars in profit gains.