July 24, 2021

F&I ‘not getting its fair due’ in digital retail

Elliot Schor has spent nearly 20 years at JM Family Enterprises, a company he hadn’t heard of until shortly before he joined as an intern. In fact, he never thought he’d enter the automotive industry at all.

After graduating from the University at Albany, State University of New York, in 2001, where he toyed with the idea of entering medical school, the New York native traded bonds on Wall Street. He watched the planes crash into the World Trade Center on 9/11 from his Manhattan office.

After a few years, Schor departed New York, following a girlfriend to Miami and enrolling at the University of Miami in the process. That girlfriend, now his wife, suggested at the time he look for a job at one of the largest companies in the state — JM Family Enterprises.

“I’d never heard of Jim Moran,” Schor said. “So I did some research.”

Schor quickly landed an internship at the company. After completing his MBA, he was an analyst for its treasury department. He was soon transferred to JM Family subsidiary Southeast Toyota Distributors.

Schor was a fast learner. He gained more experience and responsibility at Southeast Toyota, eventually running its sales planning and incentive program. After 11 years at Southeast Toyota, Schor moved in January 2020 to the finance and insurance product side, at JM&A Group, where he is assistant vice president of sales operations.

Schor has a long list of responsibilities, including oversight of strategic accounts, sales strategy and field associate development. He also heads the company’s leading field operations, original equipment manufacturer and business development group.

Schor, 41, spoke with Staff Reporter Jackie Charniga about where F&I fits into digital retailing transactions and what dealerships can do to augment that process. Here are edited excerpts.

Q: How was the automotive retail industry broadly impacted by the pandemic?

A: The dealers really had to pivot real quickly. In March, dealers didn’t really know what was coming. Early April was when reality set in, and a lot of dealers were closed. Dealers didn’t know when they could open their doors, or if they could, and it wasn’t uniform across the country. It was definitely different in different states. But the reality came quick that people still wanted to buy cars. That was a big realization of 2020. Despite the turmoil that was existing, there were several factors that led to what we’ve seen is the highest level of desire for personal car ownership.

People stopped sharing rides in March, and that business has not come back. Uber makes more money now delivering food than delivering people. To think that in 2015 we were talking about how shared car ownership will destroy the franchise model and personal car ownership, and that couldn’t have been more flipped on its head in 2020. When you put those factors together, 2020 became this amazing year for the dealers where they had tremendous demand for their products despite job losses, economic challenges and personal tragedy.

What about changes in the F&I office in particular, around contactless selling and remote or digital product presentations?

Digital retailing is not new. It’s been around for years. And up and down its companies, JM Family Enterprises has been focused on digital retailing for years. One of the insights that we learned, way before the pandemic, about digital retailing is that what we see as the most critical success factor for digital retailing has nothing to do with the technology, it has to do with leadership and management buy-in. Dealers want to talk about the channel in which a customer comes in from. Are they an Internet lead? Are they now a digital retail customer? Are they a walk-in customer? The philosophy on that needs to change, to understand that every customer is a digital customer. It’s really a matter of where they are in the process. The research shows that 98 percent of customers are spending 18 hours-plus online, before the pandemic, researching, doing parts of the transaction.

What does that mean for dealerships?

Dealerships really have to think about their pricing strategy. How are they showing prices online versus in-store? Is there consistency there? How are they compensating their people? Are they using old pay plans where the sales manager is incentivized to give a good price to the customer who’s in the dealership, but not necessarily a good price to the customer who’s online? And so those types of process opportunities and buy-in opportunities are really where we see the success of digital retailing in any given dealership.

It’s not as simple as throwing a tool on a website and saying, yeah, we can do that. It’s way more complex, and there’s a lot more considerations that go into it in order to deliver that omnichannel, true customer-centric buying experience that the industry talks about that we need to get to. These tools, they’re not perfect, not even close. There’s a lot more sizzle than steak in these tools. And there’s other issues, too. There’s regulatory issues where wet-ink signatures are required in many states still. It’s not just the tool that’s a challenge.

How will these changes impact F&I?

We need to, as an industry, stop thinking about the way we want to do things and start really thinking about the way the customer wants to do things. That’s exactly where we’re going in terms of our F&I offerings. We really think that the future of F&I is building confidence and trust in the transaction. And F&I is something that is severely underserved in those digital retailing tools.

The first goal of the digital retailing tool, generally speaking, is to sell a car. It’s really not to maximize the experience. It’s really not to maximize the F&I income. It’s, “Let’s sell a car.” There’s so much opportunity within that to test and learn. And that’s what we’re really excited about in 2021. We’re going to continue to evolve our virtual F&I offering through testing and learning about what content drives better outcomes and where in the process does it drive better outcomes.

Dealerships still have anxiety about placing F&I online, thinking customers aren’t as likely to self-select products digitally. Do you think the digital retailing experience shortchanges what happens in-store?

We certainly agree that [F&I] is not getting its fair due. I think some of it is the priority on selling the car online. It’s a complex product. [But F&I is] very misunderstood. It’s typically sold by an individual, in person, with strict compliance standards to get outcomes. Online, you don’t have that. What you’re going to start seeing more of is bringing in a human element online, whether that be through chat, whether that be through video. It’s starting to layer in that human element online for the F&I. It’s going to be more of a, “Hey, you have questions. We understand that. We’re standing by, ready to answer your questions.” What you’re going to see is the digital retailers starting to be more interactive with the customer when it comes to F&I, either through chat or through video.

What else might change?

You’re going to see these easy-button shortcuts. Branding online is going to become important. Trusted brand names in the marketplace, retailers that have built their brands stronger, are going to have more success. Branding is going to be a critical element. [Kelly Blue Book] was really good in branding their used-car widget online. That becomes a part of the dealer’s offerings. I can trust that used-car offer because it comes from KBB. What you’re going to start seeing from the F&I providers is a push to brand, a push to give customers recognition that they’re buying something trusted and they can have confidence in it.

Another thing is simplification of the menu. If a customer’s virtual and we had the opportunity to present to them either online, in person or even through a website, suggestive selling is part of it. But I would take it even further towards bundling. Bundling is something that we started to dig into over the course of the last few years. Bundling products and being able to offer three products combined and say, “Hey, Mr. Customer, this product will give you all these things in one bundle with one low, easy price.” It simplifies that transaction, and it simplifies the understanding of the customer. Bundling and branding are two trends that you will see coming forward in 2021.