Friday, November 16, 2007

Menu Selling and Compliance are Not Dirty Words!

Fantastic article on using a Compliant Menu by one of my favorite F&I Trainers, Becky Chernek.

A compliant and profitable menu selling process is critical to measuring a Well-Run F&I Department.

Menu Selling and Compliance are Not Dirty Words!

Jim Collins, author of the best selling book Good to Great, studied many U.S. companies to learn why some of them could be mediocre or "nothing special" for years, and then transform themselves into outperforming some of the most well-known and well-run of their competition.

He said the question every company needs to ask is, "Can a good company become a great company and, if so, how?" In his study, he learned several "timeless, universal answers that can be applied by any organization" regardless of the economy at any given time. One of Collins' key points is appropriate for dealerships experiencing difficulty in selling products to customers, without risking liability. It has a direct effect on enduring and growing profitability. Before you can set any goals for the next month or year, you must first "confront the brutal facts" and then "act on the implications."

What are the brutal facts too many dealers avoid facing?

* One, their sales and finance staff are working in a vacuum and not as a team.

* Two, they are working mainly to earn a personal commission and not to put the company's principles and reputation first.

* Three, they are still using the old methods of box closes and payment packing, because that's what they've always done.

* Four, they fail to recognize the advantages of proper, efficient, and committed menu selling.

In the past few years, since menu selling was first presented as an alternative to the often questionable methods used by many finance managers to make product sales, two attitudes have emerged.

Some dealers see menu selling as the ticket to increased profits, customer retention, limited legal liability, and a consistent and effective sales process. Dealers who trained their personnel to use this method have never had to fear what customers were being told behind closed doors. For many of them, the menu was a blessing in disguise and profits increased significantly and consistently.

For others, however, the outcome was dismal and finance managers complained incessantly and bitterly that menu selling was not only killing sales, it took too much time, and left money on the table.

Why is it that some dealers can reap significant profits utilizing menu selling, while others fail? Why is it that some "good" dealerships become "great," through the use of menu selling and compliance, and others remain static?

Many managers have told me they endorse menu selling, but only if they don't have to disclose the interest rate, base payment, trade-in or vehicle price. They say, "If I tell customers what they are paying for the car before I have a chance to offer products, those customers come unglued and any chance I have to selling anything flies out the door with them."

I nod with understanding, and I know exactly what those managers end up doing. They return to payment packing methods. They offer products, without ensuring their customers have a full understanding of how much each product will add to their monthly payment.

They ignore the potential risk of lawsuits on a daily basis and work with their fingers crossed. "So far," they say, "I've been lucky." Other mangers tell me, "There's no sense in presenting some of our products, if it's obvious the customer won't buy. The haggling wears me out." Others say, "I've learned that if I present enough products to most of my customers, some of them are bound to make an unexpected purchase. It's a crapshoot."

Do good companies that want to be great companies make excuses for failure, prejudge customers' intentions, maintain the status quo, ignore the "brutal facts," and refuse to change sales methods, even when they aren't working and may put the dealership's community reputation at risk? You know the answer, without my having to spell it out!

A compliant menu is purposely designed to disclose all the pertinent buying numbers-the base payment, interest rate, and purchase price of the vehicle-without manipulating any of them. Every customer is made to understand the complete transaction prior to choosing any other available product options.

A compliant menu increases profits significantly, while limiting legal exposure . . . if the process is properly conducted. When customers believe no one is out to gouge into their carefully crafted budget, when they see that dealership personnel are not only credible, but professional and helpful, they will buy.

Menu selling is not merely a concept; it is a belief system-a principled company's culture, based upon integrity. Menu selling is not only about what goes on in the finance department, it is about all personnel and how every transaction is communicated to all customers, beginning on the lot or in the showroom.

What ground work is necessary to establish a compliant and profitable menu selling process? Jim Collins learned that "'stop doing' lists are more important than 'to do" lists." Although the following suggestions are offered as a "to do" list . . . if your dealership is experiencing slow vehicle and product sales, unhappy and continuously complaining or negatively competitive personnel, a lawsuit or two every year, diminished good will in the community, think in terms of "stop doing what you're doing," while you read what will initiate and sustain a complete turnaround in your dealership's sales:

Sales department personnel must be in "harmony" with those in the finance department. Full disclosure begins in sales and ends with the finance department in one fluid and cooperative process.

Finance managers must "deep six" box closes, which stifle growth, minimize profits, invite unethical business practices, and tarnish the dealership's reputation.

Finance managers must eliminate all payment packing methods, which risk liability and customer loyalty and may induce lawsuits.

Sales department personnel must be trained on how to fully disclose pertinent buying numbers to customers and then be mandated to never send customers into finance, without their knowing the full price of the vehicle and the payment options.

Sales managers must review every customer's payback history, prior to establishing a payment. Bumping a customer's payment in finance and up-selling products afterwards is lethal.

Finance managers must be taught to get out of their offices and meet customers at the sales manager's desk. Two heads are always better than one. Ego kills company growth. Profits are maximized when managers work as a team.

Finance managers should always meet customers on their terms. They can reduce sales resistance and qualify the sale, by asking specific fact-finding questions that help to sell products based on customers' needs.

Software programs support a compliant menu selling presentation; however, no software program runs on its own. A manual menu presentation is every bit as effective . . . if presented properly! It takes training and practice, practice, practice. Example: what good is it to have a Steinway piano sitting in your living room, if you don 't know how to play it?

Finance managers build confidence through rigorous training and practice. Customer's objections cannot be overcome, without know-how. Lack of confidence increases a lack of sales. Managers return to unethical business practices-concealing, hiding, stuffing-because they don't have the groundwork to be a craftsman.

Innumerable new finance managers often have the highest performance when utilizing full disclosure menu selling. Why? They don't know any better. Old habits are hard to break. Of course, veteran sales and finance managers can learn to change. I didn't say old habits are impossible to break!

First, however, they must face the brutal facts, and then make a concerted effort to create "a culture of discipline." Collins states that "A culture of discipline is not just about action. It is about getting disciplined people who engage in disciplined thought and then take disciplined action." A compliant menu system begins with a compliant sales department and extends into the finance department in a seamless process. Once an entire dealership commits to compliant business practices and a well understood and well practiced menu selling process, profits soar. Menu selling and compliance are not dirty words. They are the mantra for countless "great" dealerships.

Becky Chernek is a professor at ADI and is the Founder, President of Chernek Consulting. Becky has over 20 years of automotive retail experience and has been consulting automotive, RV and Marine dealers nationwide and Canada since 1997. For more information about her automotive dealership in-store and workshop consultation, please visit her web site at:

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nancil8659 said...

Very good article. Thanks for the post.

nancil8659 said...

Which Finance sources / websites do you read?

Mike Lipis said...

This article should be read by everyone in every finance Office. It is clear and right to the point..good job becky!!