F&I Admin Execs: Connectivity, Service and Efficiency Are Keys to Greater Market Share
This article was originally published by P&A Magazine in their June 2010 Issue. See the original article here.
Trinder and Kathinokkula explain how the industry can pick itself up even when sales volumes are down.
Despite the tough times the auto industry has been facing, David Trinder and Kumar Kathinokkula say the future looks promising. They are the CEO and COO, respectively, of F&I Administration Solutions (F&I Admin), a full-service administration system that was bought from DealerTrack Aftermarket Services in February 2009. F&I Admin’s product, SCS Auto, is electronically linked to three menu systems with another three to be added shortly. Trinder and Kathinokkula talk with P&A Magazine about the latest trends, technology and customer needs they see for F&I product providers.
Do you think sales volumes will improve in the near future?
Trinder: It’s anyone’s guess, but the general consensus is that sales will increase modestly in the next few years. There has been so much upheaval that it’s going to be some time before we’re back at the levels we have seen before.
It was originally hoped that dealers would sell more aftermarket products to make up for less volume, but that didn’t really happen. Dealers want to get customers into cars and because the whole lending world has changed, the dealer’s ability to finance other products became more challenging.
We expect the penetration of aftermarket products to at least stay the same or grow as lending loosens back up, but sales volumes will also need to increase.
Why did you think this was a good time to buy F&I Admin and expand its offerings?
Trinder: When we bought the business, the auto industry had already declined significantly, so we based all our projections on some pretty low numbers. Therefore, the business had the right staff complement in terms of skills and numbers and incorporated a revenue stream that reflected significantly reduced car sales. Also, we were already familiar with the company, the customers and the software, so we knew we had a solid base from which to build the business and capture a larger market share.
What makes an administrative system stand out from the others?
Kathinokkula: Apart from the obvious requirement of delivering to all of the necessary administrative needs of the business, the administrative system must be able to provide connectivity to all third-party systems. It’s an absolute requirement. When agents say, “I’ve got this fantastic product,” they know the dealer’s first question is whether it is connected to the menu or the DMS that the dealership uses. If it’s not connected, this objection cannot be overcome and the agent gets no more of the dealer’s time. We are also connecting to other service providers in the industry. Our recent announcement that we have connected to Wright Express is a perfect example of this.
What benefits does connectivity give the provider?
Trinder: Open, standards-based connectivity to external systems ensures that providers have the freedom to form greater numbers of partnerships, make each partnership more efficient, and improve the efficiency of nearly every administration process. It can increase the potential of dealer signup because of the connectivity to their menu and DMS. Once a dealer is signed up, the provider has the ability to change rates and product offerings without worrying about getting the changes implemented in external systems. And when connected to external service partners like roadside assistance, payment plan providers, parts providers, etc., the potential for efficiencies is enormous. The connectivity we recently announced to Wright Express delivers significant processing efficiencies because all information is managed in the administration system. It is no longer necessary to jump to different systems to make claim payments, and all reporting is consolidated.
What do you see F&I product providers and administrators looking for?
Kathinokkula: We are constantly hearing from providers that they are looking to build a more complete suite of products. This means that they need a system that can support more than one product. It is important for an administrator to be able to manage every product effectively and efficiently as well as be able to view dealer performance across all products.
At the same time, our customers make it clear that we must meet their administrative needs while making the process faster and easier for them and the dealerships. More recently, a greater emphasis has also been put on helping our customers sell more products.
What is the core competency of your business?
Kathinokkula: We are entirely focused on a complete and comprehensive administrative system and the corresponding needs of our customers. We have formal calls with each customer every week and many informal discussions in between. Most discussions center on their needs and how we can deliver added functionality to support them. We also have an annual conference at which our customers discuss their needs and we agree on the developments for the coming year. Listening and responding to customer input is incredibly important.