Gary Fagg, a consulting actuary with CreditRe and one of P&A Magazine’s Actuarial channel contributors recently approached P&A to review some online GAP protection material that he will be providing AFIP for their certification program for F&I professionals.

His experience in the actuary, accounting, risk management, and risk transfer solutions related to vehicle protection products, precedes him and he has been asked to speak at the upcoming Vehicle Service Contract Administrators Conference held at the Las Vegas Hilton from September 26-28.

The editorial staff here at P&A Magazine thought who better to open the review to than our own Provider and Administrator subscribers because you are the experts in the industry. So, we are inviting you to click on the following link to review and comment on the material to be presented.

GAP Protection Offered by the F&I Office in Conjunction with a Retail Installment Sales Contract

The basic questions we are asking of this material are:

1. Does this document contain all the information an F&I practitioner needs regarding the GAP product?
2. Are there any technical errors, omissions, or commentary?

We appreciate the time that any of our readers can contribute to reviewing the document provided in the link above and welcome any comments, corrections, etc. that you can provide.

P&A Magazine had the chance to speak with Brent Allen, president of StoneEagle, to discuss the company’s role in the F&I industry and how they contribute to making the lives of providers and administrators easier. The following interview examines StoneEagle and all of the technology programs they have to offer clients.

The StoneEagle Group is made up of multiple companies — can you explain to our readers the different divisions and the services they provide?

StoneEagle (SE) was founded in 1987 as an “enterprise systems” software development company under the name StoneEagle Insurance Systems. The SE founders developed systems for insurance companies, banks, and third-party administrators as far back as the 70’s. SE developed its first warranty administration system in 1989. That system was converted to more modern standards in 1992 and was made year 2000 compliant. This compliance caused rapid growth for the company through the 90’s.

StoneEagle.com Inc. (SE.com) was incorporated in the 90’s for the purpose of creating web-based solutions to integrate with its already successful administration systems. With the merger of a small data acquisition company in the mid 90’s, SE.com began to re-invent itself as a dealer-centric solutions provider with industry standard reporting tools, rating and integration services. Today’s offerings include: SEcureMetrics reporting, SEcureSalesTool for service-drive aftermarket product sales, SEcureTransmit for submitting sold products back to administrators and will soon release SEcureMetricsService for parts and service analytics.

In 2004 StoneEagle Services (SES), which was once an administration company, was resurrected to launch a new payment processing solution. This payment solution, invented by StoneEagle, includes paying any provider of parts or services with a virtually loaded credit card. This process applies a fixed value to a credit card transaction which helps eliminate fraud and create a simple reconciliation process for administrators and insurance companies.

Please expand on the products and services you offer, and specifically, how they can add value to/for the Providers and Administrators?

It is important to note that StoneEagle isn’t just a product provider, we are a solutions provider. It is probably safe to say that few, if any, other companies in the industry have as broad of a range of products and services.

• SEcureARCH is the latest aftermarket product administration and is based on over 20 years of success. It is the only system on the market to boast an open architecture, which makes it ideal for plugging in external tools and processes. For the auto dealer environment this may include an administrator’s own web portal, menus, or other integration points. For the admin company, plugging into parts sources, inspectors, or pricing engines becomes quick and more simplified.
• SEcureMetrics is the original fully DMS integrated analytics tool in the industry. Agents and administrators can help their dealer clients create higher product penetration numbers by showing the effectiveness of sales tools and process with numeric or graphical representations. Dealers can focus on their internal numbers, and dealer groups can compare the performance of their dealers side by side across different manufacturers, regions and DMS providers.
• SEcureMetrics Service will allow the dealer to optimize his parts and service department. He will be able to isolate the most profitable parts, services, vehicles and customers. He will also be able to track the effectiveness of various marketing campaigns and how they have helped increase business in other areas of the department.
• SEcureSales Tool (SST) was originally designed for the sale of insurance products through direct marketing. SST quickly became adapted to the service drive. It will allow a dealer to pre-qualify customers with appointments for applicable products. The service writer can print quote sheets for customer presentations, take credit card payments and capture multiple installment payment information for submission to premium finance companies.
• SEcureTransmit is a natural bolt-on to SEcureMetrics and SEcureSalesTool. This tool allows the dealer to look at a list of sold aftermarket products and select those for which he wishes to create a remittance register. This register simplifies the accounting process by letting them print the register and include it with his batch of business. Once the business is batched, the dealer can simply select to transmit the data electronically to the administrator of the business. In many cases the dealer allows the agent or administrator to initiate the data transmission themselves.

Looking back over the past few years, how has this changed?

Over the past few years we have seen changes to almost all of our products.

• SEcureMetrics reporting has seen a complete change to the user interface. It will now allow for several user controlled configurations including moving, or removing, individual columns, column-level data selection and user controlled versioning of report views.
• SEcureMetrics Service was started from scratch in 2011. It will mimic SEcureMetrics in look and feel but focus on the service end of the business.
• SEcureSalesTool has been completely re-written to allow easy addition of several different sales “flows.” This means you can sell different products with different methods. The tool allows the user to pick the method and then the screens change based on the sales process.
• Our aftermarket product admin system, SEcureARCH, has been completely re-engineered. We have combined our years of experience and intellectual property with cutting edge programming techniques, hardware, and software to create a completely service-oriented system that we believe will appeal to most administration companies, both large and small.

We hear a lot about connectivity these days. What benefits does the StoneEagle system provide to administrators?

We consider this one of the most important issues facing the industry today.

Concerning DMS connectivity, StoneEagle has always been on the leading edge. Our reporting tools and sales tools have been integrated since their inception. We have come to believe that having our products certified or use methods not considered “Hostile” by DMS providers as the best way to insure consistent, reliable integration.

For our administration system, connectivity was one of the highest considerations. The basic architecture means that we can efficiently connect to any relevant product or service via web services. This includes but is not limited to, agent portals, parts databases, inspection companies, NADA auto values, menus and StoneEagle’s own DMS integration portals.

In the near future, do you have any plans to add additional features in the area of connectivity?

One area of future focus, in relation to connectivity will revolve around “Single Sign On (SSO)” and “Seamless Integration.” More and more we hear clients asking to sign on once, and be able to transition from one application to the next. This request transcends all of our products from reporting to our admin system. We want to be able to allow our clients to “plug in” to other software offerings easily. Security is a major hurdle here. There are many ideas, and a few published standards. Our goal, as always, will be to keep our clients’ data safe while creating technology that makes his experience quick, easy and intuitive.

As a true veteran, I am sure you have your finger on the pulse of the F&I industry. What do you see F&I product providers and administrators looking for?

I’m not sure I can claim to be a true veteran in the F&I space, but at the end of the day, we are all dependent on the customer in the F&I office. That means there are two people we need to make happy: the customer and the F&I staff. There have been many improvements around the customer: menu sales processes, tablet apps, educational tools and others. I think the tablet applications, whether they are browser based or true “apps,” will be huge. Placing control with the customer in an environment in which they are comfortable, will hopefully help gain their confidence in the products placed before them.

On the other side of the desk, The F&I manager finds himself with 10 various windows open on his computer: a CRM, a menu, his DMS, his reports and more. As our technology gets better, I think we need to look at giving him a single place to land and run the business efficiently, a “dashboard” where he can launch his favorite tools, one that will allow any product provider with the ability to integrate, the option to plug in, where he can pull a deal, rates, and forms once, and review all related information. There are at least three companies working on this idea today. I believe this will be the next advancement for the dealer.

Looking to the future, what are some of the major hurdles our industry will need to overcome?

DMS integration is a huge hurdle today and in the near future. As the DMS providers take stronger stances on ownership of data, security protocol, integration automation and competing product offerings, independent product providers are faced with the expensive prospect of certifying with the DMS providers. There are several questions all providers are asking: will the integration be sufficient? Will pricing be equal among all providers? Should I have to absorb the cost or can I raise my price? Will added cost take my product out of competition? Are dealers willing to pay the extra money for my product? Will the industry simply adapt to the extra cost? And many others.

Another interesting future hurdle will be internet auto sales. Just a few years ago, this was very difficult to accomplish with OFAC checks, credit scores, financing options and other road blocks. As technology increases, we are seeing this type of sales process happen more often. Dealers and product providers are trying to figure out how to make F&I offerings to the on-line customer. Many have the strategy of pulling the customer into the store for the close, but customers are becoming increasingly motivated to complete the sale from home.

Industry conferences, including panel discussions and audience participation, are a great place for us to discuss these issues and work together to get over these hurdles.

P&A Magazine sat down with Jim Ganther, President of the F&I Providers and Administrators Association (FIPAA), to explore how this new association will be contributing to the industry. The following interview discusses how the association was founded, key members, goals of the association and much more.

What was the impetus behind the Association?

Ongoing conversations between and among executives of numerous providers and administrators began almost two years ago as the US Fidelis fiasco unfolded. Other copy-cats sprang up in the St. Louis area, where US Fidelis was based, perpetrating the same sketchy business model. So the reputation of the entire service contract industry took a hit; the industry as a whole was being associated with the sales practices and other abuses of those companies. Reputable providers and administrators wanted to react, but how? This Association is part of that “how.”

Who established the Association?

I credit David Gesualdo with making sure the Association became a reality. He quarterbacked a number of conference calls among interested parties and, when no one seemed willing to “bell the cat,” he took it upon himself to pull the trigger. Part of that effort was recruiting Adam Kimber and me to join him in the effort. In hindsight, it made sense for guys like us to be the ones to get the Association started – we’re all close to the industry, but not actually employed by any specific company within it. This makes us as close to neutral players as you can find.

Who will run the Association?

The Association will be run by a three-member Board of Directors: David Gesualdo, Adam Kimber, and me. I am President of the Association, David is Executive Director, and Adam is Managing Director. We all serve without compensation.

What does the Association hope to accomplish?

One point most of the participating companies agreed upon was to establish a “Good Housekeeping Seal of Approval” that told the world that any company so designated was not a fly-by-night operation. In order to obtain the designation, a company would have to demonstrate it can meet certain objective criteria with respect to marketing practices, reserves, consumer satisfaction, Better Business Bureau rating, and so on.

Another goal is to establish a certification program for independent claims inspectors. Right now there is no way of knowing if an inspector has the knowledge and qualifications to conduct a fair, objective inspection. This is obviously of great interest to the companies that must rely on such inspections.

We also intend to create a certification program for provider and administrator personnel. The intention is to establish a baseline of knowledge for employees that will help them understand both the intricacies of their industry as well as the market they serve: retail automotive.

Long-term, we hope to assemble a wide range of member benefits that can help providers and administrators attract and retain employees, and enhance their customers’ experience.

Those are ambitious goals. How does the Association intend to achieve them?

Our first order of business is to establish an Advisory Council.

What is the role of the Advisory Council?

The Advisory Council will be tasked with creating working groups to undertake the heavy lifting necessary to turn our goals into accomplishments. We expect the working groups to consist of four to six experienced people from the industry who can get things done and report back their results to the Advisory Council for approval and implementation.

Another purpose of the Advisory Council will be to oversee the Board of Directors. The Association is a not-for-profit organization, and we intend to keep its financial affairs transparent to the Council. In addition, the Council will establish dues and membership criteria.

Finally, the Advisory Council will act to guide the activities of the Association. The Council will be primarily comprised of senior executives of member companies, as well as a representation from affiliated companies. We expect to meet at least twice annually in person in connection with the Industry Summit and Agent Summit in Las Vegas, with conference calls and webinars as necessary in between.

Who will be on the Advisory Council?

The roster is not yet complete, but we are very pleased by the number of respected industry members who have enthusiastically agreed to serve. Their initial term of service will be two years. We expect to announce the full Advisory Council in connection with the Industry Summit in Las Vegas, September 26 – 28.

How much will it cost to join?

That’s a matter for the Advisory Council to decide, but we expect it to be quite affordable. Member companies need to see a real value, and that’s hard if dues are astronomical. And as I said before, the Association is a not-for-profit organization, so the dues will be set accordingly. We need to generate enough revenue to accomplish our mission, not make anyone rich.

How much will it cost to receive the “Good Housekeeping Seal of Approval?”

Although we need to get Advisory Council approval, it is our hope to provide the designation for free, or for just a nominal handling charge. The problem with putting a high price tag on such a designation is that it creates the appearance of bias: the designating body only gets paid if it grants the approval. This hardly seems even-handed. Furthermore, I think it casts doubts on the integrity of an organization to generate income from such a program. It degrades the value of the designation. That’s one of the reasons we incorporated as a not-for-profit organization.

How much will the certifications cost?

Again, that needs to be determined by the Advisory Council – they’ve got a lot of work ahead of them! But we hope to keep the cost of certifications as low as possible. It is better for the industry if standardized training is made as widely available as possible and high fees would impede that.

When can companies sign up for membership?

We should have the membership criteria and dues structure shortly. Membership applications will be available at the Industry Summit in Las Vegas, and online at www.fipaa.org immediately thereafter. All providers and administrators that join before December 31 will be designated “Founding Members.”

Gaining industry insight from e-Commerce companies PEN, F&I Express and DealerTrack Aftermarket Network

In part 3 of our connectivity series, P&A will be profiling three companies – PEN, F&I Express and DealerTrack Aftermarket Network – that facilitate e-Commerce; e-Commerce defined as the means to rate, contract, and submit aftermarket products electronically.

In our first article, we profiled two systems that provide administration solutions and how they are connecting the industry – F&I Admin and StoneEagle, and in our second article we profiled dealer menu systems – Innovative Aftermarket Systems (IAS), Ristken Software Services, MaximTrak, MenuVantage, and VisionMenu.

PEN (Provider Exchange Network), F&I Express, and DealerTrack stand out as uniquely placed in the industry in that they are not administration systems or menu systems but they do provide a solution that provides benefits to both dealers and administrators alike.

These three companies all share a future vision where the transaction process for the sale and recording of aftermarket products is entirely paperless.

The reasons why an electronic and paperless transaction process is important to the industry has been explored within P&A and at numerous industry functions, in trade journals, and around the water cooler. Beyond the efficiencies, error reductions, and cost savings we strive for in the often dysfunctional technology miasma we operate in, the questions is, which innovators will break through and effect the paradigm shift necessary to bring about change?

Let’s first take a look at how these companies are attempting to solve the problems associated with printing multi-part forms, rating contracts, duplicate data entry, as well as how they eliminate the need for an F&I manager to go to multiple websites to sell aftermarket products.

What They Do

PEN enables the dealership software itself to perform e-Commerce functions. PEN recognizes the challenge of getting the dealer to adopt change, so their technology allows the dealer to stay within their primary software, rather than having to login to any special website, whether it is a provider or other commercial portal.

With PEN, the provider “plugs in” to the application itself. There is no intermediary software the dealer has to use. If they use an ADP or R&R DMS for example, there will be no need to “move” the data to some other software application.

The PEN model is provider-centric, where PEN is a managed digital pipeline between the provider and the dealership, supporting a potentially paperless transaction process for any dealer system or menu to request rates and forms directly from the provider.

F&I Express, on the other hand has built its own website and aggregates providers and administrators on this website so the dealer can go to one place to get access to whomever they do business. Since the website houses multiple administrators, this potentially allows the dealer to do one-stop shopping for all of their aftermarket product contracting, regardless of the number of providers a dealership may have.

F&I Express offers e-Commerce options to providers and administrators regardless of their technology. For organizations that do not have an administration system that can provide electronically generated rates and contracts, F&I Express can provide a turn-key solution. For organizations that already have a technology infrastructure to support electronic rating and contracts, F&I Express provides those organizations a solution that leverages their existing IT infrastructure.

Again, the F&I Express model is provider-centric, in that it considers itself a partner with the administrator as opposed to a technology vendor. The company offers different levels of connectivity depending on whether the administrator already has a proprietary e-contracting system or not, and will even private label the site.

The DealerTrack approach is to provide one integrated solution to manage everything an F&I manager needs. Dealers get the benefits and efficiencies of a menu, electronic rating of aftermarket products, e-contracting, and e-remittance from one platform.

DealerTrack’s open architecture allows all providers to connect to the platform, eliminating the need for the dealers to access multiple websites. Because of the integration that DealerTrack offers, double keying is significantly reduced, if not eliminated.

DealerTrack has the capability to support all providers’ rates whether the provider is connected to the DealerTrack Aftermarket Network or not. This provides dealers with the ability to rate all of their products on one system.

The key difference between the competing philosophies is – PEN’s solution embeds the e-Commerce functionality within any application the dealer chooses to utilize, F&I Express aggregates a multitude of providers in one easy to use website, and DealerTrack utilizes one platform to house a slew of dealership functions, of which one is the ability to rate and contract F&I products. It will be fascinating to watch which style of e-Commerce gains the most traction in the marketplace.

How They Do It

PEN is exposed to the dealer in the form of enhanced capability in their existing software. The technology is accessible by any electronic menu or DMS software and the interface supports any immediate or future integration points.

A menu or DMS is improved with real-time integration to many providers through PEN. The DMS enjoys a significant change because today it is essentially an input screen to record a sale. With PEN, products, rates and contracts are presented to the dealer in real-time from within the DMS. All the F&I manager needs to do is select products from a list to get accurate rating and then print forms electronically.

In most cases a dealer will never see or hear of Provider Exchange Network, they will only know that their menu or DMS does electronic rating and contracting. According to PEN, other solutions that are based on a separate user interface have the additional challenges of data synchronization and getting dealers who are notoriously resistant to change to learn yet another new system. By working within the dealer software, PEN purports that the negative impact of change and the need for training is almost completely removed.

The F&I Express approach to integration is much like an ATM network. By consolidating as many providers as possible onto the “network”, a dealer group with dozens of stores in multiple states with perhaps seven different providers can easily serve up rates and e-contracts specific to each provider.

The network includes lender portals, menu software developers, third party admin systems, DMS, and or course, providers. In fact, according to F&I Express, the best data to rate a service contract comes from DMS. F&I Express can make that data available to a provider or admin system, let them rate the contract accurately, then supply the results back to the dealer in one easy-to-use website.

F&I Express’s main focus is on facilitating the e-contracting aspect of a transaction, but is not limited in any way by how the signature is captured or in what form, if any, the provider will accept an electronic contract. The system accommodates printing a contract for a wet ink signature, placing a signature on a contract with signature pads, or even a newly developed iPad signature capture capability where the consumer signs with their finger.

DealerTrack can support web services for e-rating, e-contracting and e-remittance directly to or from providers and third parties, or they can host the rates and contracts internally. Providers are currently utilizing the network via all of these methods. DealerTrack is also open to other means of “connecting” based on the provider or software developer’s system and needs. This gives providers the capacity to configure a solution with some or all of DealerTrack’s services.

DealerTrack supports the e-rating, e-contracting and e-remittance as a function within DealerTrack or as a fully integrated solution with the DealerTrack eMenu. DealerTrack will build out the integration in support of both of these options as part of their connection services to providers and third parties.

Dealers can access the features and functionality through their existing access to DealerTrack. As the dealer or provider is integrated onto the platform, the respective users will be given the rights to utilize the functionality.

The most notable difference between PEN and F&I Express is that while PEN manages the pipeline between the parties to conduct e-Commerce, F&I Express actually supplies the providers that do not have a proprietary e-contracting solution the ability to do so. DealerTrack fills both roles.

From the standpoint of our readers, if your company has developed an in-house e-contracting solution, PEN, F&I Express and DealerTrack can expose your technology to the universe of dealerships and gain the benefits of e-Commerce efficiencies. If a provider or administrator would like to benefit from e-Commerce, but stick to its core business, F&I Express and DealerTrack could be your entrée into the e-contracting realm.

The Benefits

Ok, so all this whiz-bang technology sounds great – but what’s in it for the provider, administrator and their clients?

PEN’s training and support services originate with the provider and DMS, not directly with the dealer. Recognizing the importance of the dealer and agent relationships, PEN bridges the partnership between providers and dealer software vendors, without getting in the middle of coveted relationships. Their training and support is imbedded into the provider and dealer system processes so that the dealer experience is branded appropriately.

Rather than having to go to an e-Commerce portal, PEN hopes to support greater flexibility in the dealership process when using more than one application. By making the process seamless, a dealership could rate a product in a menu, work a deal in a desking application, and book the deal in accounting. As long as those systems are PEN-enabled, the dealer and provider are assured of accurate and consistent data flow.

F&I Express contends that there are three main stakeholders for e-Commerce solutions to become the norm: providers and administrators, dealers, and agents. In order for e-Commerce to become relevant to the stakeholders, as many providers and administrators as possible must be on the network. At the end of the day, the provider has to be able to say to a dealer that e-contracting will be easier and faster than printing the multi-part forms in use now.

Another benefit is relieving the burden of F&I having to visit multiple provider websites for e-Commerce when the dealership relies upon a bevy of different providers for its aftermarket products.

Lastly, the agent benefits by the elimination of errors and improved cash flow by promoting the F&I Express platform. We are all aware that at month end, the agent spends valuable selling or development days chasing after misrated contracts. Imagine an agent losing a week of productivity per month fixing problems. Now imagine the same agent gaining that extra week of productivity and it is easy to see why the provider and the agent are stakeholders.

DealerTrack can claim the most widely used network in the automotive industry today. Over 17,000 dealers use the DealerTrack platform to submit credit applications, to stay compliant with state and federal laws, and to manage their overall F&I business. According to DealerTrack, the fact that a dealer can use a single platform to manage such a large portion of their dealership business is a key advantage.

The Business Model

As previously stated, PEN is dedicated to servicing the F&I product provider/administrator. PEN contracts directly with the provider and the fee is transaction based per completed contract. Included are dealer systems support and services to the provider.

Dealership functions are typically provided as an enhancement to the core product of eligible dealer systems. Each dealer system has the discretion to manage its own dealer facing presentation. At the present time, all PEN dealer system partners offer PEN functionality at no charge to the dealer.

F&I Express has a similar transaction based fee, but the company views its business model as a performance based system. The provider/administrator only pays a fee when F&I Express provides value to their organization.

A provider should only expect to pay a fee to F&I Express when the deliverable – the electronic contract and/or pertinent data delivered in the form requested by the administrator – is transmitted. The company does not foresee the likelihood of ever charging a dealership for access to an all-inclusive network of providers.

DealerTrack’s business model is both transactional and subscription based. The eMenu is a subscription based product and includes the menu and a full financial reporting tool (F&I log) included in the monthly fee. Dealers can use the eMenu to e-rate, present, finalize, e-contract, and e-remit aftermarket products.

The DealerTrack Aftermarket Network is a transaction based product and it is free to the dealer. Dealers can use the Aftermarket Network to e-rate, e-contract and e-remit aftermarket products. The aftermarket provider is billed for completed transactions.

DealerTrack offers dealers and providers options and incentives based on volume tiers and in some cases, the dealer can receive a free or discounted eMenu subscription.

The Future

What does the future look like for e-Commerce? Let’s take a look at the answers to these questions from the perspective of the companies we are profiling.

PEN’s strategy is to support the transaction no matter whose products are represented or what system they use, or even how they use it. PEN focuses on the exchange business and is staying out of the dealership or admin software arenas. The company recognizes that there are a lot of great software applications serving dealers and providers/administrators, and their goal is to make them all work together seamlessly.

The relationship with PEN’s founders at ADP and R&R create the opportunity to integrate the vast majority of franchised dealerships, about 80% of the market. The company’s measurement of success is to enable an accurate and flexible point of sale process, so each dealership connected to PEN is capable of 100% e-Commerce.

F&I Express believes the future is in making the system easy to use and fast for the operator, i.e. the F&I manager that is resistant to change. The company has no doubt that the marketplace is headed towards the total adoption of electronic processing.

Much of F&I Express’s focus is on how to make it easier and faster for the F&I manager while driving other benefits for the dealership to make sure every contract is correct. The company sees no reason why every provider and administrator would not want to be on the platform.

Enrolling as many providers and administrators on the platform as quickly as possible, while continuing to create awareness with agents and dealers about a better way to conduct business is the path forward the company has chosen.

For DealerTrack, and perhaps for the industry as a whole, a look into the future could be the company’s recent addition of a major OEM financial arm and product provider joining their platform to conduct e-Commerce. DealerTrack is in the process of training the OEM’s dealerships to utilize the functionality as this is written.

Stumbling Blocks To 100% Adoption

One of the key stumbling blocks is human resistance to change. A provider portal is arguably better than paper and pen, but still requires a change in human process. The pain of change must be less than the benefit of the new process. For PEN, working within the dealership software itself, the pain of change is very small.

F&I Express addresses change by identifying the three types of F&I managers that exist today and segmenting them into categories with a strategy to deal with each. First are the F&I managers that are ready to adopt e-Commerce right now and will gladly toss their impact printers and multi-part forms in the trash. The second segment are F&I managers that with greater awareness of their options and education will gladly change their process. This segment most likely represents the largest group. Last are what F&I Express calls the “Hummers”, those F&I managers that love to hear the hum of their impact printers and like the way they do business. These are the same folks that resisted the data entry aspect of RouteOne and DealerTrack but now use them every day.

Being relevant – having the greatest number of providers and administrators on the platform – so that the number of products the dealership sells from different providers matches the number on the platform is the key to that relevance.

Another hurdle includes legacy solutions and the cost of change to the provider. In the absence of solutions available today, many providers have resorted to building their own solutions. Discarding that investment or letting go of IT initiatives is not easy.

One must consider and weigh the time factor and expense of a home-grown solution against outsourcing to one of the profiled solutions. Perhaps more importantly, there is still more to be done with each of our profiled solutions.

For example, when is the roll-out date for PEN to realize connectivity with R&R and ADP? Is there a critical mass of providers contracted with PEN so that when it does go live, it will be adopted by dealerships?

F&I Express is in the position where only dealers that have all of their aftermarket providers signed up will be motivated to use it. F&I Express needs providers to convince dealers to use it and needs dealers to use it to convince providers that they should sign up. It seems that they still have some significant work ahead before they can claim to have reached a critical mass.

DealerTrack is in the enviable position, with the recent addition of another major OEM committed to their e-Commerce platform, of a leadership role in the segment. Much like the others, however, their solution will not be in the mainstream until there is wide dealer adoption.

In Conclusion

The subjects of this article all depend upon a certain critical mass of providers integrated on to their platforms for their e-Commerce solutions to be viable. Will a dealer use e-Commerce if his stable of product providers is not 100% represented by an integrator? This remains to be seen.

In Part 2 or our Connectivity Series, it was revealed that the menu developers are exposing providers to e-Commerce directly through the menu at no charge to the dealership. The only money being made by an integrator, beyond start up costs, is when a contract is remitted electronically and the provider is willing to pay a transaction based fee to the integrator for the final contract or data.

One has to wonder if the providers are willing to pay this fee and how the industry can cross the chasm and adopt e-Commerce as the standard. When lender portals were in their infancy, many dealerships resisted becoming data entry clerks for the banks and continued to fax their applications. It was not until lenders demanded electronic application submittal or the dealership would be penalized 25 basis points, then finally stopped taking faxed applications altogether, that the paradigm changed.

We are seeing e-rating and e-contracting becoming a function often accessed through the menu. Will it be possible for providers to demand, much like the lender portals did, that the dealer submit contracts electronically? Will menu systems’ e-Commerce functionality supersede third party integrators directly supporting e-Commerce from separate websites? Stay tuned.

If you missed Part 1 or Part 2 of P&A’s connectivity series, click here for Part 1: “Connecting Providers, Administrators and Dealers: Administration Systems” ; click here for Part 2: “Connecting Providers, Administrators and Dealers: Menu Systems”

In today’s dealerships, the menu systems in use have become the means for not only presenting the dealership’s financial and aftermarket options in a consistent and compliant manner, but have become the new portal for connecting to many of the third party systems available to the modern F&I manager.

F&I’s importance as a primary profit center underlines the need to be informed of the current integration state-of-the-art in the business office. The challenge is to integrate the ever increasing number of third party systems the F&I manager must access to reduce their workload. This will enable more time for productive selling, and is a role that the menu systems have assumed beyond their original design.

P&A contacted a veritable Who’s Who of menu system providers, including Innovative Aftermarket Systems (IAS), Ristken Software Services, MaximTrak, MenuVantage, and VisionMenu. Our intent was to profile the companies and learn which third party systems menu providers are connected to now, and which third party systems they plan to connect to in the future.

Perhaps even more important, does connecting to and integrating third party systems actually streamline the workflow? We will also discuss the menu providers’ availability and utilization of bi-directional integration.

Lastly, menu utilization becomes critical when the software connects to a growing list of third parties. What is being done about menu utilization and are menus being used consistent with their design? It is important to know what the menu providers and other parties are doing to keep menu utilization rates as high as possible.

Connections

If there was ever any question about the multitude of third party systems an F&I manager may have to access in the normal course of business, the following general list of systems our menu providers connect to should put that to rest:

• DMS Providers like Reynolds & Reynolds, ADP, and DealerTrack DMS. Some menu providers connect with Tier 2 and Tier 3 DMS providers as well.
• Lender portals like DealerTrack and RouteOne.
• Aftermarket product providers: VSC, GAP, and other ancillary products.
• Rating and enrollment providers like PEN, F&I Express, F&I Admin and StoneEagle for e-rating, e-contracting, and e-remittance.
• Bi-weekly payment providers.
• Sales and compliance training.
• VIN decoding.
• Electronic identity verification systems like OFAC and Red Flags.
• Credit bureau aggregators like Equifax, Experian, and TransUnion.
• CRM systems.

Our menu respondents did not indicate individually a connection to all of the above third parties, so the following is a brief summary of specific connections.

IAS integrates with DMS providers Reynolds & Reynolds, ADP, and DealerTrack DMS with certified interfaces. The system also integrates with about twenty different VSC and ancillary product providers for e-rating and e-contracting. IAS connects to identity verification systems to verify customer identity and prevent fraud.

Ristken connects with Reynolds & Reynolds, ADP, DealerTrack, and RouteOne with certified integration. Ristken also integrates with other Tier 2 and Tier 3 DMS and DSP providers, in addition to the Provider Exchange Network (PEN), bi-weekly payment provider Equity Driver, OFAC, and Red Flags.

MaximTrak connects with the major DMS providers, credit aggregators TransUnion, Experian, and Equifax, and adds a connection with RouteOne for credit application submission. The company recently added connections to PEN and F&I Admin for e-contracting and e-rating. Rounding out MaximTrak’s portfolio of connections are bi-weekly payment calculators, numerous product vendors, VIN rating, insurance calculations, e-contracting, OFAC, and Red Flag scores.

MenuVantage blends a comprehensive suite of integration to include point of sale providers, credit aggregation, lender submission, automated compliance screening, and DMS. The system allows for multi-directional deal flow as not all deals follow the same path.

VisionMenu integrates with most DMS providers, connects to over thirty product rating and enrollment providers, and offers both sales and compliance training plus a CRM connection for Powersports dealers. VisionMenu will connect to any bi-weekly payment provider that has an available web service.

Future Connections

Selecting a menu provider should include individual inquiries as to exactly which third parties they connect with or plan to connect with. Looking to the future, the strategy among menu system providers is to accommodate as many third party systems as possible so as not to limit the eligibility of a system to any dealership based on who they do business with.

The technology is evolving as this is written, and the universe of possible third parties that could conceivably connect through the menu is a moving target. The “menu as a portal” idea, aggregating many of the functions listed above on to one screen, offers a fascinating look at where we are headed with this technology.

All of our menu system providers are aggressively chasing this herd of cats and our entire industry will benefit from their efforts.

A brief look into the future is IAS’s plans to add functionality whereby video recordings are stored alongside tiered and final menus within their menu system for a true historical perspective. IAS’s newest tablet application will also integrate with their menu to provide interview results electronically to F&I managers before the customer enters the business office.

Ristken, cautious not to integrate for the sake of integration, carefully chooses their third party connections based on the value it provides to their clients. Ristken is always looking to integrate with third parties that provide a mutual benefit to the dealers they serve.

MaximTrak already integrates with over seventy-five companies today. The company envisions a future where as technology advances to allow for more functionality, the goal is to stay on the cutting edge and facilitate higher CSI scores and sales by aggregating all of the functions into one application.

MenuVantage believes providers with exclusive contracts with third party delivery systems, those that do not allow the dealer to choose which vendors they do business with, may be forced to accept a more open architecture. According to MenuVantage, the trend in the industry appears to be one where closed arrangements that limit the dealer’s choices will be replaced with an arrangement where the dealer retains control.

VisionMenu sees the menu as a hub between the DMS and other product providers, and plans to connect to anyone with a web service that helps eliminate dual data entry, saves time, and encourages the F&I manager to use a tool that has proven to make them more money.

Deal Flow and Integration: Pull and Push

From a practical standpoint, it has been established that the menu is fast and efficient compared to traditional methods. Custom menus can be generated and modified in seconds. The choke points are in populating the menu with deal data, rating contracts, re-populating DMS with finalized deal data, printing forms, and electronically remitting the sale of aftermarket products.

Streamlining deal flow begins with populating the menu with customer data, vehicle info, and deal structure. Menu systems integrate with DMS and/or lender portals to pull this information and populate the menu deal screen, eliminating duplicate data entry from the outset.

A connection with VIN decoders and product providers’ rating engines can then supply a list of eligible products. The F&I manager only has to select time and mileage bands based on the consumer’s driving habits to populate a custom menu. No fumbling with rate matrixes or forgetting surcharges are possible when only eligible products are presented to the F&I manager to select from.

Once the final deal structure and product selections are agreed upon, the next step is to update DMS and print forms. Here is where things get really hairy with integration. MaximTrak, Ristken, and MenuVantage offer bi-directional communication with DMS. “Pushing” finalized deal data back into DMS and updating a deal record, however, is not allowed by all DMS providers.

MaximTrak postulates that bi-directional functionality will become more integral to the overall process because aftermarket contracts will stem directly from the menu sale. Ristken has found that the majority of their dealers utilize DMS integration capabilities even though some F&I managers still choose a manual input process. Either way, Ristken’s menu retains full functionality. The majority of MenuVantage’s dealerships benefit from a bi-directional interface, customized with line-by-line detail.

IAS’s certified DMS integration is not bi-directional at this time, but the company has not seen this to be a complaint from actual users. Although the company believes that theoretically bi-directional integration makes sense, “in the trenches” it’s not a true concern.

VisionMenu pulls data from DMS. When the company first established DMS integration, it was believed integration needed to be bi-directional – pulling and pushing. They have found that a dealer has no problem manually updating a few products in DMS. According to VisionMenu, this is all a push accomplishes, since the F&I manager has to go to DMS to print forms anyway.

Most F&I managers are accustomed to manually updating DMS with finalized transaction data, even if offered the option of electronically updating the record in DMS. Why? Chalk it up to old habits dying hard when a finance manager is unlikely to wait more than a few seconds for the update process to complete.

Forms for sold products can be printed the old-fashioned way with impact printers and multi-part forms, or with e-contracting right from the menu. Which path is chosen here is determined primarily by the product provider and whether or not they connect with companies like PEN, F&I Express, F&I Admin or StoneEagle to facilitate e-solutions.

The expense of supplying multi-part forms and not having transaction data electronically will ultimately drive late-adopting product providers to join the e-contracting club. Every participant in the supply chain, from the provider to the consumer, will benefit from 100% adoption of e-rating, e-contracting, and e-remittance.

Menu systems are becoming the de-facto hub through which third parties connect in the F&I office.

Utilization

If you agree with the above statement, then menu utilization becomes an important factor in order to gain the efficiencies, cost savings, and increased profits menu systems are known for, particularly when access to third party systems is built-in to the menu process.

Utilization for any software application is dependent upon factors like ease-of-use and accountability. For menu systems, industry usage statistics are unclear as to the percentage of deals with a signed final menu. Nor is it clear if menu systems are being used properly.

For IAS, generating a nightly report compiling menu usage data and emailing it to the general managers and agents is a first step. Next, IAS’s staff reviews menu usage statistics for every store on a weekly basis. IAS then personally contacts every F&I manager whose usage has dropped off. Ascertaining the reason for the drop off has resulted in an improvement nearly every time.

Ristken evaluates each enterprise and their needs to develop a strategic utilization plan. As dealerships become more comfortable with technology, combining effective training, collaborative sales tools, and valid results has improved utilization rates.

MaximTrak’s research has shown that when a menu is used consistently, PVR will increase an average of $200 per vehicle and VSC penetration will rise an average of 14%. MaximTrak believes the best way to enforce menu adoption is through management buy-in. Once management sees the potential for increased profits, directives and pay incentives will help finance mangers follow suit.

MenuVantage has incorporated several processes to ensure menu utilization and continuously works with dealers and agents to maximize the experience.

VisionMenu focuses on ease-of-use, believing the F&I manager will take advantage of the profit opportunity it gives them. The agent is often paying for the software, so menu usage is mandated because the system adds income and is part of the agent’s value proposition.

It is interesting to note the different approaches the various menu providers take when it comes to utilization and accountability. One thing is certain, menu utilization will not magically happen on its own. In most cases, it will take hands-on involvement and constant monitoring to get the desired results.

It is clear that many of the innovations in the finance office are built around the powerful application the menu has become. Our industry is fortunate to have some very bright people willing to push the integration envelope, transforming a sales tool into a commerce hub.

If you missed Part 1 of P&A’s connectivity series, click here for “Connecting Providers, Administrators and Dealers: Administration Systems”

In a sales environment where the products have become commoditized, it is essential to establish a clear and concise “why do business with us” story. If having the lowest price is the only thing that matters to you and your customers, then don’t read any further. Our industry has seen the demise of many a low-cost provider. How quickly many forget the old adages, “You get what you pay for” and “If it’s too good to be true…it probably is.”

A VSC provider is really no different than a dealer who faces “low price” competitors from all points of the compass. Enlightened auto dealerships, faced with stiff same-brand competition from as little as a few miles away, are adopting custom branding strategies that literally begin at “Hello, welcome to Hometown Motors.”

This same concept applies to a provider. We spend an inordinate amount of our resources articulating to our sales force the value propositions of our VSC, but what about the value propositions of doing business with our company? What do we offer that distinguishes us compared to our competition? Is our sales force adequately trained to sell us as well as our products?

A provider must be able to quickly explain to an agent, a dealer, and ultimately the consumer why doing business with them justifies a decision to rep their products, sell their products, and buy their products now. Get this part right and price becomes less of an issue.

Since the majority of providers operate with an indirect sales force that by its very nature is “independent”, the general agent is the provider’s first target of opportunity. We want to attract the best, most talented, and hardest working agents possible.

Put price aside for a moment and ask yourself, “Why would an agent rep our products?” With how much facility is your business development staff able to articulate the answer to the above question to a prospective agent?

No one ever buys anything until the value exceeds the price.

We all too often equate the above philosophical statement with the buyer of our VSC contract and not with the people selling them. Don’t make this mistake. Take the time to brainstorm with your top creative people the truly compelling reasons why an agent should do business with your company. Realize that your “why do business with us” story is a process and not an event – it will change over time, and should be reviewed often.

A good place to start the unique branding process is to ask yourself, “What do we do that no one knows about?” For example, the average response time to get a live claims analyst on the phone for your company is only twenty-one seconds. This would be valuable info for the agent and the dealer to know so the service advisors are not standing idle waiting to process a claim. Is our sales force equipped with the facts and the reason why this is important? Chances are, your agents are talking to dealers that are frustrated with the level of service they are getting from their current providers.

Other questions to ask yourself:

• Are our agents aware of how many tens of millions of dollars in claims we pay out each year? The public perception of insurance companies is that they try not to pay claims. Touting a big number paid out in claims easily debunks that perception, and gives the impression that your company exists to pay claims.
• Have we adequately explained the difference between the factory warranty covering defects in material and workmanship and our VSC which covers wear and tear? Have we explained what this means to the dealer that sells the policy and the consumer who purchases it? The distinction is often not understood or even mentioned at the dealership level, at the point of sale, and should not be overlooked.
• Are our agents aware of how many millions of dollars are distributed to dealers who participate in our wealth creation programs? Is data readily available to provide prospects with empirical evidence supporting the efficacy of the program?
• How often are the details of participation programs reviewed with dealer clients in person? Are our agents adequately trained to discuss the nuances of a reinsurance quarterly or annual report with a dealer or investors?
• Are our agents experts on the different types of participation programs available to a dealer, able to explain the features and benefits of each, and recommend a program that has the best chance of meeting the dealer’s long-term goals?
• Are there technologies you incorporate which streamline the rating, contracting, remittance, and payment of claims? Have we adequately explained why this is important? How easy is it to do business with your company, and why?
• What level of training and support have we committed to for our agents? Does our support extend to providing personal growth courses, motivational programs, or business retreats? How accessible are senior staff for accompanying an agent for dealer meetings? Do we take the time, at least annually, to visit our key accounts, meet with the dealer and his managers, and analyze the health of the relationship?
• Are there programs in place to accommodate the inevitable claims disputes, and do we partner with the agent in their resolution?

The list above is in no way conclusive. The health of any indirect sales force will be proportional to how much thought and effort is put into fostering a culture of not just product knowledge, but knowledge about the unique attributes your company has to offer.

Let us assume for a moment that your company has invested the brainpower and resources to adopt an internal ongoing think tank to address the “why do business with us” story. Our agents have the value propositions on why to do business with us down pat. What do you suppose will happen the next time the inevitable discussion of price comes up?

The agent will be prepared with one more reason than he needs why it is worth paying a little more than the competition for all that we have to offer. We will have created a desire to partner with a company that has the best attributes, not just the lowest price. We will have equipped our sales force with the tools necessary to succeed in both conquest business and account maintenance.