The Deal MakerBy Joanne Costin
Article Date: 07-01-2010
Copyright(C) 2010 Associated Equipment Distributors. All Rights Reserved.
At McCann Industries, dedicated F&I helps seal the deals by providing
customers with choices that fit their needs – and often hurried timetables.
As finance and insurance manager for McCann Industries, Mike Ruddy’s work begins when a salesperson asks him to close the deal. Ruddy’s job: To find a financing package that works for the customer and get the deal closed – quickly. Unlike many dealerships that relegate this assignment to a department with many other responsibilities, McCann has made Ruddy the dedicated resource for securing finance and insurance.
Ruddy reports to Sales Manager Dave Harris, who believes the unconventional reporting structure communicates to the sales team that Mike is not there to be a deal breaker or to throw road blocks into the process. Instead, he is deliberately woven into the fabric of the sales force.
“Mike is in the field riding with the sales guys; Mike will go sign contracts if a salesman is not available, so he is part of the sales team, which is really unique,” said Harris. “That is one of the things I push, to make sure Mike’s expertise is fully utilized.”
“I am working very closely with the sales people,” added Ruddy, “visiting customers, offering financial solutions to those customers or leasing options; providing physical damage insurance as well as extended warranty coverage.”
But to get the acceptance and trust of the sales force, who had for a long time viewed finance as “the sales prevention department,” there is no substitute for experience. “The only way it works is when the sales team lobs a deal into me; they know it is being handled,” explained Ruddy.
McCann Industries President and CEO Dennis Kruepke acknowledges that Ruddy supports the sales team, but has his eye on the bottom line.
“My thought was to turn it into a separate profit center for the business,” said Kruepke. Ruddy’s compensation plan includes both a salary and commission component.
Kruepke’s inspiration came from the auto industry, where he saw finance departments being used effectively. He then learned more from a fellow Case dealer who had success in setting up a finance and insurance program.
Credit is More Challenging
Upheaval in the banking industry and the recession has left more buyers looking for financing at the same time banks have tightened their credit policies.
“In this day and age, where cash is so precious, there are more people financing and looking at leasing options to keep their payments down,” said Ruddy.
“Some customers are not AAA rated, and Mike has to work rather hard to get some deals financed, where in the past it was relatively easily to get that done,” explained Kruepke. “Now a finance company might ask for several things and it is a matter of negotiating in the customer’s interest to get the finance company’s approval. Mike talks that language, where a normal salesman might not.”
Ruddy’s background includes more than 12 years with an Oakbrook,Ill.-based finance and leasing company, and five years with CIT, a commercial lender.
Ruddy’s expertise on the job means salespeople have more time to sell and spend less time chasing financing. The dealership has also found that a finance manager may have an edge over a salesperson when speaking with the customer about their financing arrangements, particularly when so much more financial information is now needed.
“The customer might feel more comfortable talking to a finance manager than the salesperson,” said Ruddy. “The sales person is able to keep his relationship intact and let the finance manager ask the tough questions.” This might include asking for more monies down, financial statements or other information.
“When Mike comes in, it’s not a sales guy who is just trying to sell them something, no matter what,” said Harris. “I think they feel with his expertise that they have a guy who cares about their financial future, who cares about the way they are structuring the deal.”
Knowledge of the potential finance sources is key. “That is where the expertise comes in on my end,” said Ruddy. “I know how to get that deal done. They can go back to their office and have their guy talk to 10 different banks, or they can give it to me.”
Ruddy presents customers with several financing options so they can choose the one that best meets their needs. “We will do a spot check review to determine the quality of the credit and determine where we need to go for financing. There are ways to structure it, to get a better rate,” said Ruddy. “Giving them more options, that is the key.”
“Sometimes our vendors will offer cash back in lieu of financing,” added Kruepke. “We can use that cash and take it to another finance company and use it for a down payment. It is a lot like putting together a jigsaw puzzle. It used to have six or seven pieces, now it has hundreds.”
And then there’s the time issue, which is often another critical piece.
“They win a bid on a job and need that piece of equipment next Monday,” said Harris. With a dedicated finance person, McCann is usually able to provide some kind of response within a day.
“You are trying to decrease those lag times,” said Ruddy, “because the longer a deal takes, the better chance you have to lose it.”
Of course, advantageous rates are key, and low interest financing from manufacturers are a major sales driver. “You’re able to get better deals with less digging for information, and it frees up the customer’s bank lines for other uses,” said Ruddy. “They need their working capital for materials and payroll. Zero percent financing? They are not going to get that at their bank.”
Accessing more lenders through Ruddy’s efforts has enabled the dealership to go beyond securing financing for Case machines through CNH Capital. This is important because McCann also sells many other types of non-Case equipment such as attachments, air compressors, concrete cutting and drilling equipment. “Today, cash is king,” said Ruddy. “You have to have financing and leasing options to keep customers’ payments down.”
McCann Industries is also equipped to handle municipal lease structures. A tax-exempt municipal lease allows state and local government agencies to purchase equipment in a lease/purchase or conditional sale, both of which result in ownership at lease end. Tax-exempt leases are typically far easier to execute than municipal bonds, as no bond referendum is required.
In the case of municipal leases, the equipment salesperson will typically deal with the shop supervisor, while Ruddy is likely to deal with a finance director. As government budgets have become cash-strapped, McCann has seen an increased demand for these types of tax-exempt financing.
“My job is to find the most economical cost factor so we can pass it along to the municipality to have a better chance of making that sale,” said Ruddy. “We are able to do very aggressive low rates.”
Selling the Total Package
Dealers have long been pushing after-sale products such as extended warranties, but according to Kruepke, sometimes salespeople are afraid to push these products for fear of sabotaging the sale. McCann effectively uses the skills and experience of the F&I and product support to sell extended warranties, insurance, and other add-ons such as GPS fleet management systems. Harris holds a quarterly conference call to go through all the different finance options with salespeople, but he doesn’t want salespeople to be quoting rates. “I want them to go to Mike with it.”
It’s about selling the total package,” said Kruepke.
In striving to be a convenient one-stop shop for their customers, McCann Industries has expanded into the area of physical damage insurance. According to Ruddy, the dealership’s insurance products are very competitive, and offer several advantages for customers. Insurance is available on all makes and models, and unlike traditional policies that are generally renewed annually, the insurance rate offered by McCann is guaranteed for the life the contract. In these uncertain economic times, that financial security is appealing. The cost of the insurance can easily be added to the finance contract for the machine.
Lost and stolen equipment is a problem for the construction industry, and McCann’s insurance minimizes risk for their customers. According to Ruddy, one of the key advantages of their insurance coverage is that the customer would be reimbursed for the total cost to replace or repair the machine. This contrasts with many insurance coverages that reimburse based on the depreciation values. In some cases, even after reimbursement a customer can be short thousands of dollars to replace or repair the machine.
Insured machines that are damaged and need repair contribute to the company’s overall parts and repair business. “I think if we have the insurance coverage, we have a better shot at getting that work, because it all ties back to the dealership and the products we offer,” said Ruddy. If customers have a claim, it also won’t affect their other insurance rates.
In the end, using a dedicated F&I department (or person) is based on the concept of letting people sell what they know best. “Let the sales guy handle the equipment part, let the finance guy handle the finance part,” said Ruddy. It’s an arrangement that is meeting the expectations of McCann’s management.
“Our most successful salespeople use the F&I guy more effectively,” said Kruepke. And more often than not, that’s where the deal is won.
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