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March 24, 2011updated 12 Apr 2017 11:52am

Cooke’s view

As a result, the ground rules and comfort zones when it comes to car finance lending must change too

By Peter Cooke

Are customers important enough to be listened to?

Economic power is shifting because of the recent crisis, says Peter Cooke. As a result, the ground rules and comfort zones when it comes to car finance lending must change too. What may have worked in the past, may not work so well in the future.


Photo of Peter CookeTechnology is wonderful – the savings it can bring are huge.

“Press 1 if you want to buy a car – press 2 if you want to borrow the money to buy it.”

Work through the whole lexicon. “Press 9 and we’ll tell you why you are an unsuitable risk.”

Oh yes, don’t forget. “It’s our policy to answer all calls by the third ring – your custom is important to us.”

To customers it’s a total turnoff, implying they are not important enough for us to speak to them – a machine can do that. But we all seem to get unsolicited calls offering to help us with our financial needs. Private motor finance is a commodity and lots of organisations sell it.

Most claim that the selling experience is important in helping to make their particular commodity unique. But is insulting the customer an integral part of that process?


What does the customer really want?

Is it time the industry and its players stood back and asked: “What does the customer really want?”

And perhaps even listen to the customer without technology or smart research agencies intervening, and perhaps introduce a little reality into the equation.

The mythical retired car buyer may not wish to go online and follow a menu, or press a series of buttons to be told eventually: “It’s not our policy to lend to the likes of you.”

Rear view of a businessman holding an ear trumpetMarkets are changing and lending policies need to keep up. Little more than a year ago, a local authority worker would have been a good bet as a potential borrower – but now?

As the economy becomes more austere, every piece of new business may have to be worked for – and that may mean spending more time listening than ticking historic credit rating boxes.

The mythical ‘little old lady’ may be refused credit because she is a little old lady of a certain age. End of story. But ask a few more questions and she may tick every other box.

She may have cash in the bank, retain a good balance, receive a substantial pension, own her own house, have no credit card debts – but she wants to borrow to buy a car. Her motivation is her own concern, but it’s your wasted business opportunity, even if mechanistically she may be refused credit.

So, come out of the ‘credit policy silo’ and look at the changing real world. The bulk of capital and disposable income is now in the hands of the over-55s.


Group of ‘unacceptable risks’

Baby-boomers are starting to retire – a hedonistic, often well-off bunch – but many a mechanistic rating profile simply rules them out. And, in another decade’s time, this group of ‘unacceptable risks’ could be even more powerful economically.

If you don’t believe me, try working through some of these anti-customer systems and check the result yourself. Remember, it’s all too easy to hold oneself up as the reference model – the benchmark of virtue. Have you ever bought a used car and had to negotiate the finance before you received the keys? Or have you, within memory, always had a company car provided?

We talk about politicians being out of touch, but it can happen at a much more humble level – motor finance.

The message is simple. The economy is going through a massive change, probably a bigger one than most of us have encountered during our working lives. Economic power is shifting. As a result, the ground rules and the comfort zones must change too. What may have worked in the past, may not work so well in the future.

Remember mortgages? Now relabelled by many as toxic debt. Similarly, ‘student loans’ have metamorphosed into ‘student debt’ – but few have read the small print.

The nursing profession is another example of how the original task has almost been forgotten. Surely the role of nurses is to look after patients, to help get them return to health and back into the community.

Look how that has changed – hi-tech tubes and pumps, green screens, forms to fill in, boxes to tick, progress to report against measured priorities. The patient is almost an inconvenience.

It comes back to the same thing, whether it is a patient or a would-be borrower of motor finance. Listen to the clients, the patients. Remember, it is fulfilling their needs that pays your salary. Think about what they want, not what you want to sell them.

It is a simple but important message – the client really is important enough to be listened to – they may have other choices apart from you.

Which button do I push to be told I don’t fit the right profile for a loan for my next car?

Peter Cooke is professor of Automotive Management at the University of Buckingham


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