Finance Torque’s Peter Cottle has some retention
strategies for finance companies.
Go deeper with GlobalData
One of my constant frustrations in
this business is the inability of both finance companies and
introducing dealers to retain finance customers.
The matter of who ‘owns’ the
customer is always a lively topic for debate, although I suspect
any customer would tell you that no one does.
Franchise and dealer loyalty still
exists, but a compelling offer from elsewhere will often be the
deciding factor in where customers take their business. Finance
companies are generally poor at customer retention, mainly because
the original deals signed are tripartite arrangements.
But if they work with their dealer
clients in true partnership, mutual customer retention can be
attained. That said, at the time of selling the car, the dealership
has some fantastic information on the customer from the finance
agreement – amount financed, period of loan, APR, monthly payment
etc. This detail could and should be integral to future customer
contact.
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By GlobalDataBy not waiting until the end of the
loan, when the vast majority of customers will have already
settled, dealers can construct a highly personal proposition for
the customer to change the car after perhaps 20 to 28 months. There
is sophisticated software available to do this and some of the
captives are making good use of it.
However, there is no reason why the
independents cannot work effectively with their own dealer
partners. In fact, there is evidence of customer loyalty schemes
for mutual repeat business.
A finance provider presenting a
positive picture could spark some much needed activity in the
showroom, or at least raise the standard.
Point of sale finance remains a
very attractive proposition and the FLA has worked tirelessly to
promote its Specialist Automotive Finance initiative to provide
consumers with more confidence, and many dealers now see this as a
seal of approval that provides their own brand with extra
credibility.
So what other action can to be
taken? The motor finance market can prosper in these testing times
provided:
- We ensure car retailers have
finance as an integral part of their sales process – in the
showroom and on websites. - Customers are offered
competitive rates and terms with a finance product tailored to
their requirements. - Dealers embrace the latest
technology, including customer contact via smartphones and social
networks, to market the latest finance campaigns. - The existing finance
database is used to produce persuasive examples of how customers
can change their car straight away, with perhaps no cash input, and
keep the current monthly outlay close to their existing
commitment. - Sell the benefits of the
newer car – it will generally be more economical. - Car retailers and finance
companies work in partnership to maximise opportunities for their
mutual benefit.
Peter Cottle is managing
director of consultancy Finance Torque, and a former senior
director at Bank of Scotland Corporate, responsible for its retail
and wholesale motor finance business
