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Jo Elms, brand director of Network, the UK car finance arm of fleet lessor LeasePlan, talks to Johnny Minter about quotation systems, vehicle renewals customer-facing websites, PCH, finding the right people to broker and the ‘spaghetti’ of systems.

Since inception in the early 1980s, a lot has changed at Network, including the recent launches of the Sunrise quotation system
and a new customer facing website.

Perhaps the biggest event occurred around the turn of the century when Network’s parent company, Dial Contracts, was acquired by LeasePlan, making Network a part of the UK arm of one of Europe’s largest fleet lessors, which is itself 50% owned by the Volkswagen Group.

Rather than rapidly changing the company, the transition has been a smooth one. As Jo Elms, brand director at Network, explains, the company "continued as a trading style of LeasePlan, post-acquisition, because it is unique in some respects."

Being a unique part of a bigger brand has its advantages, such as having the best of both worlds with Elms pointing out Network has a different front-end operational business, while some of the back-end operation is consistent, "where it’s appropriate for it to be so."

As an example of such synergy, Elms suggested "the way that we would collect a vehicle at the end of a contract is consistent across the board," but that differences between Network and LeasePlan occur when it comes to marketing activity, sales activity, and what the Network proposition offer is to customers.

Elms says Network is currently "enjoying the fruits of its labour" having only last year completed an office move from Wandsworth, in South West London, where the company had settled following an initial move from neighbouring Putney.

Now, in Leaseplan UK’s office in Slough, 20 miles west of the capital, operating with around 100 franchisees, and recently finishing a number of large product launches, Elms says Network is "looking forward to consolidating and building in the future".

Johnny Minter: How does the franchisee business work?

Jo Elms: We have about 100 franchisees who target, predominantly, SMEs, businesses up to about 100 units. They range from anything from single units up to what we would classify as small fleet. So we have some of our franchisees acting as small fleet managers. They are independent businesses in their own right, and we would support them with vehicle funding that they are then able to offer their customer base.

Minter: In 2008, you said longer-term rentals were starting to eclipse standard car hire, is this still the case?

Elms: That was a slight reflection of recession as much as anything. We had a lot of customers who had taken contracts for a couple of years; recession bites, times are really tough for lots of customers, so we had lots of customers extending their contracts rather than taking out a new vehicle.

That then started to push customers into slightly longer contracts than perhaps they would have taken historically. Or they were certainly hanging onto their vehicles for slightly longer.

At that point there were lots of questions about the market, this obviously wasn’t just Network. What we’ve then seen a big increase in volume in 2010, 2011, and 2012. There is a bit more consumer confidence in the marketplace. Lots of customers feel, while we’re
not out of recession, we’re potentially over the absolute worst of the storm. Therefore they feel more confident about signing up for a vehicle contract. Now we’re seeing less extensions and more new contracts.

Minter: What products have been popular for you since then?

Elms: The really big growth for us has been around PCH, which we introduced in the early part of 2009. We had it in pockets of the business, but it hadn’t been available in the Network business until January 2009, and that’s been a huge success story for us.

That’s a reflection of the sector our franchisees predominantly target and a reflection of changing tax positions.

Talking to franchisees, they will go to a customer with a business contract hire quote and a personal contract hire quote, and the customer will go to their accountant to ask which is better.

In our sector of the market, the small end of the SME sector, there is a lot of grey area whether it’s a business purchase or whether
it’s a personal purchase. That’s increasing because it depends on your personal tax position and the position of your business as to what’s the best choice for you to make. About a quarter go down the PCH route. A customer might do a business contract hire contract at one point, then they might do a PCH contract, then they go back into a business contract hire product; that tells a
story of the cycle of the customer’s business, its success, its tax position etc.

Minter: LeasePlan recorded 7.4% growth across Europe in 2012. How has this affected investment in Network and how have you guys done in comparison?

Elms: In 2010: 10% growth; in 2011 we had 14% growth, 2012 we had about 3% growth. Which sounds a bit odd, but it’s based on our average renewal cycle, so it was more the vehicles that were written in 2008, 2009 that were then coming up for renewal.

While we still grew, we didn’t grow as much as we had in the previous couple of years because there is not the same amount of vehicles to renew.

We’ve punched above our weight, for want of a better phrase. Network is the largest of the four LeasePlan UK brands.

We make a significant amount of LeasePlan UK’s profit. From a global perspective, because the UK has a much more evolved and mature SME sales organisation, there is a LeasePlan global project to look at developing small fleet in multiple markets around the
world.

Obviously, the UK is at the forefront of that, as we’ve been at it for a long time, and there is quite a lot of learning that our colleagues
in other markets can take from that.

Minter: Why did you replace your front-endquotation system?

Elms: We had quite an old, not particularly user-friendly quotation system. March last year, we replaced it with Sunrise. That was
a multimillion pound investment.

Our franchisee’s tell us what we’ve got is significantly better than anything our competitors are running with. It’s been designed to almost mirror internet shopping: You can choose certain vehicles; you can play around with terms and mileages, and then add your vehicles into a shopping basket.

From that, you can compare against special offers, where we’ve maybe made a commitment to buy some stock, and you can play around with your shopping basket and, from that, send the end quote through to customers.

It’s been a massive investment, a two-and-a-half-year project. We moved from IDS data to CAP data. That sounds relatively straight forward, but we then had to integrate our quote system into our back office system, and change quite a lot of the interfaces and the functionality around that.

When you get into the spaghetti of the system, it becomes a lot more challenging.

It’s about making sure what you have is fit for purpose. It was a big piece of work just because there are multiple routes you can get to the price of vehicle – manufacturer discounts, dealer discounts – the system has to be able to cope with that.

We’ve got about 100 franchisees but they employ over 800 staff.

Once you’ve built your system, which is complex enough, you’ve got this really big deployment process to go through.

We did a lot of classroom training before we went live. We had a staggered roll-out over the space of a month and we did a lot of refresher training. It’s been a big success. It was hard work but, in the round, we have a system that is sector-leading that our franchisees love.

It’s given us lots more functionality, it makes things faster and it gives us lots more reporting.

Minter: Why did you launch a customerfacing website? How has that gone?

Elms: I am quite keen for us to do more PR and more pure advertising on behalf of our franchisees. Not advertising pricing, that’s
what the franchisee should be advertising, but brand building on behalf of our franchisee base.

Our proposition is quite different to our competitors, and our franchisees have a number of key USPs.

All of our franchisees are BVRLA members. They are therefore audited, in order to ensure they’re adhering to all the BVRLA standards.

We also complete an annual audit of all of our franchisees. The BVRLA audit only checks to a certain level, while we’re checking
for quite a lot of other stuff as well and we do quite a lot of sharing of best practise.

There are lots of controls and checks and balances. All franchisees’ staff will go through our annual industry development course which deals with products, services and, crucially, the regulatory environment.

In the four and a half years I’ve been doing this job, pretty much every year there has been some sort of change in terms of legislation, particularly around consumer finance. I’m ensuring my franchisee base, selling on behalf of Network, understand the law and the legal framework.

We also offer lots of online training around data protection, money laundering, etc. We put our franchisees through the training we as LeasePlan employees would go through.

From a customer perspective, if they’re talking to a Network franchisee, they’re talking to somebody who has proper training, works in a structured and controlled environment, is checked regularly and is adhering to the BVRLA’s code of conduct in terms of dealing with customers.

From the customer’s perspective, that gives one of our franchises, a Network franchisee, a strong USP and gives the customer
a level of confidence and reassurance.

It’s a great message to give a customer, to say a Network franchisee provides this level of reassurance.

The website is my call to action, to enable a customer to find out more about being a Network franchisee. It allows the customer find a franchisee, rather than me listing a hundred of them in an advert.

Minter: What’s next?

Elms: The next 12 months are not about any big, new systems change or product development.

Because we’ve had this phenomenal success in 2010 and 2011, we’ve got more vehicles due for renewal than we’ve ever had before.

Our big focus for this year is to continue with our franchisee base, with the fantastic job they do from a new business perspective, but to give them lots more tools to manage those renewal customers coming back.

It’s 10 times cheaper to hang on to an existing customer and do a good job and get them to keep coming back rather than to spend money generating a new customer.

Minter: Will you be looking to add more franchisees?

Elms: No, not particularly. Four, five years ago, we had two parts of our business competing in the same space.

We had the Network business and, at that point, business called Automotive Leasing Broker. I brought those two businesses together. That was summer 2008 and, from the combination of the two, we had about 227 franchisees.

We set out our direction, our proposition, that franchisees would be BVRLA members, audited and trained. We recognised it might
not work for everybody, so we had some people that moved at that point.

We’ve also got a minimum volume threshold, and we were upfront about that from the get-go. We had a number of franchisees that weren’t delivering in terms of our minimum volume expectations. We lost a number of franchisees in 2009.

While we’ve ended up with 100 franchisees, as opposed to 227, we’ve done more volume, we’ve made more money and they’ve made more money as a consequence.

We have become supersonically efficient because we have a franchisee base which has absolutely bought into what we are all about; they get our proposition, they get what we do for them. They have familiarity with our systems and our document and pay-out processes.

Our back-office function is unbelievably efficient, and they like that because it means we pay them quickly. Having fewer franchisees does not necessarily mean doing less business. There’s no point in signing up lots of new franchisees for the sake of it.

We headhunt, rather than recruit, if we find the right people. We have recruited some, who get what we’re all about, and they buy into the training, the structure and the process. Then it becomes very successful very quickly.