Everyone knows the cost of acquiring a new customer
is much higher than the cost of retaining an existing client. A
strategy to retain clients is an obvious one and one that I’m sure
virtually every business adopts these days in the tough economic
climate – unless of course you happen to be a leasing company.
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Not all leasing companies operate the same way, of course, but
last week I had two prospects phone on the same day, desperate for
cars, with exactly the same story. The two customers both had cars
with, as it turned out, the same leasing company, and both had
decided that it would be a good idea to keep their current
cars.
So, Mr Customer calls customer services and asks if it’s
possible to purchase his lease car, which is about to end its
contract hire agreement. The leasing company agrees to sell it to
him, and provides a figure of £8,500 which is a little higher than
trade but not a bad price for a three-year old Golf. We have a
happy customer.
That is, until he asked about finance for his old car. “Oh, we
don’t offer finance,” was the response. “They said what?” I
enquired in utter disbelief, and he repeated himself. Now bear in
mind that this company – which is in the top 10 largest leasing
companies – is big in consumer finance and provides HP and PCP
finance to loads of customers every day. He was staggered, and
asked if the leasing company rep was sure, as he didn’t actually
have eight and a half grand sitting in his bank account. She said
she was, and suggested that he consider a bank or personal loan, or
arrange to have the car collected.
Catalogue of dopiness
It’s bad enough not contacting the customer to replace his car.
It’s equally bad not automatically giving him the opportunity to
buy his old car, especially as, for most funders, driver purchase
gives the greatest resale return. But, amazingly, having got to the
point of wanting to buy the vehicle the customer could not arrange
finance through the company!
So the leasing company has lost the new car sale, it will lose
packets on the old car, which will now go to auction, and it’s lost
the opportunity to arrange finance on an £8,500 car with an
existing good paying client. Is it me or are they totally
whacko?
But why should I be concerned? I’ve potentially got two new
customers. Well, having seen Chrysler withdraw from leasing in the
US and GMAC and Ford Motor Credit wind down their leasing
operations, I feel it is only a matter of time before we see the
same happening over here. Frankly, I’d rather lose a few deals and
know that we still have a large selection of funders to choose from
than struggle to fund cars. So, funders, please, wake up, get left
and right hands talking and stop being so bloody DOPEY!
