Contributing Author: Brien Joyce, Vice President, Specialty Channels, EFG Companies
Ask yourself the following questions:
- How often are your indirect auto loans refinanced within the first 30/60/90 days?
- Do you consider your offering equal to, or more competitive than, the competition?
- What differentiation does your offering provide to cut through the clutter and drive auto loan growth and retention?
With a dense auto lending environment from captives to credit unions, dealerships have had their pick when it comes to choosing which loans to push. In fact, dealerships have reduced the number of lenders they work with. According to a recent study from Dealertrack Technologies, the average number of lender relationships has dropped to between 6.9 and 10 lenders. With that in mind, lenders have vied to provide consumers with low rates and dealers with high margins.
Meanwhile, in this post-recession economy, dealers are finding it more difficult to cultivate lasting consumer relationships. Consumers are more informed and are perfectly fine with switching brands, dealerships, vehicle types, and lenders based on how much value and service they feel they are receiving.
For this reason, it’s time for indirect lenders to consider shifting their focus from just what they provide at vehicle closing to enhancing customer service throughout the entire lifecycle of each loan. The fact is that if a consumer has a positive vehicle ownership experience, they will be much more likely to return to the selling dealership. In turn, if you demonstrate to dealerships how you are willing to help them achieve their goals, they will be much more likely to present your loans in the future.
One method of enhancing the vehicle ownership experience is to provide complimentary protection products as part of your loans. This gives you the opportunity to demonstrate your ability to identify with today’s consumer lifestyle and needs, and instill a sense of confidence that they are making a decision based upon value. It also gives you more control over product pricing while giving dealerships the opportunity to increase their margin through the sale of upgrades.
Complimentary products that have been successful include:
- Vehicle Return Protection
- A Limited Powertrain Warranty
- Tire & Wheel Protection
- Paintless Dent Protection
- Roadside Assistance
- Lost Key Fob Replacement
Additionally, the key to building a successful consumer relationship goes beyond APR or products to nurturing the consumer experience through continuous and value-driven communications.
When implemented correctly, consumers are engaged throughout the lifecycle of their auto loan, gaining greater loyalty with both your institution and the selling dealership. This also gives you the opportunity to build a deeper one-on-one relationship with each consumer, increasing the opportunity to position other products and services that are relevant to their needs.
In order to truly reap the full benefit of ongoing communication efforts, it’s important to:
- Align your marketing and lending teams
- Create a cohesive, constant contact strategy
- Provide content that mixes incentive emails with value-driven non-sales-related emails
- Determine the metrics that become key indicators of success (Ex. Conversion metrics to other services)
To fully understand ROI, compare loan volume and product penetration to previous quarterly or yearly results.
With almost 40 years in administering consumer protection products and working hand-in-hand with dealers across the U.S., EFG Companies knows how to structure your loans to be more attractive in and out of the F&I office with F&I products and custom-tailored communication plans. Contact us today to learn how.