Is Dealership Customer Retention Your Priority?

With the auto loan market leveling out, and analysts predicting a more modest pace of growth in 2015, what are you doing to increase your market share?

Recently, both Experian and Equifax stated that a subprime bubble has not formed because of the lending community’s control over the pace of market expansion. However, neither entity recommends loosening credit standards, but rather maintaining control or even tightening restrictions as the year plays out. This places limits on traditional means for subprime lenders to compete. However, a more level market also means there is more opportunity to gain prime consumers while balancing risk.

In the same way that many prime lenders welcomed subprime consumers in the aftermath of the Great Recession, smart subprime lenders are looking to expand in the near-prime and prime spaces. In fact, Equifax found that over a three-year time period, consumers with deep subprime credit scores who took out a subprime auto loan were four times more likely than those without an auto loan to improve their score to a level above 640. In aggregate, subprime consumers with auto loans improved their credit score by a median of 52 points, which is a 62.5% improvement over the median score change of the group that did not take out a loan.

However, for dealers, keeping those customers is no small feat. Ask yourself the question: how am I helping my dealer partners in their customer retention efforts?

This starts from the very moment the dealer contacts the lender to initiate an auto loan. With consumers demanding a shorter car buying process, F&I mangers need swift loan approvals to keep the process moving. So ask yourself, how am I facilitating quick approvals?

• Communication: Do I have solid communication with the dealership? Do I contact the F&I managers to review loan qualifications and rating systems, and answer any of their questions?
• Availability: When F&I managers call, is the phone answered on the first ring, no matter the time of day or night?
• Approachable: Do F&I managers feel comfortable negotiating with my institution to secure a loan, possibly based on non-traditional data?

Cultivating strong relationships with dealers and working with F&I managers to secure the best loan to meet their and their customer’s needs provides significant downstream benefits. First, it may provide F&I managers greater opportunity to sell consumer protection products. In fact, some lenders are making this process even easier for F&I managers by adding complimentary products to their loans. Complimentary products should create an opportunity to upsell to more expansive protection products, driving dealer profitability and ultimately customer retention.

For example, to address customer retention, consumer protection products help dealerships demonstrate their commitment to their customers. This protection provides consumer confidence that when a mechanical breakdown occurs, they won’t be burdened with the decision of paying their auto loan or paying for a repair. Consumer protection products also help to boost dealership CSI and increase the likelihood for referrals, while at the same time reduce the risk of a lender’s loan portfolio.

Lastly, these dealer and consumer benefits help lenders cement their relationship with dealers. If a dealer group knows its F&I managers can rely on your lending institution for availability, communication, and approachability, and if your institution makes it easier for them to sell F&I products, it can be assumed that they will be more inclined to work with you when you’re ready to expand your market presence.

Dealership customer retention should be just as important to you as it is to the dealership. As a lender, you have the ability to significantly help dealerships increase their touch points with consumers by facilitating the sale of F&I products. Learn how to fortify your dealer relationships, and act as a facilitator of mutual success with EFG Companies.

With almost 40 years of experience in helping dealerships and lenders achieve new levels of profitability, EFG knows how to differentiate your institution by putting you on the same page with your dealers when it comes to increasing customer retention. Contact us today to find out how.