Customer service always wins



It’s been drilled into dealers’ heads that customer service, not price, can help differentiate between competitors. The same holds true for lender partners who work with new car dealerships.

J.D. Power’s 2015 Canadian Dealer Financing Satisfaction Study measures dealer satisfaction in 1,300 new car dealerships based on nearly 6,300 finance providers, including captive and non-captive.

For those unfamiliar with the study, the responses are compiled into an overall satisfaction Index Score Ranking out of a possible 1,000 points. Satisfaction is measured in four segments: prime retail credit, retail leasing, floor planning and non-prime retail credit.

This year’s results continue on last year’s trend. But there’s a lot F&I managers can learn from this study, especially since it has Canadian data.

The most satisfied dealers work with lenders who focused on providing a personalized service and a high level of support. That tended to result in more satisfied dealers (with a score of 943) than those who did not (who scored 744).

“Support” in the study includes helping dealers understand their lending options, how they can maximize profits, reduce expenses and retain customers.

Not at all surprising, dealers also crave speedy contract funding in the application and approval process, along with the underwriter personnel in place to facilitate credit approvals. Anything to help business managers speed up and help alleviate some of the paperwork — a huge pain point in the F&I process — and cut down on customer wait times.

Dealers also preferred having a central point of contact in underwriting, whether an individual or a team, than no dedicated support.

This helped boost satisfaction by about 81 points in the prime retail credit segment and 76 in the non-prime retail credit segment.

zara-chartIn fact, the study revealed nearly one-third of the dealers are willing to pay a roughly 0.70-basis-point premium for an “enhanced” service and financing experience.

That just goes to show that offering the lowest price isn’t enough to satisfy a customer and beat out the competition.
But lenders are already aware of this. This survey has been released for 17 years. So what differentiates lenders from the rest?
Mike Buckingham, senior director of the automotive finance practice at J.D. Power, acknowledged both captive and non-captive finance providers are doing well with their sales teams.

“When we talk to the lenders out there, everyone is focused on improving the dealer experience. Clearly they know it’s a very competitive marketplace out there,” said Buckingham.

But he added, “Where we see some of the lenders going to the next level is really building a business partnership with the dealer. Trying to help dealers maximize profits and retain customers — those are really marks of the higher performing lenders.”
For a second consecutive year, BMW Financial Services came out on top with a score of 936 points — the highest dealer satisfaction in the prime retail credit segment.

Runner-up Mercedes-Benz Financial Services was not far behind at 920 points and then Honda Financial Service firmed up third at 895.

Note all three are captives, with good systems, good processes and strong and long-standing relationships with dealers.

Years ago, post-recession, pricing was higher and there were more restrictions on underwriting, said Buckingham.

Today, the market is strong, the credit risk is generally low (even despite creeping debt levels) and the cost of funds is low. Today, it’s all about having that collaborative relationship between lenders and dealers.

That’s why captive finance arms like GM Financial are aiming for speedier service and happy customers. Earlier in May, Automotive News reported GM Financial is working with its dealer partners to take the reigns on some of the F&I process as part of its efforts to become a full-line captive finance provider.

To win the sale and satisfy or retain customers, F&I managers need to work with their sales team and help provide their expertise on how to close deals. That way, everyone wins.

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