Balancing Automation with Human Contact

I read an interesting article in the New York Times about hotels that have gone hog wild into “guest conveniences.” While modernization is great, automation is inconvenient and annoying for some people due to a lack of familiarity or a genuine preference for human interaction. Imagine the frustration of hotel marketers basing their pitch on electronically controlled everything for their guests. Yet, many guests reject the conveniences and favor face-to-face human contact!

Is there a similar issue building between consumers and dealership finance companies? As an example – a prospective vehicle purchaser can conveniently search online through inventory, enter a credit application, and even receive a preliminary price and finance quote with hopefully an encouragement to come to the dealership and close the transaction! What if the customer is disappointed by the initial quote, decides to pass on your deal, and goes to another dealership? Your dealership may lose the opportunity to sell this customer the car of their dreams.

I understand the appeal of all the wizardry as I have witnessed customers spending hours in a dealership trying to close their deals so they can drive home in a newer, nicer, and prettier vehicle. This process can be a wearing experience for all participants – the customer, the salesperson, and the F&I person. In cases where the automated approach is not as foolproof and convenient, it’s essential to have a strong customer service presence and be as helpful as possible to close the transaction successfully. Completing the sale quickly will prevent customers from leaving your dealership with a half-hearted promise of “I’ll be back,” as it is a fact that a high percentage of “be backs” do not occur.

With the advent of electronically submitting a deal to potential finance providers and the incredible sophistication of electronic underwriting within a finance company’s whiz-bang Loan Origination System (LOS), finance responses are often available in minutes, if not seconds! The downside is that if the response is a turn-down, obtaining clarification for further review supported by facts, pleas, explanations, etc., can be difficult, time-consuming, or impossible, depending on the policy of the finance company. Finance companies with strict review policies report that purchasing a finance contract because of a “one-up review,” which usually occurs because the applicant failed one or more suitability tests, contributes disproportionally to delinquency and defaults. These restrictive second review policies may cause delays and create another difficulty for the F&I person as it is challenging to discuss details about the deal with a computer.

As always, a dealership that researches and fully understands a finance company’s programs can save time and frustration as the submitted applications will more likely be approved when the applications closely fit a finance company’s criteria. Unfortunately, the speed and convenience of online submission portals and the finance companies’ lack of concern regarding look-to-book ratios encourage dealers to simultaneously “shotgun” applications to several different lenders. While it is easy for the F&I person to take the “shotgun” approach to fund a deal, a dealership’s targeted approach to the finance company whose program fits the customer’s application is significantly more likely to be purchased by the finance company.

An important consideration is determining whether indirect lending is a relationship business. If your response is yes, you may be thinking about keeping your sales team engaged with consumers to support the human element in the business. We also need to consider the personal contact between dealerships and lenders. Often, telephone contact is used and can be ineffective as the parties are busy and repeatedly miss each other’s calls. The finance company may not have sufficient knowledge of the dealership relationship, the dealers’ portfolio performance, etc., to effectively communicate with the dealership. Simply calling with a “Hello, how are you today?” isn’t sufficient and needs to include helpful insight and information to determine how to best service the dealership’s customers.

Many finance companies rely heavily on social media posts and print advertising to stay connected with dealership leads and customers. While efficient, it can be a bit cold compared to personal contact. Personal contact is expensive. So, the question: Is personal contact effective and productive? Is the expense of generating more quality business for both parties resulting in a more satisfying transaction for dealerships and, therefore, worth the incremental cost of keeping the human interaction and finance reps on the road?

Following the delivery of a vehicle to a customer/borrower, complete with finance arrangements, is the contact by finance companies limited to emails, texts, and collection activities? Welcome calls from the finance company are essential to establish expectations on the timely remittance of payments, as is sharing reliable contact information. When servicing non-prime borrowers, a friendly and helpful suggestion is more likely to accompany acceptable payment performance than an impersonal and cold contact. In some cases, texts, emails, and voicemails can be used if a borrower is not answering the phone. But, if you begin the customer contact with a welcoming and helpful phone call containing relevant information, they will be more comfortable accepting future calls from the finance company.

Communicating with borrowers with a friendly and timely call as needed is essential to limit escalation to late or skipped payments. Remember that rarely is it to anyone’s benefit to repossess a vehicle for nonpayment. It’s a bit trite but remember that it is usually easier to obtain payment by treating borrowers with dignity and respect – a spoonful of honey helps the medicine go down. Being sincerely helpful to borrowers will encourage them to move your payment to a higher level in their payment priorities. Anything less may result in a humiliated borrower who feels diminished, disrespected, and may become uncooperative, more delinquent, and difficult. The goal is to reach positive solutions. A well-trained, knowledgeable collector with great people skills can aid the borrower in figuring out how to make the payment. Including these principles in a text or email is challenging and too easy for the borrower to ignore or delete. At the same time, a cordial phone call may be much more productive.