Skip to main content

Auto|Motivated - How do you intend to lift finance share in your dealership?


How do you intend to lift finance share in your dealership?

After conversations with numerous dealer groups since the inception of commission changes on 1 November, this topic still remains somewhat contraversial, yet the market is unanimous that industry Finance share needs to increase to over 60%...fast!

Make no mistake, the 35-40% finance penetration industry standard ARE THE CAPTIVE CUSTOMERS. That is why it is the standard and achieved so universally across the industry. It is not because our sales teams and Finance Specialists are all equally adept at maximising the opportunities!

The only way to reach 60%+ is to start the reeducation process of our customer...starting from the second they start their research online. Here are 6 reasons why the sales floor is a critical stakeholder in this education process:

  1. Early referrals are a fallacy! 92% of finance customers already know their funding intentions by the time they speak to the finance specialist. We are currently influencing the 8% minority where we should be focussing on the 54% that have already pre-arranged their finance through their banks and brokers.
  2. New Rules, New Tools! Sales teams refer finance out of convenience rather than confidence. If we continue to detach sales from finance, your sales team will continue to qualify using the tools they've always used and Finance will continue to talk to the same customers, at the same time, they currently do.
  3. More qualified, more contracts! 85% of customers are more likely to buy from you if you provide tools throughout the decision journey. The industry preference continues to be to withhold information from the customer believing that this equals control. More than half of your finance customers are seeking alternative solutions - you don't have control! Furthermore, more qualified leads will yield more quantatative results.
  4. Rate is not the reason! Finance specialists for too long have avoided the rate question to "build value" over price. Banks and brokers, for the main, don't offer solutions or rates that are beyond the competitive landscape in our dealerships, yet beat us at our own game, despite us holding home ground advantage! We need to change the narrative on finance by enabling our customers. Our core function has officially shifted from a sales based model to a service/value based one.
  5. Credit Scores are the new norm! Every financier assesses risk based on credit scores today. Whether or not their rate profiling is influenced by it is irrelevant. Rate aside, the ultimate decision is based on the previous conduct of the customer. Moving forward, credit score will be almost the sole determining factor in assessing credit worthiness, especially as we edge closer to Comprehensive Credit Reporting (CCR). Education needs to start today with every customer interaction in a convenient and transparent way.
  6. How else? If you don't enable your customer and empower your sales floor, how else will you realise a finance share of >60%? For over 12 months we knew the market was changing and that finance commission would be impacted, yet widely as an industry, we've changed nothing and the finance share needle hasn't moved. Alternatively, we wait for our partners to innovate and provide us solutions that creates a market differentiator. If these solutions materialise, it will be at a further cost to control and income.

The Royal Commission continues to highlight intermediated markets that don't focus on customer outcomes. As an industry we can no longer afford to hide behind the regulatory interpretation of our partners, or wait for them to innovate, or more change will come our way. Automotive has always been an entrepreneurial industry but recently there seems a willingness to wait for change and then adapt. We need to shift our finance focus from reactive to proactive to remain relevant or we will be disrupted, led by competition and regulation.

Nothing changes IF nothing changes.

Comments

Post a Comment

Popular posts from this blog

Auto|Motivated - BDC - thing of the past or way of the future?

With the rise of online and mobile enquiries, dealer groups have invested in Business Development Centres (BDC) to centralise their enquiries, aiming to create efficiency and consistency as well as taking much of the leg work away from the sales team on the floor. There have been some successful examples on how a BDC increases appointments and, in turn, sales but there are a number of challenges in managing large volumes of leads, and team members, in a consistent and efficient manner. Some large dealer groups in the US have moved from a BDC to Direct Sales Model and are seeing uplifts in conversion, gross and customer satisfaction. Equally, by scaling down BDC resource as well as rationalising the sales floor, has seen an expense reduction, and in turn increased returns. From a customer experience perspective, the biggest disconnections in the BDC process are: The customer is inevitably transferred to a sales team, meaning they have to establish rapport and trust all over again. The p...
Post a Comment
Read more

Auto|Motivated - Change management or change maintenance: a culture of change

Change management or change maintenance: a culture of change Throughout my 25 years in the motor industry I have been heavily involved in managing change, whether that be system, process or culture, and I am constantly hit with the phrase change management. For the majority of my career this has rung true and been a key part of delivering solutions to my team and customers, but, recently I have started to challenge it. The digital age has well and truly arrived in automotive yet i challenge that we are more disconnected than ever. As managers we spend more time looking at our phones than we do speaking to our teams. We are adept at communicating our expectations around KPI's but how well do we communicate our expectations on our values, other than strategically placed flyers around the dealership. And, of those cleverly thought our vision acronyms, how often do we cite change as part of our core value? As an organisation, do you live your beliefs or print them? We seem to compartme...
Post a Comment
Read more