April 2011, Auto Dealer Today - WebXclusive
The buy here pay here (BHPH) business can be the ultimate customer relationship management (CRM) program. Three CRM best practices for any business include identifying and targeting your best customers, generating quality leads, and planning and implementing marketing campaigns with clear goals and objectives. Let’s look at how these three CRM components can strengthen your BHPH business.
1. Identify and Target your Best Customers
Probably one of the most important practices for any business is to identify and target your best customers; this is especially true in the BHPH business. Doing business with credit-challenged customers who are generally not good money managers is a risky business in itself. Experiencing loss ratios of 20 to 30 percent can be an intimidating factor for anyone in the BHPH business. Add the fact that delinquency and charge-offs are facts of life in BHPH, and you can see why identifying your best customers is a critical component to success.
Very few BHPH loans perform without some form of payment difficulty. Since many BHPH customers live paycheck-to-paycheck, the slightest change in their income stream (such as loss of hours at their job) presents challenges to making their car payment. Successful BHPH dealers will do everything they can to work with a customer to keep them in the car and making car payments by providing some form of payment arrangement when the customer is unable to make a payment in full or on time. These BHPH dealers also make repossessing the vehicle the last option.
As a result of working with your customers, you are cultivating a customer relationship based on trust, flexibility, understanding and customer service. The objective of any BHPH loan is to make the customer successful in paying off the loan. The more you can help the customer along the “bumpy road” to paying off the loan, the better the customer relationship becomes. Additionally, the customer becomes more valuable to your business by demonstrating their ability to keep their promise and make good on any special payment arrangements made during the course of the loan.
2. Generate Quality Leads
Many BHPH dealers don’t advertise to any great extent in the traditional advertising channels such as print, radio or television. BHPH dealers who treat their customers with respect and demonstrate a willingness to work with them benefit greatly from repeat and referral business. Some dealers talk proudly about customers who have paid off six or seven vehicles with their store or financing vehicles for many of their customers’ friends and family. So an extension of identifying and targeting your best customers is to identify and target the friends and family of your best customers!
A repeat or referral customer is a valuable asset to any business. As a result, many BHPH dealers put a great deal of thought and effort into rewarding customers who pay off their loans or refer new customers to their business. Although there is no guarantee that a customer who is referred to your business will pay off their car loan any better than the regular customer, the person who provided the referral can sometimes deliver valuable assistance when trying to contact the referral customer should that customer become difficult to locate or assistance is needed to clear up a delinquent account. One of the most effective ways to grow your loan portfolio is organic growth, which is identifying and targeting your best customers and rewarding them for repeat and referral business.
3. Plan and Implement Marketing Campaigns with Clear Goals and Objectives
Today, technology plays a huge part in operating any successful business. Technology not only aids in identifying and targeting your best customers, but it also reduces the cost of reaching your customers and improves the efficiency and effectiveness of the delivery method.
Something as simple as a monthly newsletter or a “News and Views Bulletin” to your customer base can provide important information about your business. It can be used to announce new changes, products, or staff and solicit invaluable testimonials from current customers. This can be delivered by e-mail at little or no cost. Most dealer management software (DMS) programs have some form of customer data mining built into the program. In many cases, the challenge is figuring out how to implement the program.
In today’s business environment, if you don’t already have a strong presence on the Internet to advertise and promote your BHPH business and provide potential customers a way to contact you online, you run the risk of becoming extinct. Remember, when designing or evaluating a CRM program, a great deal of the success of the program revolves around the customer experience delivered at the store.
Vol. 8 Issue 2