April 2012, Auto Dealer Today - WebXclusive
The buy here pay here (BHPH) business provides an unusual opportunity to interact with customers in a way that many businesses do not. The fact that most BHPH customers are required to make their loan payments directly to your business means you may be interacting with your customers as frequently as every week. How you choose to manage the process and procedure for those interactions will play a large role in the success of your BHPH business.
Successful dealers understand that the BHPH business is the collection business, not the sales business. As a result, these dealers put a great deal of thought and effort into their interaction with customers during the collection process. The most fundamental collection activity in a BHPH business is taking a payment from a customer, and it’s also an area where the effectiveness of your customer relationship management (CRM) process can be the easiest to measure.
Creating a good customer experience is one of most important components in developing an effective CRM program. The question that successful BHPH dealers continually ask themselves is: What is it like to be a customer at my BHPH business? They also ask themselves: What is the attitude of my staff? How does my staff interact with our customers? How do we make our customers appreciate doing business here? How are we different than our competition? The answers to these questions are critical to the growth of your loan portfolio.
If making a loan payment at your BHPH store is like paying a utility bill at the bank, it’s likely there is little interaction with your customers, and the atmosphere is uninviting and sterile. If your staff treats customers like they are doing customers a favor, your customers do not feel appreciated and are not likely to become repeat customers. If the interaction with customers is confrontational instead of solution-driven, your customers are not likely to refer friends and family to your business.
The simple process of taking a loan payment creates a magnificent opportunity to interact with your customers and implement the key components of a successful CRM program. The frequency of when customers make loan payments will determine how often you interact with them. The attitude of the staff during the payment process will ultimately define the “customer experience” associated with your business.
BHPH customers are generally not good money managers and delinquency on loan payments is a fact of life in the BHPH business. An effective BHPH CRM strategy will clearly define the process for working with customers who do not make a payment in full and on time. A clearly-defined process for handling delinquency reduces misunderstandings and confrontations between staff and customers, and the procedure for handling delinquency should be consistent with every customer. Successful BHPH dealers will work with customers when a delinquent payment occurs. Once again, a clearly-defined process for extending a payment arrangement to help a customer bring an account current is critical to the effectiveness of your CRM. Working with customers when they can’t make a payment in full or on time can also serve to increase customer loyalty and make the customer feel appreciated. When customers feel they are treated with dignity and respect, the opportunity for repeat and referral business is greatly improved.
Many BHPH dealers fail to utilize the loan payment process as a valuable opportunity to update critical customer information such as current address, employment changes and contact phone numbers. Many BHPH customers change residence and employment with great frequency, so updating customer information during the loan payment process will ensure that your DMS reflects current information on customers, enabling you to better manage your customer base. They key to getting customers to provide accurate information is to have the customer verify their home address and employment information when making a payment, instead of asking the customer if he or she still lives or works at the address on file.
Interacting with customers during the loan payment process is also an excellent opportunity to build a relationship with your customers and learn more about what’s going on in their lives. Asking simple questions about what they plan to do for the holidays, how their kids are doing or how they’re enjoying their new job are great conversation starters that can also provide important insight about your customers.
Finally, one of the most overlooked CRM opportunities in BHPH is interacting with customers who have already paid off vehicles. These customers have demonstrated the ability to make payments, honor their loan agreements, and pay off their vehicles. As a result, many of these customers are prime candidates to grow your loan portfolio. Frequent interaction with these customers through a variety of marketing and promotion initiatives that invite them to do business with you again will help extend the reach of your CRM program and increase the opportunity to successfully grow your loan portfolio.
Why is developing an effective CRM program so vital to success in a BHPH business? Many successful BHPH dealers rely on repeat and referral business to fuel the growth of their portfolio with little or no expense for advertising.
Vol. 9, Issue 2