Perception Is Reality
Taking a customer-first approach to the buy-here, pay-here business can minimize your repossessions and encourage repeat and referral business.
April 2013, Auto Dealer Today - Feature
Mark Dubois is the director of BHPH 20 Groups at Performance Inc., a division of ADP Dealer Services. He offers more than 30 years of experience in the automotive industry.
There is an expression that says “perception is reality.” If this is true, what perception do customers have of the used-car dealers, used-car salespeople and buy- here, pay-here (BHPH) dealers? It’s very likely that customer perception of these people is generally not very good. Why is that?
The answer is that some used-car dealers and BHPH dealers have earned a reputation of taking advantage of customers by selling less-than-reliable vehicles, turning their backs on customers when they have mechanical problems, and repossessing their vehicles if they miss a payment. This is not to say that all BHPH dealers have earned that reputation, but one bad apple can spoil the entire basket.
So what can BHPH dealers do to strengthen their reputation with customers and the community? The answer may be more obvious than you realize. Much of the success in this area will come down to how you interact with each of those groups. The good news is the BHPH business provides a unique opportunity to interact with your current customers on a frequent basis.
CONSULTANT VS. COLLECTOR
Each time a customer makes a payment on his or her loan, you have an opportunity to interact and create an impression. I recommend investing some time training your collections staff on how to effectively deal with customers who can’t make a payment in full or on time.
A consultative approach based on finding a workable solution is my suggestion. Threatening customers with repossession is not an effective way to go. Both approaches will leave an impression on customers; however, only the latter will leave a good one.
The most successful BHPH dealers rely heavily on repeat and referral business to grow their loan portfolios. Repeats and referrals are earned by treating your customers with dignity and respect through the term of their loans. There will most certainly be times when customers can’t make a payment in full or on time and will require help from the dealer to bring their account current again. Working with your customers during these times by extending a payment arrangement will minimize repossessions and go a long way toward creating a positive experience with your customers and building a strong relationship with them.
To take the consultative approach, you must first be sure your collections staff is trained to be problem solvers. They must know how to effectively find a solution to a delinquent payment that is fair to the customer and agreeable to you. It’s not uncommon for collections staff to let emotions interfere with good judgment and take a delinquent payment personally. The result is usually a confrontational approach to resolving the delinquent payment, which usually results in a bad experience for the customer.
Remember, a repeat or referral customer is one of the highest compliments a customer can give to your business. As the owner of the business, you should constantly monitor how your staff interacts with customers, especially when the situation could become confrontational.
In addition to focusing on the customer experience, there are other ways to enhance the reputation of your BHPH operation in your community. Sponsoring a local sports team, hosting a community food drive or holding a customer appreciation day with an outdoor barbecue and activities are not only great ways to embrace your community, they will also go a long way toward enhancing the image and perception of your business.
So, it may take many good experiences to earn a customer’s repeat or referral business, but it can take only one bad experience to harm your reputation. Actively working to improve the customer experience at your business will pay dividends in the long run. The alternative is to do nothing and not care about your reputation in the community. In that case, perception may in fact be reality.