The BHPH business provides plenty of opportunity to provide great customer service, in a wide range of ways.  Customer service may be as simple as the buying experience at your dealership.  Maybe your customers get a great experience after delivery through your service center, or vehicle warranty plan that helps them with vehicle repairs.  Many dealers claim their customer service is evident every day through the interaction between the staff and customers.  Some dealers take customer service to the next level by hosting events like customer appreciation day.  Whether your dealership provides free oil changes or discounted rates to your customers on service and repairs, the focus of all of these efforts are to provide great customer service at your dealership.

 

In a BHPH business we have an additional opportunity to deliver customer service through the method and approach of your collections department.  Payment arrangements are generally designed to help a customer through a tough time when they can’t make their car payment in full or on time.  The objective of a payment arrangement should be to help the customer through a tough time but also to help the customer get current with the payment obligation on their finance contract.  However, does customer service have to be a one sided relationship? Is the customer to only one that should benefit from the service you provide to them?  Is it possible to deliver customer service that provides in a win – win result for the customer andthe dealer?  I believe the answer is yes!

 

Many of the dealers I work with in my 20 Groups or my consulting and training services have heard me describe what I call the “20-60-20” rule.  The theory is that the majority of your collection efforts will be directed at 60 percent of your account base.  This group will frequently struggle with making their car payment in full and on time. This group of customer will need help getting through a tough time in order to get their account back to current payment status.  Working with these customers, keeping them in their vehicle, and making payments should be the number one priority for your collection team.  Repossessing the vehicle should be the last resort.  A payment arrangement in itself is a service that you provide to customers that should result in a win – win outcome.  Our NIADA training class teaches dealers and collection staff that payment arrangements are not automatic, and are not designed for every payment situation!  Best practices for collection staff teaches that any payment arrangement must be supported by proof of hardship, or what we call verification.

 

Helping a customer through a tough time and showing them the path to getting their account back to current status is a process that takes time, effort, discipline and structure.   Where this approach breaks down is when a dealer or collector creates an unrealistic or unreasonable payment arrangement for a customer, and essentially sets them up for failure.  The other side of that equation is when the customer does not honor the terms of the payment arrangement, and essentially breaks their “promise”.  Either one of these scenarios will result in a failed attempt to help the customer bring their account to current status and will likely result in a repossession.

 

Creating payment solutions for customers that will prevent a repossession should be a top priority for a BHPH dealer and the collection staff.  A good example of this plan is helping customers through the holiday season when there is tremendous competition for the small amount of income most of your customers have to work with.  Understanding what the end result you want to accomplish is the starting point for this collection strategy.  You know a high percentage of your customers will struggle to make their car payment during the holidays.  The best collection strategy might be to show these customers a plan to make it through the holiday season and get caught up when the holiday season is over.  Is this impossible to achieve?  Is this too much effort?  Is this not realistic?  You only need to consider the options you have to convince yourself that this can work.

Tax Refund Season

 

Many BHPH dealers take advantage of a tax refund program in the early part of the year to improve delinquency rates, pay down excessive delinquent balances, and even reinstate a repossession that may have happened recently.  What make this plan so effective?  It’s a win – win customer service approach where the customer and the dealer benefit from the outcome!  The tax refund experts estimate that a single parent with 2 to 3 children, earning $20,000 a year will have zero federal taxes withheld.  This would result in a tax refund of over $8,500.00.  If the same scenario was based on an income of $40,000 a year, the result would be a tax refund of over $5,000.00.  The dealers that have embraced this payment solution will see tax returns being processed by the end of February.  Recent changes from the PATH ACT resulted in delays in IRS funding of tax refunds for millions of taxpayers.  However, there is an option for a tax refund advance that permits dealers and customers to get money from the tax refund well ahead of the official tax refund dates.   In addition to improving collections and paying off side notes for expensive mechanical repair that you helped customers finance, this plan also permits a dealer to accelerate new loans (sales) well ahead of the official tax refund dates. Another win – win outcome for the dealer and customers.  Customer service can extend way beyond simply a polite interaction between customers and staff, or a free oil change program.  If you plan ahead, and determine the end result is to help your customers through the holiday season, this plan can help you clean up delinquency, pay off side notes reinstate recent repossessions, and accelerate new sales with strong down payments.  At the end of the day, dealers can deliver customer service that provides a win – win result for the customer andthe dealer.   For more information on consulting and training services to accelerate your business results, contact me at mark@niada.com

By:  Mark Dubois
NIADA
20 Groups Moderator and Consultant
mark@niada.com