Playing The Field - Is It Acceptable For A Motor Finance Lender To Follow Both A Dealer-Dedicated And Direct-To-Customer Strategy?

It is not only acceptable for a motor finance lender to follow both a dealer-dedicated and direct-to-customer strategy, it is necessary. The whole premise of whether it is suitable for a motor finance lender to follow both is completely wrong-footed.

The inevitable changes facing the car finance industry must be embraced; we can no longer dictate the agenda to the customer. We can no longer say “you will deal with us in this way, at a specific location, on our terms and when we want to.” We must facilitate a new way of supporting our customers that allows them to choose when and how they interact with us.

For many, that will mean dealing with a traditional dealer in a traditional way. However, for a growing percentage, that will mean hopping from one format to another depending on where they are in the process, their current mood or what their needs are at that moment. This means that a plurality of touchpoints will become the norm, and a customer will expect lenders to join these interactions together in a coherent way rather than repeating their interactions every time they shift from one mode to another; for example, from online to the showroom.

Consequently, there is a role for the finance company to carry out part of the online process directly with the consumer, without implying that the finance company is being disloyal to its dealer partners – or that there is any conflict of interest between the two. Of course, the two models should not be set up to compete; but that isn’t a requirement in any case. To the contrary I feel that, done well, the two are very complimentary and can result in a new source of car sales leads for the finance company’s dealer partners. We need to remember that, if a customer wishes to deal directly with a lender for their loan, it wouldn’t be putting their needs first if we told them they couldn’t do it. If dealers embarked more wholeheartedly on their own provision in this space, by ensuring they are offering what is expected by the customer - a clear, transparent and competitive service, it would be the best solution. This would mean the opportunity for a finance company to sell directly to a customer would happen less frequently.

As evidence of our belief in this, it is our plan to include a full end-to-end online retailing platform within our standard terms and in our dealers’ corporate identity. Therefore, delivering customers directly to dealers with their finance needs already resolved.

Defending the dealer-introduced model, to the exclusion of alternatives, is just a ploy to appear more attractive to prospective partners. A multi-channel future is inevitable and to drag your heels to create some perceived advantage in today’s market, or bury your head in the sand because the reality doesn’t fit your established model, will only force customers to find someone else that will let them choose what they want – therefore the prosperity you are experiencing will leave as they do

It is not only acceptable for a motor finance lender to follow both a dealer-dedicated and direct-to-customer strategy, it is necessary. The whole premise of whether it is suitable for a motor finance lender to follow both is completely wrong-footed.

The inevitable changes facing the car finance industry must be embraced; we can no longer dictate the agenda to the customer. We can no longer say “you will deal with us in this way, at a specific location, on our terms and when we want to.” We must facilitate a new way of supporting our customers that allows them to choose when and how they interact with us.

For many, that will mean dealing with a traditional dealer in a traditional way. However, for a growing percentage, that will mean hopping from one format to another depending on where they are in the process, their current mood or what their needs are at that moment. This means that a plurality of touchpoints will become the norm, and a customer will expect lenders to join these interactions together in a coherent way rather than repeating their interactions every time they shift from one mode to another; for example, from online to the showroom.

Consequently, there is a role for the finance company to carry out part of the online process directly with the consumer, without implying that the finance company is being disloyal to its dealer partners – or that there is any conflict of interest between the two. Of course, the two models should not be set up to compete; but that isn’t a requirement in any case. To the contrary I feel that, done well, the two are very complimentary and can result in a new source of car sales leads for the finance company’s dealer partners. We need to remember that, if a customer wishes to deal directly with a lender for their loan, it wouldn’t be putting their needs first if we told them they couldn’t do it. If dealers embarked more wholeheartedly on their own provision in this space, by ensuring they are offering what is expected by the customer - a clear, transparent and competitive service, it would be the best solution. This would mean the opportunity for a finance company to sell directly to a customer would happen less frequently.

As evidence of our belief in this, it is our plan to include a full end-to-end online retailing platform within our standard terms and in our dealers’ corporate identity. Therefore, delivering customers directly to dealers with their finance needs already resolved.

Defending the dealer-introduced model, to the exclusion of alternatives, is just a ploy to appear more attractive to prospective partners. A multi-channel future is inevitable and to drag your heels to create some perceived advantage in today’s market, or bury your head in the sand because the reality doesn’t fit your established model, will only force customers to find someone else that will let them choose what they want – therefore the prosperity you are experiencing will leave as they do.

This article first appeared in the September 2017 edition of Credit Strategy magazine.