Auto captives need customer focus to thrive

The captive finance arms of Ford and Lincoln once again took top rankings in the J.D. Power 2016 US consumer financing satisfaction survey, as the consultancy cautioned that falling sales are driving dealers and lenders to seek to build better long-term relationships with customers.

According to J. D Power, retail light-vehicle sales in the US are expected to reach 14 million units in 2016, a decrease of 1.5% from 2015. The consultancy argues that with increased competition for sales, dealers and lenders that perform well in the basics of financing—including helping the customer get financing quickly and at the best rate—can boost customer satisfaction and generate repeat business for both the dealer and the lender.

As an example, the simple task of establishing an automatic payment method with a lender can lead to increased customer satisfaction and business retention, and provide other services to ease the borrowing process.

“The small drop in sales is making for a very competitive auto lending market, which means dealers and lenders in many ways need to get back to the basics to satisfy customers,” said Jim Houston, senior director of auto finance at J.D. Power. “Lenders need to move beyond a transactional relationship and create a customer-centric culture that helps them build a relationship with their customers. The lenders—and dealers—that are able to do that are the ones most likely to excel.”

The J. D Powers study measures overall customer satisfaction in four factors: billing and payment process; onboarding process; phone contact; and website. The research is based on responses from more than 19,000 customers who financed a new- or used-car purchase or lease within the past four years.

Detailed findings

The results give Lincoln Automotive Financial Services the highest overall satisfaction score among financiers of luxury-brand vehicles with a score of 879. BMW Financial Services (866) ranks second; Audi Financial Services (864) ranks third.

Ford Credit ranks highest among lenders that specialize in mass-market vehicle brands with a score of 856. Bank of America (854) ranks second; Kia Motors Finance (851) ranks third.

The findings show that in the luxury brand segment, overall satisfaction is 49 points higher (on a 1,000-point scale) among customers whose dealer or finance manager explained account features, services, or benefits of their financing than among those whose dealer or finance manager did not (880 vs. 831, respectively).

A lender welcome package that answers basic loan servicing questions (such as how to make payments and how to sign up for automatic payments) can reduce the number of contacts the customer needs to make. Specifically, among luxury customers who say they “completely” understand all of the servicing information, problem incidence drops to 8%, compared with the overall luxury problem incidence of 10%.

When email customer service is available, satisfaction improves by 42 points among customers of luxury-brand vehicles and 61 points among customers of mass-market brand vehicles. When online bill pay is available, satisfaction improves by 53 points in the luxury segment and by 86 points in the mass market segment.

Satisfaction declines significantly when a customer has to contact their lender more than once to resolve a problem. Overall satisfaction among luxury brand customers resolving a problem with one call is 875 points but declines to 821 among those whose resolution requires two calls.

Highly satisfied luxury and mass market customers (those with overall satisfaction scores above 900) can have a significant effect on dealers and lenders, as they are nearly twice as likely to return to a particular dealership and are more than twice as likely to lease or purchase the same brand again, as those whose satisfaction scores range between 801 and 900.

“In the seemingly complicated environment of vehicle financing, it’s the sometimes-overlooked customer handling steps that can bring clarity to the customer and give dealers and lenders a unique competitive advantage,” Houston said. “Working together on the steps that clearly affect satisfaction levels can enable dealers and lenders to turn first-time customers into repeat customers.”