Leasing Professionals

Janis Christensen of Mercury Associates argues the case for best practice in US fleet leasing

Christensen janis

Last year Mercury Associates, Inc. celebrated its 10th year in business. The company has made tremendous strides over the past 10 years, growing from a three-person company to the largest dedicated fleet management consulting firm in North America, with a staff of 30.

Its clients include federal, state, and local government; the US and Canadian armed forces; public transit; electric and gas utilities; telecommunications; manufacturing; commercial motor carriers; and fleet leasing; among others.

Janis Christensen is director of Corporate Consulting Services at Mercury Associates.

She gave Asset Finance International some insights into some examples of best practice by US fleet lessors.

“We often work,” she explained, “with auto lessors and fleet management companies when we conduct best practices reviews of our client’s fleet operations, typically in efforts to implement changes and/or improvements by the supplier on behalf of our client.

“The 2008 financial meltdown pushed the automobile industry into its worst crisis since the industry was formed. The collapse of credit markets wreaked havoc on leasing companies throughout the world. The market turmoil was manifested by tighter credit, steep declines in residual values, supplier consolidation, decreased vehicle ordering resulting from corporate layoffs, and widespread lease extensions.

“However, fleet organizations continued to have demand for new vehicles and some lessors were better prepared—or created more innovative approaches—than others to fund leased asset replacements. These lessors were able to renegotiate lending rates and create a win-win outcome for their clients. Today, with funding at historic lows, the best-in-class fleet lessors are working with their clients to implement strategies relating to fixed versus floating interest rate decisions.”

Christensen added: “Another win-win situation that comes to mind is fleet suppliers who have client advisory boards where they actually listen to what their board members say. In my experience, some suppliers treat their client boards as ‘window dressing’ and fail to follow through with board members’ recommendations.

“One particular win-win case in point is a fleet lessor who responded to customers’ request for a data strategy that allowed them direct data access for delivery of high-performance data analytics. The supplier responded with a solution to deliver actionable information through a new reporting system that lowered costs for both the supplier and its clients.”

“Finally, she added, “in more general terms, auto lessors who invest the time and have the patience to understand clients’ individual needs—rather than treating them as commodities—will develop more win-win relationships. Sales and account representatives who are passionate about customer service will overcome their company’s weaknesses even if they do not have the best technology, best rates, newest apps, and so forth.”

We asked Christensen whether she could give us some insights into some examples of poor practice by US fleet lessors, where they have done something that has not served either them or their clients well?

She answered: “The worst case, from what many fleet professionals share with us, goes back to the financial crisis. For a variety of reasons, some lessors were unable to fund their clients’ orders and, to this day, this remains a point of contention. Certainly, privately held firms had the ability to remain more flexible with funding options than public corporations, but since this event, many fleet managers will continue to factor in the criticality of their lessor’s funding capabilities when selecting fleet management partners.”

General examples of poor practices, she explained, range from providing self-serving advice relating to selection of certain automobile manufacturers to recommending incorrect vehicle replacement timing advice. These tactics work with unsuspecting fleet managers, but ultimately resurface to hurt the supplier when the client becomes better educated about best practices.

We then asked what steps is she seeing good lessors taking to improve the service they offer to their clients. And are any adopting approaches now that you think are likely to fail?

“Good lessors have trained sales and customer representatives who invest time into developing good relationships with their clients. The most common complaint that we hear from our customers is dissatisfaction with their day-to-day customer service representative. This lack of satisfaction is one of the prevailing reasons a client will consider changing suppliers.

“Taking steps to keep up with rapidly changing technology is one specific area where fleet lessors can improve service for their clients. Improving dashboards and customer service portals are critical steps in order to remain competitive.

“Approaches that do not meet the needs of the new breed of fleet manager—the Gen-X and Gen-Y Millennial generations—are likely to fail. Lessors may fool a Baby Boomer with an app that is merely a link to a website, but these types of subterfuges will not fool the younger, tech-savvy fleet managers.”

If Janis Christensen could offer one piece of advice to the CEO of any fleet leasing business, what would that be?

She stressed: “Don’t treat clients like a commodity. Understand that each client is unique, even those within the same industry. Successful suppliers are passionate about customer service and go the extra mile, even when no immediate profit potential exists. Fleet is a relationship business and best-in-class suppliers live and breathe the customer.”  

The firm’s data centers in Houston and Seattle have hosted commercial off-the-shelf fleet management information systems for a diverse set a clients including Cox Enterprises; Danella, General Motors; Harris County, TX; State Farm; Tinker Air Force Base, and Willbros.

It also provides management information system implementation, maintenance facility master planning, management training, executive recruiting, and expert witness services.


Janis Christensen is director of Corporate Consulting Services at Mercury Associates. www.mercury-assoc.com