Repairing Our Reputation

Improving the customer experience was top of mind at the industry’s annual get-together in January. I’m sure you’re sick of hearing about what customers want, but there might be a good reason to keep listening. Before I reveal what it is, let me share a couple of observations.

First, the industry seems to have reached a consensus: To make customers happy, we must reduce transaction times. Even finance sources believe they have a role to play, as you’ll read here.

Second, if you haven’t noticed, regulators have been busy of late. Hudson Cook’s Nikki Munro offers her take on why that’s so here. The good news is, at least from my conversations with finance executives, the current regulatory climate is not impacting origination strategies. I do believe the regulatory pressure is preventing auto finance sources from entering into an all-out battle for market share. At the very least, it has encouraged stability and a little discipline.

Now, the reason I think we should all be focused on the customer experience is because it’s the simplest way to keep complaint-driven regulators at bay.

Take the $9.35 million settlement Santander agreed to last month to resolve the Department of Justice (DOJ)’s claims that its repossession activities over a five-year period starting in January 2008 violated the Servicemembers Civil Relief Act (SCRA). What motivated the DOJ’s investigation into the 1,112 repossessions wasn’t curiosity. No, the agency kicked off its investigation because two servicemembers objected to how Santader repossessed their vehicles.

In fact, the DOJ didn’t open its investigation until January 31, 2013, about five months after Santander took steps to prevent improper repossessions. And the DOJ did so only after one of the cases was referred to the agency by the U.S. Army’s Legal Assistance Program and after a California federal court prevented a National Guardsman from pursuing a class action suit because of an arbitration clause included in the loan documents.

By the way, the reason the Legal Assistance Program made the referral was because Santander failed to respond to its complaint letter.

And that’s why finance sources are so focused on responding to and preventing consumer complaints. That’s the case for Wells Fargo’s dealer services team, which is headed up by Dawn Martin Harp. She said her team has been examining consumer complaints and adjusting business practices based on their findings.

The bank is even working on a consumer-education initiative to ensure buyers understand how an interest loan works. “I’m proud to see our [complaint] volume decreasing,” Harp told me at the National Automobile Dealers Association (NADA) Convention & Expo. “So the changes we’re making and our communication with customers are showing up.”

Even Jeff Brown, Ally Financial’s new CEO, said the finance source has become more active in promoting financial literacy. Ally has also added new courses to its Performance Development Center training hub, including a new Vehicle Selling Skills module that teaches salespeople how to assess customer needs.

What about your store? Does it have a process for examining and addressing consumer complaints? Hey, regulators have endorsed such activities.

See, I believe the auto finance industry has come to realize that a lot of this regulatory scrutiny could have been prevented through better consumer communication and by addressing their complaints. I also believe finance sources now realize that a lot of the issues we face are rooted in a general lack of consumer financial literacy.

So why not join them in correcting these issues? I mean, aren’t you tired of supposed regulators and consumer advocates painting dealership personnel with a broad stroke? So let’s change things. You can start by teaming up with your finance sources to promote some of these financial literacy programs. The F&I section of your website is the perfect spot to house that material.  

Last year I wrote about a company called ChannelNet, which builds microsites for finance sources that serve as self-service portals. Not only do they keep customers educated about their options, they drive loyalty as well. I’m not sure if it’s cost-effective for dealers to do the same, but maybe we can build off of that concept.

Hey, I’m all for shortening transaction times to improve the customer experience, but I also believe regulators are telling us through their recent actions that we’re not spending enough time communicating with and educating our customers. I just hope our industry keeps that in mind as we push for that one-hour transaction.