18 April 2018

Have you ever wondered why certain businesses, banks included, incentivise you to join them? This is because they see the ‘lifetime value’ in having you as a customer. I cannot say that I agree with the differential in rates between new and existing customers in certain market places, such as insurance: I should not have to ‘challenge’ the renewal to get the insurer’s market place offer. All that said lifetime value is key to all our businesses.

Let’s start with finance companies, and there are two aspects to consider here: the customer and the client. The better you know your customer the more capable you are of underwriting for new business going forward; the better you know your client the better placed you are to work together with both existing customers and on your forward facing customer offer and technical capabilities.

The successful finance company must seek to fully integrate with its clients, becoming an integral part of their operation and making all aspects of the customer journey seamless; customers should have easy access to copy documents and settlement figures, and ability to make changes such as payment date or additional payments to their account.

Now onto motor dealers and lifetime value. Without wanting to ‘teach my granny to suck eggs’, while the sale of the first vehicle is great, it is add on products, the go to provider for servicing and repairs as well as that vital repeat sale that drive continued profit. When a customer thinks anything car related the dealer should be at the front of their mind. The additional and repeat sales are a far more cost-effective model than the one hit wonder.

When 25 May brings the new General Data Protection Regulation into effect, I will perhaps again be able to answer the house phone without fear of it being in relation to a car accident I never had or to take part in some simple survey that is ultimately a marketing tool to get even more unwanted calls. GDPR will change our world; we must have clear customer consent to make contact.

Motor dealers will still seek to provide that very best level of service to customers, and make contact at appropriate times for appropriate reasons – according to our records your vehicle is a due a service, your MOT is due to expire or we are today able to offer you the opportunity to upgrade to a newer vehicle for the same monthly payment.

The landscape continues to evolve, finance constructs have moved to APR language with no customer fees and a percentage of charges becoming the most common method of commission payment; we also see a narrowing of the rate corridor. What this means for customers is a transparent journey with a commercial offer and fees to impact, all adding to an improved experience and placing customers well for a sensible change cycle.

What is next? Enhanced digital capabilities, an even slicker customer journey? What we all do need to keep a lens on is that we are operating in a compliant manner and maximising technology so as not to leave ourselves exposed to any fraud.

The future of motor sales and the finance offering is ours to shape. Open lines of communication and working together are the building blocks to success.

Author Alex Watt is regional sales director at Barclays Partner Finance, a commercial partner in Auto Retail Bulletin

Tags: Barclays, GDPR, Lifetime value