COSTA MESA, Calif., Nov. 17, 2016 /PRNewswire/ -- With the pace of new-vehicle retail sales slowing, dealers and lenders are focusing on building a relationship with their customers to increase satisfaction and business retention, according to the J.D. Power 2016 U.S. Consumer Financing Satisfaction Study,SM released today.
Retail light-vehicle sales in the United States are expected to reach 14.0 million units in 2016, down 1.5% from 2015.1 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.
"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."
Five Fundamentals to Improving Satisfaction The study identifies five aspects that can lead to an improved overall customer financing experience:
Understanding the Deal: In the luxury brand segment, overall satisfaction is 49 points higher 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, on a 1,000-point scale).
Reference Guide: A lender welcome package that answers basic loan servicing questions (e.g., how to make payments and how to sign up for auto-pay) can reduce the number of inbound contacts. 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%.
Accessible Self-Help Tools: When email customer service is available, satisfaction improves by 42 points among luxury brand customers and 61 points among mass market brand customers. When online bill pay is available, satisfaction improves by 53 points in the luxury segment and by 86 points in the mass market segment.
"One and Done": 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.
Satisfaction Equals Loyalty: Highly satisfied luxury and mass market customers (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 who are less satisfied (scores 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."
Study Rankings Lincoln Automotive Financial Services ranks highest among luxury brands, with a score of 879. BMW Financial Services (866) ranks second and Audi Financial Services (864) ranks third.
Ford Credit ranks highest among mass market brands, with a score of 856. Bank of America (854) ranks second and Kia Motors Finance (851) ranks third.
About the Study The 2016 U.S. Consumer Financing Satisfaction Study measures overall customer satisfaction in four factors (listed alphabetically): billing and payment process; onboarding process; phone contact; and website. Satisfaction is calculated on a 1,000-point scale. The study 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 and was fielded in July-August 2016.