‘Check Out’ the Competition to find your Competitive Edge?

When customers call into you banding rates about “I’ve got this APR” and “I’ve got that APR” and you run around after them trying to match the deal to get the business whilst cutting your own profitability, have you ever stopped to think “I wonder if this person is telling the truth?” or “Sometimes I wonder why I bother doing all this work for very little return”? Then, in some cases, after proposing the deal to every finance company you deal with, you manage to ‘scrape’ the person through who was supposedly ‘Squeaky Clean’ and been offered this wonderful rate? Frustrating isn’t it, however, when was the last time you paid a visit to your local bank or building society to find out what level of service they have to offer and what rates they actually quote you whilst sitting in front of them. Have you called the Alliance & Leicester or Tesco’s to obtain a quote or try to get finance, to see if their ‘Headline Rate’ is as attractive as they make out? My guess is that not many of you have done this for some while now, if ever. Nearly every advertisement you see has got this marvellous ‘Headline Rate’, however, the magic words “Subject to Criteria” always appear on these, my advice to you is don’t forget this as in some circumstances it can make a difference of 7 percentage points!

Visit Your Competition

Let me share a recent experience with you. I was carrying out a business manager’s course and one of the tasks set during our course, is to spend a couple of hours finding out exactly what the competition is really like. The delegates visited a number of local banks & building societies to see the level of service, how quickly questions were answered, and what quotations were given, the information required & how long it would all take. The results of which were staggering.

One Bank advertising 9.8% APR actually quoted the equivalent of 16.9.
When asked how long it would take to get an answer another said “within 48 hours”.
One building society would not consider you for their rate unless you had a mortgage with them.
Another bank virtually insisted you had to take the protection otherwise you wouldn’t be accepted.
Product knowledge in all, bar one bank, was poor.

This list is not exhaustive, however, it really is an ‘eye opener’ when you consider how many people call into your dealerships banding figures around without realising how much effort it could take to get the rate suggested in advertising or literature. Now it may be that the branches visited were particularly poor, however, it just goes to show how often you underestimate your own professionalism and hunger for your customers’ business.

Visit Your Competition

With the bank that actually came out quite good during the visits, the main thing the delegates realised was that they had to offer a faster, more professional service than this provider and set up a credit line quickly. They also realised the importance of getting in front of the customer during the first visit to the showroom to ensure this is achieved. Therefore, they had to ensure that their salespeople were qualifying correctly and involving them from first point of contact.

How do you feel?

To emphasise the point of setting up a credit line immediately, how do you or your salespeople feel when they are applying for Hire Purchase, a personal loan, or a mortgage? Think back. Do you start to wonder how easy will it be for me to get this? Do you start to analyse yourself and think “Well, I’ve only been in my new job for six months due to moving to gain promotion?” or “My last two credit card bills were paid late because I was on holiday, or working away from home.” All these points, and more, are going through your customers mind when they call into see a vehicle first time. They are not aware at this stage how much they will get for their trade-in vehicle, and therefore do not know how much to borrow. Ensure the customer is introduced immediately to the business manager and, even if you cannot get a firm commitment, set up a credit line. Then by the time (if not before) they get home you have called them and said, “Your finance has been agreed, which colour would you like?” How do you think that customer would feel? In nine out of ten cases, as long as the car was right, the customer would take your finance. You have just saved them the hassle of ‘phoning or visiting their bank & if the payments fit their budget, you have just earned another finance case. You tend to forget the level of service, which you can provide. My advice to you is “Don’t”.

A good friend of mine applied for a loan with a top direct lender recently, and they were virtually insisting he took the payment protection. After stating he really didn’t require this (all be it the fact he is self-employed and should really take it) the loan was turned down. He has a credit history that is second to none, and owns one property outright. He was accepted by another finance company automatically, without question. This was a real situation, and he would not approach the direct lender ever again. You cannot be more convincing with your customers than when you use a true story.

Get salespeople to visit

Check your competition by visiting, or calling, at least one institution per week. More importantly get your salespeople to visit as well. After all they are normally the ones who come to you stating; “Mr & Mrs Bloggs have been quoted X by their bank, you’ll need to do better than that to get their business”. Yet half the time they are not aware of the level of service offered by the branches. You are great (well some of you are) of keeping regular checks on your local dealer competition; however forget to look at the finance companies.

Loan Forms

You can organise a credit line very simply for every customer because of the low level of information required. Keep loan application forms from the banks, building societies and off the web sites to show how much more information they require. For example, credit card details with outstanding balances, whether you have pension arrangements, savings plans & their balances, store cards & the outstanding balance, other loans & Hire Purchase agreements & the balance outstanding. These are just to name a few. You don’t need all this information. Tell the customer this and prove, by showing them leaflets collected, that you know what you are talking about.


Competitive Edge

Your ‘Competitive Edge’ over the competition is that you can offer a quick and efficient service without the need to ask all of the information that the banks, building societies require. Use the information gathered and most of all:

Visit or make enquiries to your competition regularly.
Ensure your salespeople visit the competition as well as yourself.
Look at what is bad about the competition and how you can use this to your advantage.
Look at what is good about the competition and how you can improve your service to give you an advantage.
Remember how it feels when you go into buy goods and apply for a loan, and what you require. Your customers’ needs would probably be similar.
‘Headline Rates’ are to attract the initial ‘phone call, and in a lot of cases the customer doesn’t get the advertised rate.
Ensure you are introduced to the customer after the first point of contact and set up a credit line in all cases.

Sometimes you forget just how professional you are, and the level of service you offer. Pressure is on to achieve targets and there is more competition around in the market. However, sometimes you are all guilty of giving away rate just because the customer has told you what they are getting, without checking all the facts out. Evaluate your competition regularly and this will certainly gain you extra finance cases along with increased earnings in the long term.