Insights|Cutting the Cost of Collections for Automotive Organizations

Cutting the Cost of Collections for Automotive Organizations

As the popularity of vehicle leasing grows, so could the risks of damage to automotive companies’ balance sheets through missed payments. So how can you be sure you collect outstanding debts without damaging your outstanding brand reputation or customer experience? Of the 17.2 million vehicles sold in the U.S. over the course of 2018, 30%

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automotive debt collections
by Sitel staff August 14, 2019 - 3 MIN READ

As the popularity of vehicle leasing grows, so could the risks of damage to automotive companies’ balance sheets through missed payments. So how can you be sure you collect outstanding debts without damaging your outstanding brand reputation or customer experience?

Of the 17.2 million vehicles sold in the U.S. over the course of 2018, 30% – 5 million – were leased rather than financed or bought outright. And as millennials, with their focus on access and experience rather than ownership, become the nation’s biggest generation in terms of spending power and wealth creation, this percentage is set to increase.

A new lease of life

Car dealerships have been offering leasing for decades as an alternative means for consumers to enjoy the benefits of car ownership. But now, a number of companies, from storied automotive brands inducing Audi, BMW, Volvo, Mercedes and Porsche, through to disruptive startups like Fair and Canvas; are moving the concept into new territory by launching vehicle subscription services – essentially taking leasing to new levels of flexibility and customer centricity.

For example, by paying a $3,000 monthly fee, Porsche Passport members have on-demand access to every type of car in the company’s current range. Users select the vehicle that best suits their needs at that moment in time and there are no mileage restrictions.

Meanwhile, at the other end of the scale, Fair customers can lease a nearly new car for as little as $210 a month plus an up-front one-off ‘start’ payment.

“Customers clearly want to redefine the relationship they have with the automobile and the fact that well-established automakers are following startups into this new business space should be seen as a seal of approval,” explains Matt Fry, VP Customer Experience Management at Sitel Group. “However, moving from outright ownership to leasing presents these companies with a new set of risks – risks that were traditionally the burden of banks and finance companies who would have provided a customer with a car loan.”

New services bring new risks

Unlike fast-growth disruptive startups, automotive brands that operate at the luxury end of the automotive market may feel that their customers are better insulated from economic uncertainty; this means that the risks associated with launching these types of services are mitigated.

However, even if unemployment rates are at their lowest levels in 50 years, data from Career Builder shows 78% of U.S. workers live paycheck to paycheck and nearly one-in-four employees are unable to set savings aside on a regular basis.

Furthermore, one of the things that the longest government shutdown in U.S. history highlighted is that any consumer – regardless of the size of their salary – can become a delinquent customer through no financial fault of their own.

A May 2019 study of 5,000 federal workers in Utah, conducted by Weber State University to understand the financial and psychological impacts of the political impasse, found that as a result of the December 22 through January 25 shutdown, 35% of respondents missed a rent or mortgage payment.

All of which presents a complex business challenge, particularly to smaller companies without secondary revenue streams who need to build their balance sheet as well as their customer base and are yet to establish a brand that’s strong enough to survive negative publicity.

The challenge of collections

“On the one hand, collecting outstanding debt requires resources, investment in technology and constant training and assessment to ensure protocol and regulatory compliance. In other words things that are out of scope in terms of core business for many startups in particular,” Fry points out. “Yet on the other hand, it also demands a level of understanding and delicacy in terms of customer experience that even traditional automotive companies are lacking due to their traditional focus on a transactional approach to doing business.”

Collections are a moment of truth; a customer interaction that if handled incorrectly – could generate negative publicity, damage brand perception and increase customer churn rates.

“With the right partner, companies can reduce the costs of their first-party collections operations and increase performance, without impacting customer experience,” says Fry. “At Sitel we have developed an ecosystem built around data analytics and security, digital innovation, compliance and crucially, customer understanding.”

The responsible use of data provides a wealth of insights. With a greater understanding of customer journeys and channel preferences, we’re able to help you identify the best way to reach out to each individual or to help your company develop the right self-service tools.

Through speech analytics we measure customer sentiment and identify the agent approaches that drive collection success and maintain customer satisfaction. These findings are then used to continually train agents and refine how they interact with customers.

“Interrogating data, in compliance with all regulations relating to every vertical and business sector from healthcare to banking and financial services, also helps identify potential at-risk customers and patterns and enable agents to take preemptive steps,” Fry adds.

To learn more about the challenges facing all businesses within the automotive industry from manufacturers and insurers to after-market service providers, and to understand how Sitel Group can help companies get closer to their customers, download our white paper: 

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