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PCPs 'radically changing the relationship between new car buyers and dealers'

By Professor Jim Saker

Over the past few months, we have been conducting some research into the relationship between sports fans and their respective teams. Much has been written on the subject referring to the passion and feeling that exists between the supporter and the club.

It was, however, slightly sad to listen to the England supporters chanting ‘I am England ‘till I die,’ as the team left the recent World Cup in plenty of time for the senior players to take their seats on the centre court at Wimbledon.  

Apart from the phraseology being a little odd – one can be English until one dies, but ‘being England’ is a problematic concept – I was left with the thought that by forming this relationship, supporters would be guaranteed unrealistic ambitions followed by resounding failure, all at a lot of expense. On top of this, it would only finish at death.  

This level of commitment is highly commendable, especially with the poor showing of the team, but it appears that wherever the team plays a hardy group will stay loyal, only to be finally disappointed.

The concept of customer loyalty and relationship, whether it be to the England team or a business, is important in the long-term success of any enterprise.

What is interesting is the fact that over the past two years the relationship between new car buyers and the dealerships has changed radically.

Looking at the rise in the PCP penetration rate would suggest that for the bulk of customers the relationship is now both restricted and contractual. The customer is tied to the franchise in a far greater way than any simple warranty arrangement.

I was talking to the head of one of the manufacturer retail groups and we started to discuss this change of relationship and how this was or could impact on staff behaviour with respect to customers.

From his own evidence, he reported that there was beginning to emerge a tendency for dealer staff to take a different approach to customers on PCP contracts compared with other retail customers.

The view was emerging that you didn’t have to offer as much customer service for PCP-holders, as they were forced to come back to you. It was far more important to concentrate on retail customers, who could easily walk away and trade in or purchase a different car.

We both agreed that this mentality was flawed on a number of levels.  

 

PCPs 'places an even stronger emphasis on delivering more customer care, not less'

One of the issues is that the PCP by its very nature gives a natural break point where a customer has to decide whether to stick with you or not.

If the level of customer service has been poor, this could obviously encourage any customer to make a clean break.  From the psychological perspective, if you feel trapped in a relationship or plan that is not delivering the type of service you expect then there is three years to build up both resentment and a desire to move.

However, if a positive relationship has been built, the risk of the customer walking away into a new unknown relationship will be lower and the customer will be motivated to stay and take out a further plan.

This, therefore, places an even stronger emphasis on delivering more customer care, not less.



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Comments

  • Barrie Reeves - 14/08/2014 12:55

    It's a pity that dealers and manufactures have lost the plot when it comes to PCP if they went back into the history of the PCP and it's original concept it was never intended as a payment programme or long term ,Eustace Wolfingtons vision was for short term trade cycles with the customer being in a position to drive away a new car every two years before the higher costs associated with long term occurred, for those interested check Eustace out on Google and read the HAC story. Maybe it's not to late to have those 2 year trade cycle customers and then when the next recession hits you could see the benefits of the returning short term customer.

  • Rob Chisholm, Applewood Vehicle Finance Ltd - 14/08/2014 13:40

    Why would there be a large number of customers all coming back at the same time with the same car and similar mileages on them? Because the offers that were made to them were 'pushed' at them by the manufacturer or dealers because that is what suited them more than the customer? Because the dealer staff are too focussed on selling down to a price rather than to the customers wants and needs? Because that what the manufacturers has fields full of at the time? If the customer is being listened to, and the dealer provides the vehicles that best suits their needs on a contract that matches their requirements in terms of contract type and length, maintenance, mileage, model, specification etc., then logic and experience tells me there will be a raft of different cars being brought back at the end of the contract. If not, then the problem has emanated from within the trade.

  • Baker - 14/08/2014 14:11

    Good lord i cannot believe the idiocy of his football comments. "I am England til I die" obviously means they will support England (football team) until they die, there is nothing wrong with that phraseology at all its nothing to do with being English until you die, you can't change your natural nationality. Supporting a football team is all about emotion and a lot of time (not all the time) about your roots and supporting your local team whether you've moved away or not. This will never happen in the motor trade because of technology, new looks and affordability. If you've been driving a bog standard brand for years and you win the lottery you're obviously going to trade up.

  • Bambam - 16/08/2014 11:41

    Every mainstream manufacturer finance house has PCP at the heart of their marketing strategy. There does however need to be much synergy with the manufacturer. The manufacturer must provide much greater emphasis on both dealer and finance house CRM strategies. Manufacturer bonuses should have parity between sales target attainment and customer retention. Manufacturer finance houses should have their CRM processes tendered annually particularly if they are manufacturer owned. Too many manufacturer finance houses are lazy and just feed off the parent without any form of strategy or displaying any innovation. Within the Vauxhall franchise I have absolutely no concept what the manufacturer finance house does in terms of CRM, innovation or strategy. Time for radical change and shake up.