Make your customers—and dealers—an offer they can’t refuse
Why preferred dealer programs are a win-win for everyone
Auto dealers must optimize their mass marketing dollars across multiple channels including TV, newspaper and radio. However, as a lender you have the opportunity to send dealers a gold mine of prequalified, interested vehicle prospects, often for a fraction of the cost of other marketing programs, by leveraging a preferred dealer program.
You can help get a big boost in your automotive lending portfolio, and your customers and preferred dealers get exactly what they want: qualified prospects ready to drive cars off the lot.
Step One: Identify your preferred dealers
To start a preferred dealer program, you should first identify your preferred dealers. It can be as few as one or two dealerships, or up to a reasonable capacity. They are, by definition, the dealers you prefer to work with based on your location and other variables. Here are a few things to consider:
Dealer Size matters
With bigger dealerships, one relationship can result in many more loans (versus spending your time working with many smaller dealerships).
Dealer audience matters
Look for dealers with a sizeable customer base within the credit spectrum you serve.
Step Two: Identify which dealers prefer you
Here’s how the power of Lost Sales Analysis (LSA) can help. You can review the deals you’ve lost, see how they’re performing with other lenders and get a detailed breakdown of your originated loans by dealer. In turn, you’ll clearly see how much business you get from a particular dealer, and who prefers you.
For example, you may be nurturing a relationship with a dealer by sending representative to visit on a regular basis. You think there is a solid relationship, and as a result, you should have roughly 15 percent of the overall loan originations within your preferred credit spectrum. Yet, LSA reveals you may barely have 5 percent.
From there, you dig deeper to find out more about the deals at the dealership, such as: 1) did you get to look at enough of them; and 2) after you approved, counter-offered, or denied, how did your underwriting decision compare to the offers that were ultimately booked?
Lost Sales Analysis provides the data you need to help determine your booked loan positions with your preferred dealerships. Moving forward, you can more strategically direct your time and resources.
Step Three: Leverage prescreen to pre-approve qualified prospects for a loan through your preferred dealer(s)
The idea is simple. Work with Equifax to create a list of prescreened prospects that qualify for a vehicle Ioan. Work with the dealer to send out a mailer or letter letting them know: 1) they’ve been pre-approved by you for a new loan; and 2) they should visit XYZ Preferred dealership during normal business hours, where dealers will be on hand to help them drive off in the car of their dreams.
It’s a powerful message to your customers. If you serve non-prime consumers, these programs can deliver a high return on investment (ROI), as many of these prospects might have worried about the embarrassment of being turned down for credit at a dealership.
It’s a great marketing tool for dealerships. Roughly $600 of every car sold at most dealerships is a marketing expense. Bottom line, significant amounts of money is spent on mass marketing for generic leads. If you can provide a steady stream of customers who are already credit qualified and may be in the market to buy a car—that has immense value to the dealership. In fact, dealers may often share in the mailing costs with you, which further optimizes your marketing ROI.
Also, Lost Sales Analysis can be used to continue to monitor the results from these programs. You get the data-driven market intelligence needed for a successful program to help efficiently compete for and win more business, while strengthening and effectively monitoring your dealer relationships.
Kick off the discussion
To create your own Preferred Dealer program, simply start the conversation. Once you’ve identified your preferred dealers through LSA, visit those dealerships to discuss the concept, covering details such as:
- The number of prospects you’ll be sending their way
- How they envision the look of the mailer (letter, postcard, etc.)
- Whether they want their logo included on the mailer
- Program costs
Equifax can also help you set up these programs. For more information on Lost Sales Analysis and Preferred Dealer programs, please contact your Equifax sales representative.