With the end of 2019, we’re saying farewell to a decade of big changes in just about every industry, including auto finance.
One big shift that businesses have made since the dawn of the 2010s is a heightened focus on customer experience.
Statistics leave little doubt that customer experience needs to be a focus for every industry, and auto finance is no exception. Negative customer experiences during the auto finance process contribute to lack of customer loyalty, elevated risk of default, even increased regulatory risk — as well as both short- and long-term ramifications to lender’s bottom line, according to research by PwC and AutoFi.
A new perspective: Preventative servicing
Customer experience isn’t always about what you do — it can also be about what you don’t do. And sometimes it’s not about what customers experience — it’s about what they don’t experience. Often, providing the best experience means anticipating customers’ needs and filling them preemptively, before they ever touch the customer.
I recently heard a term that perfectly describes this perspective — “preventative servicing.” Companies using this approach focus on being proactive rather than reactive. They actively search for hurdles along the sales journey and find ways to help customers avoid problems they’ll never even know about.
I have seen this firsthand in my own company. Adding proactive outbound insurance verification to our tracking and notification process — reaching out to insurance companies for policy information before ever communicating with the borrower, and using AI technology to automatically check the insurance status of new loans — has dramatically reduced the number of borrowers who receive notices. These borrowers have no idea we perform this service, yet it prevents a negative experience.
Anticipating problems minimizes losses
Another industry example is in collections. Instead of waiting for borrowers to become delinquent, collection departments can use technology to monitor early warning signs that consumers might be having financial trouble, such as paying 20 days late when previously they were paying on time. They might not ordinarily be flagged as “late” because they haven’t hit 30 days — but perhaps reaching out to the borrower to offer solutions could avert a default later on.
Can you think of other areas where preventative servicing could benefit the auto finance world? As the calendar flips to 2020, make it a goal to identify spots in the sales journey that have the potential for customer dissatisfaction. If you can head those problems off at the pass, you’ll get to spend the new decade with less stress and more satisfied customers — and likely a boost to your bottom line.
As VP of finance company markets for State National Companies, Mark Baltuska leverages 25 years of industry experience to work with finance company professionals to understand their portfolio risk challenges and help them find solutions. State National Companies, a division of Markel Corp., is the Customer Experience partner of Auto Finance Excellence (AutoFinanceExcellence.org), a sister service of Auto Finance News.