The COVID-19 pandemic has highlighted the need for auto lenders to take a different approach when it comes to supporting their dealer partners.
Establishing a successful customer relationship with dealers means providing the proper tools, helping them navigate the move to digital lending and offering a more personal approach. Lenders must ensure their products and programs are easy for dealers to understand, fit dealers’ individual markets, and address both dealer and consumer pain points.
In this webinar, part of a quarterly series presented by Auto Finance Excellence, Rich Black, indirect lending sales manager at the $1.2 billion Oregon Community Credit Union based in Eugene, Ore., shares best practices for how auto lenders can grow their business by supporting and empowering their dealer partners.
Auto Finance Summit, the premier industry event, returns October 27-29 in Las Vegas. The Summit continues to bring together the best and brightest in the industry year after year for unparalleled networking and professional education. To learn more about the 2021 event and register, visit www.AutoFinanceSummit.com.
Editor’s note: This transcript has been generated by software and is being presented as is. Some transcription errors may remain.
Hello, everyone and welcome to our third quarter webinar presented by auto finance excellence, a sister service auto finance, news and industry source for best practices and actionable advice for auto finance professionals. I’m Amanda Harris, Associate Editor for auto finance news. Thank you for joining us today. Auto Finance excellence through the generous support of a Inovatec provides members with an unparalleled opportunity to gain professional developmental, and networking resources in this competitive industry. We intend for auto finance excellence, not only to guide industry executives, but to inspire them to greater success. Joining me today is rich black indirect lending sales manager at Oregon Community Credit Union. Before he entered the world of lending rich spent more than 30 years in nearly every role imaginable in the automobile business. From detailer to dealer principal, he joined Oregon Community Credit Union in 2013, to revamp their indirect lending program, so it’ll be more competitive in their local markets. And eight short years later, it is the second largest credit union indirect lending program in the nation by loan volume. Rich also wrote a how to guide and titled How to build a world class indirect lending program. Everything you need to know to dominate your market. The covid 19 pandemic has highlighted the need for auto lenders to take a different approach when it comes to supporting their dealer partners. Establishing a successful customer relationship with dealers means providing the proper tools, helping them navigate the move to digital lending, and offering a personal approach. A rich has a unique perspective on supporting dealers as customers. And so I’m happy to turn this over to him. Thank you rich. Thanks, Amanda want to do just start this off byRich Black 02:03
giving a few words about how we perceive dealers as customers as a credit union, all of our customers are members. And so we treat them probably a little differently than then you would add a bank because we’re trying to create that closeness that you have as a kind of a family member. And as we’ve approached this, with our dealers and indirect lending over the years, we’ve found that that approach really lends itself well to the dealer because the dealer is really creating our member and creating our customer through the indirect lending platform. And so I’ll talk a little about that today. And how we have that has evolved in our program over the years, and how we continue to approach it from a from a customer relations basis, as we look at dealers as genuine stakeholders in our endeavor. Next program, or next slide, if you would, Amanda, a little about what I do with the organization, I develop program strategy. And the strategy is more market penetration, what types of dealers that we want to we want to engage with and how our products are going to reach the market and through what channels our products. So that market, I also am instrumental in product development. And from a product perspective, I look at the individual pieces of the program, the program being more than global, or the girl the global strategy that the global indirect, I guess force into that market. And the products or the pieces of those that we bring aside from just rates in terms of maybe dealer participation, we have launched a number of products over the years that are unique in the market. Good example. And this is not new, you unique, but it’s a good example of a product would be a first time buyer program that’s actually profitable and sustaining. And it’s actually pretty well embraced by our dealers. And we have a number of those that are a little outside of the box. Because we listen to the dealers and kind of meet the needs that where our dealers are. I’m also instrumental in the loan pricing for indirect products, doing a lot of analysis on the back end. And you know, what kind of yield that we need to be competitive in the market in the secondary market, of course, and what kind of pricing that we need to have in the primary market. And so I do that analysis, I bring those forward for a committee’s approval. And so in that aspect, instrumental in setting loan pricing. I also do dealer selection and compliance which are two unique roles. I think at my level in the organization, dealer selection, we do both franchised and independent dealers, which come with their own unique challenges. And which really relates to that compliance aspect. And so everyone struggles with compliance and, and the the frauds and the straw loans and the things that come up in that. And so we have taken that same stakeholder approach into the compliance side of things. And it’s been, it’s worked remarkably well, in that, I guess that vein, that that type of attack, that we have to prosecute those things when they arise and a lot of things that we do in the background, to make sure that they don’t arise. And, as all of us do, from time to time deep team development strategy in terms of how our team approaches the market, and how we educate our team to educate our dealer partners. Amanda want to Next slide, please. And so today, I want to talk a little about just about OCC you what it is, where it goes, where it’s headed, I guess, how we approach the dealer, as a customer, and not just as a vendor that perspective, how that applies to the customer experience if the dealer is the customer, common pain points that we find throughout all of indirect lending and maybe some uncommon ones, and some specific remedies that we’ve applied to those, how we measure program success, and the various ways that we do that. And then a little wrap up on how we kind of incorporate all those things together into our program. And then we’ll have a short period of question and answers. Next slide, please. So Oregon Community Credit Union is to state chartered credit union, our assets on balance sheet assets right now, very, of course, according to deposits between 2.6 and 2.8 billion. And our off balance sheet assets are measured in billions beyond that we we do keep servicing of everything that we either participate or sell. So a lot of off balance sheet assets as well. We have been for the last probably 18 months, and then sporadically before that the number one auto lender in Oregon against all I guess banks and other credit unions and even captives. And that’s been a challenge for us. But it’s been a fun challenge, we’ve had had an interesting path to get to that point, we, as a credit union, of course have to have a field of membership. And so as a state chartered credit union, we don’t have the the the ability to go into other states as a federally chartered Credit Union would, unless we charter in that state as well. And so we have recently I think, February 1, announced full Field of Membership in Washington. And Washington is a probably 30% larger market than Oregon. And in that six month period, we have become the number two auto lender in Washington. And number three, when leases are included in that. So we’re right in the top there. And of course, we’re aiming for that number one spot, probably within the next six months. And so organically, as field memberships evolve, right? You get people on the other side of the state line or the other county that are relatives or qualify for membership. So we have organic growth, moving into Idaho at a pretty rapid pace right now. And of course we’re bordered on on the south by Nevada and California. And so we are organically growing there. We don’t really have any specific targets to grow beyond those today, but that always a long term strategy that we look at us as where do we want to be next week. Next slide please. Our target right now obviously Pacific Northwest Oregon, Washington and a good portion of Idaho. We are indirect partners with franchise and independent dealers both in the auto and boat segments which are larger segments in the Pacific Northwest. A lot going on the RV segment. I think everybody has seen the impact of that recently people since COVID. Struggle want to get out not sure where they want to go but they just want to get out so RVs are also a big portion of our our focus and our portfolio. And of course power sports is is always not a big portion of it, but it is always a busy portion of it, where you’ve got motorcycles and, and a personal watercraft and snowmobiles, and all those sorts of things. So we we have focused most of our attention from the indirect perspective on those types of assets. We also do student loans, we’ve done student loans for years, not a big part of our portfolio, but it’s a needed part in our hometown of Eugene, which, of course, is where the Oregon Ducks hang out. So if you want to move on from that, Amanda, that’d be great. So let’s look at our perspective. A little differently, I want to I want you to take a look at a little different paradigm. So we look at our dealers as partners in success. And we achieve that. I guess just through that thought process, what can we do to help you? So so one of the reasons that that’s important to us is that the dealer creates members for us, right. And so the buyers, look at that lender as us the first impact that they have with us is through that dealer. Next slide, please. So we want them to be brand advocates for us, we want them to be well versed in what we have as a as an offering to members. But we also want them to be brand advocates and and love what they’re doing with us over others. And we we work very diligently to continue that bond through a variety of channels. If you want to move on Amanda, so we look at them somewhat like franchisees, right, you’ve got a McDonald’s, sign up front, you’re the brand advocate for McDonald’s, you aren’t a a as an independent, right? You, you want to be known as McDonald’s, you want to deliver the service that McDonald’s does. And that’s how we view our dealers, we want to create an environment where our dealers, look at our members, even new members that aren’t quite members yet has that same through that same lens, I guess, is we want them to to project our values and our services. In that very first introduction to we’re going to we’re going to talk about Oregon Community as a lender, because we’re going to move on Amanda things. So I think that first impression is critical. And so we do a number of things that I think are unique in the space, to create that first impression by educating the dealers about what we do not just a rate sheet, we don’t just throw a rate sheet down and say we’ll see you next month, we spend a lot of time in dealerships educating about the other things that we do as a result, we have a really high percentage of management and, and non management in dealers that are members and use our services. And that just continues to cement that that relationship in the dealership so that it can be then delivered I guess that way in a really affirmative positive manner to to the members that come in the customers this the dealer sees them and eventually the members. And I think the way that’s sustained and this is something I got from the car business is if you deliver on expectation is just expectation you go into a service department, and you get your oil change. People expect the oil to get changed, right the filter and the oil. What you don’t expect is to say, guys, we washed your car, we cleaned it, we found something else here we took care of it and you walk out with a big smile on your face. That’s elation, right? And that is how we approach dealers as customers. What can we do that that puts a smile on their face every time they think of us and which which elevates awareness rate of when when they have 20 other lenders they could go to who do I think of first? Well I want to think of OCC you because because because because and when you have somebody across the table that that is doing business with you Trent that that transaction that has nothing to do with worried with humidity. It’s the the top of mind that’s important that here’s the one I want to show you because I’m a member because the service that I get, I’m just kind of excited to share it. And that’s that’s, I think the paradigm that we we are there that that’s the paradigm that we strive for every day. So what drives customer experience? Well, I think there are three things. There’s, there’s your people, right, how they relate who they are in their communities. There’s the product, which is those pieces The the program that that or maybe differentiate you here and there, and maybe they’re filling a specific need. And then there’s the process. And if you’ve ever been on hold at virtually anywhere today, I’ll tell you other than Oregon Community Credit Union, you love the people, you love the product. And I was on hold for two hours to talk to somebody because because of something innocuous that if you just picked up the phone, I could have been off in 37 seconds. Instead, I’m still on hold, right. That’s where process comes in. And so all three of those things we focus on, I say, we were probably laser focused on all of those, between the three different I will say departments, but segmentations of our indirect department. The people we look, well, especially me when I hire somebody for the sales team, I don’t look at somebody that’s been in lending. And I do that purposefully. Because I think people that have been in lending are really isolated from the needs of, of the dealership, if you haven’t been there, if you haven’t sat in the chair, if you haven’t struggled at the end of the month to make ends meet and, and had to have those pieces fall in place. It’s really hard to be credible, right? You walk in, you throw a rate sheet down and you say, Here are my rates? What can I do for you? Will I don’t know you? What do I do? You find out what I do. And then you can tell me what you can do for me. So that credibility is critical. And so when we look at somebody that is our sales team, most of our sales team has 30 or 40 years years of in dealership experience. And then we look for out of dealership experience. What other experience do you have in the lending? Right? Of course, but just in customer service? You know, have you spent a lot of time in Nordstrom, who’s better at and of customer service than Nordstrom? Very few, right. And so that’s what we look for in our sales team. So those people are credible, they’re really well informed because they’ve been there, right, they understand what goes on in the dealership. And so the the training that we give them is that piece of why we do what we do, and how we can evolve that and stay within the confines of what we have to do as a lender and keep that viable. But it’s it’s that that extra 20% of understanding what lending is added to that 2530 years of dealer experience that makes somebody really, really important. You cannot get that I believe from just being in the lending side, your whole career, I think you have to be engaging, someone might have all of those traits, and just simply not be engaging, right? So someone who has been in, in the dealership world or in the sales world has either learned that, you know how to how to put the game face on and be engaging. Or the it comes naturally. Some people have that right. I’m not one of those that was a it’s a learned trait. For me. The tenacity that comes from the dealership is important, right? You you hear people say no all the time you learn to under to overcome those through understanding where that that note comes from, and trying to resolve it right. So that tenacity then relates very well to going into a new dealership, or if you’re getting pushback over something that that we do or don’t do well, or that somebody else does better than we do. Right? How do I stay engaged there? And then I think the ultimately what we do it, which is different I think the most is we empower these people to do what’s necessary to make the customer elated, right? If I need to do a simple rate change or something like that, you know, we don’t have to wait for the next word meaning for that to happen, you get you pick up the phone and say, Hey, in this market, this is what we’re facing. And typically within a couple of three days, if that’s a viable issue, it’s resolved. And that doesn’t really matter what it is if it has to do with it with a loan to value or if it has to do with a trade appraisal or things like that. You have to empower these people to to do what they know because they’ve come from positions of authority. And if you don’t really empower them to continue those positions of authority. You don’t get a lot of employee experience. check marks yourself right you’re you’re a little bit I guess, struggling with that if you don’t if you don’t start with the employee, man. So our product in our program is pretty much singularly focused right first of all, we want to make it easy because the the easier it is for someone to understand it, the easier it is for someone to apply it The easier it is for them to relate it to that member or that customer. And so we make it easy to apply, we are always looking for process improvement ways to make things work better, we’re quicker, we will have to make it easy to understand. And so we do a lot of interesting things like videos, I make short videos on specific products and and not only do we put them out to where you can read it, because you know, it’s in black and white. Sometimes it’s just easier to relate those things in a short video. So we’ll do a one or two minute video on how this product works and how we how we want to see it best engaged with the members where it works best for those members. And it also has to be easy to deliver against the competition, right? If If competition, a delivery is here, and ours is easier, that makes it easy. And then we also make it bespoke and I use that word in its current flavor, I guess, which is original, new, fresh, right? It’s it’s custom fitted. So we craft programs to fit individual markets, not just a blanket of, you know, here’s what it has to be for this market, because we listened to and markets are different. And we see them up here, I’m sure every, every venue across the United States, you have different pockets of markets, where where people, you know, they, they look at things differently, they perceive things differently. And so we have to craft those products within the global program that fit the specific territories, markets, and demographics, right, you have to make a malleable, you have to be able to be flexible on those things. Here’s all the LTV we would like to see. But we when we get a an offering that it’s like, you know, we’d be silly not to do this. Fine, right? Let’s make an exception on this. And let’s let’s, let’s move it along. But not only an exception basis, we have to make it malleable, broader in the broader scope where people bring things to us. And we have an open channel for dealers to bring things to us that that just aren’t working. And again, an example not a current example. But before pre COVID, let’s say you could go to the auction and buy 25 of these, the Hupmobile, right. And we got a great buy on, we want to market all 25 of these, what will you do to help me and so we take our program, we, we make it a little malleable, and we make a specific unique opportunity for the dealer to market those. And that’s that malleability that really it’s a it’s an it’s a really distinct element of our program that brings people, the dealers and us together, because they see us as a partner, as well as seeing them with a partner. And it also enhances the dealers value proposition. If a dealer can offer X, Y, and Z from us, then that he doesn’t or she doesn’t get anyplace else. It enhances their value proposition. Now they can, they can advertise, hey, we can go 120 days to first payment with Oregon Community Credit under certain circumstances, right? Or we can we can give low rates or we can do 96 months, or whatever it happens to be. If it’s if it’s unique to the market, it increased, it enhances that dealers value proposition in their market, which then in turn, helps us be better partners. And it’s it more cements that relationship between us and the dealer, as our customer and our partner. And then we do a lot of things and we just make an intentional, you know, the changes that we make. We we pull dealers right to you know, where are your pain points, and we have those conversations every day we record those conversations, we collect that data, and we start to see, you know, a developing pattern of where pain points are in, in the market or in in, in our program or in somebody else’s program. And one of the one of the most recent, I think most obvious that everybody listening to this will understand is what happened to us car values. They went nuts, right? They’re there. They’re completely out of the box. If you were a if you’re just looking at ltvs and and you’re concerned so much about losses, I just can’t get there from here. I don’t want to do that. But if you’re if you’re partnering with them, you’re gonna make a way for those things to work, right. Maybe it’s not 100% win for the dealer. Maybe it’s not 100% loss for the for the organization, but you’re going to find some common ground help deliver on that pain point. We have a ongoing program improvement mindset. And I think one of our dealers said it better Recently, as we were moving into the Washington market, he said to one of my sales team, he said, Every time we walk in here, you bring something new. That’s cool. What do you bring me today? and not something new, like a pen or a notepad, something new, like in a product? You know what new product? What product enhancement of you brought me today? And that’s that another element in the mindset of You’re my customer, how can I continually improve my delivery to you? How can I can improve your value proposition to your customers, which then become my members. And then we listen in to and we leverage feedback all the time, I get daily feedback from the sales team that’s out there. And, you know, some of it’s just normal See, right, we’re not happy because you decline this loan, that happens, sorry. But very often, you’ll hear a nugget of something that’s either changing in the market that maybe you should be aware of us car prices are sliding, for example, or we are, we’re entering an area where the used cars have been so sold out in a specific range of model years that we’re having to buy older ones. So can you help us by giving us those, those same terms on maybe a two year old or car. And so those are the things that that constant listening, and I think, going back to having those people in those chairs, they understand what what’s being said, and they understand how we take those things and, and bring them forward so that we can ultimately create a solution. So our process, and I touched on this a little bit, our process is one, I think, consistent, we have to have a consistency of underwriting, we have to have a consistency of funding times, right? We try to fund same day. And our our funding is measured annually in the billions. So you can imagine that the back office it takes to fund same day. We think those processes need to be beneficial, not only to us, they need to be beneficial to our processes, and our people. But but also how does that apply to the dealer, if it’s beneficial for me, but it impacts my relationship with the dealer, I’m going to go to a phone tree, right, I hate answering the phone. And by the way, we don’t have a phone tree. I hate answering the phone. So I’m going to go to a phone tree that doesn’t benefit anybody except the organization, it certainly doesn’t benefit the dealer, our customers. So for those of you that have fallen trees, I would encourage you to like them on fire and hire staff to talk to people because I can’t tell you the jump in an NPS that we see. Or we have seen since we went to that and we measure that daily, you know, what was our abandonment rate? What was our average time to answer? And those are huge metrics. And the dealers know that and they know that if they pick up the phone, they can call us. And they’re going to get a live body that can answer a question. The process has to be flexible. And I touched on that a little bit. It has to be flexible to meet individual needs at times, but also market needs, maybe territorial needs, it needs to be engaging. Because if if you throw a lot of really cool sounding things out there that nobody cares about or just don’t work, or they’re too difficult. What’s the point? Right, you didn’t get you didn’t engage that customer at the level they needed to be engaged, and he didn’t resolve the issue. And I say progressive, because they have to be forward thinking a little bit in what are we looking at over the next six months? What’s that market landscape look like? And what’s the dealer landscape look like? And what do I need to do? And I guess one of the best examples of the last 18 months I can give you is that when COVID hit our staff went into the market, they stayed in the marketplace, they talked to the dealers, they talked them through, you know what the issues were and anybody was in the market that time knows there were a lot of issues, right that we how do we contract them? How do we engage with them with the customer? And so that progressive aspect of that is what’s coming down the road? How can I help? And you have to have intake, right? You have to have you have to know that before you can act on it. And I think that’s one of the keys to having those relationships because people aren’t afraid to share I mean good or bad. They’re not afraid to share with us. So how do we measure cx and I think and C by CX, of course, I mean customer experience and how is it measured? Generally, we are I don’t know that we’re unique but but I only have our personal Because I don’t hear anybody else doing that. And I’m sure there are other people in the market doing that. But we we pulled dealers, not just in a conversation every day, very often we’ll go out and pull them on a specific issue, prospectively, what would you think? If? or How would you react? If. And so we’ve gathered that data. And when we assimilate that data and analyzing it, this is a go, this is not a go, this might be a go, if we fixed it, let’s go back and get some more data. And then we also, from the anecdotal side, from our daily feedback, get a lot of I get a market sense, right? What’s going on the market, if you hear the same thing, 400 miles away, you can say it’s probably a global market issue, at least in our market. If it’s a dealership specific issue, maybe it’s something we have to address differently. So all of those things come together every day to see what it is how can we be progressive in our market? How can we be consistent? How can we push forward and be the leader? tomorrow and the next day? And how do we honestly, build barriers to entry to keep that position to keep competitors out. And that’s one of the keys to it, I think, is dealer feedback, we also do a lot of analysis or through the eye, I’m sure you all have a big department. And that comes from objective data, of course. And so we compare the objective data to the subjective data or the anecdotal data. And then when those to marry, we’ve got we’ve got a winner, right, we’ve got something gold, if they don’t marry, then maybe we need to go out and do a little more research, when we measure them, typically in lift, but not only dollar lift and application lift, because one of the things we don’t have is a look to book don’t care, I want you to send me everything. Because when you send me everything, I start to see what the market looks like that your market does miss you as the dealer. And then we also look externally at market data from different sources, like auto finance, news, and others. And those really guide us I think, in the long term projections, or if we’re, if we feel like we’re kind of in a little segment of pocket, maybe we don’t want to stay isolated, we want to see what’s going on around us, you know what might be coming this way, because our market. Although we’re you know, the West Coast is the largest auto market, we’re a little two to three weeks behind what we read in the news just doesn’t hit here, typically when it’s hit on the east coast. And so we expect those things to coming. So we so we look at market data, you know, like net, net promoter scores, things like that, to, to see how we’re doing on a global scale, and how we compare to peers and to other credit unions banks, captives throughout the market. So the way that this is philosophical, by the way, how is customer experience increased? Well, I think the key, and I’ll stand on a really big soapbox to say this is just be available. If you threw everything else away, be available, be available on your phone be available on your computer, we take calls, gosh, eight, nine o’clock at night, right? If we don’t do bankers hours, we don’t expect to do that. But if you’re not at your daughter’s dance recital, or, you know, watching your son play baseball, or whatever it happens to be, and you’re just sitting around answering the phone, right. And if you’re not, then then call back. And that has made huge inroads in in relationship. Building is cash, we just love that we can call and you’re available. And and we also love that we can call it you don’t have a phone tree? Because you don’t have a phone tree. Right? You don’t have to answer the phone. You have to listen actively, right? What are they saying? Or am I am I hearing something in the background? That that is different than the complaint that I’m hearing? Or the or the the the affirmation that I’m hearing? Is there more there? And then you have to act? You know, you respond to that input? And you respond by acting to resolve the issue? What is that issue? What is a pain point? And you do that with creativity? And not specifically looking at maybe what they suggested, but how do we do that on a larger scale? How does that maybe apply to all dealers or most of my partners? How can I How can I creatively evolve that beyond just that? That one dealer or that one complaint? That’s done also through collaboration? You know, we will get a group of dealers and in take their temperature on what do you think about this and when we do that frequently, you know, what would you think if and they will get a lot of feedback at Some good, like good and some not so good. But you know you can do with with bad feedback you can, you can use that for the same purposes as you can good feedback or positive feedback in crafting your program. And then finally education. We actively educate our dealers to our product or program in general, because the better they know how to use it, the more top of mind will be because I don’t think they’re honestly and I’m not saying this. Because of where the chairs sit in, I don’t think there’s a program out there that is has the scope that ours does, and continues to evolve the scope that ours does, because we listen. And so having a program that’s got a very large scope, and a lot of moving parts, doesn’t typically fit into the new f&i or sales manager, right. They don’t they’ve they’re just looking for rate terms and dealer participation, well, when you have a whole lot of things on the outside of that sort of ancillary products, and they don’t know it, then they don’t know that there’s, there’s maybe a better way to do it. And or maybe there’s a different way to accomplish that. So that dealer education is an ongoing piece. And I think that dealer education, then increases that customer experience, because now I understand it better, I appreciate that. And that’s what our our videos do. That’s what our our staff does daily is we’ll sit we’ll have sales meetings and say, Look, there are six things that we offer that nobody else offers. And here they are, and hear how they work. And if you forget this, when I leave, here’s where you can go to find them, you can watch the videos, you can pull down the, the the guidelines, and if you if you can’t survive any of those, you know, my phone number call. So those all coming down, come down, I think, to building those personal relationships, to increase customer experience, and evolve the program to benefit the dealer. And of course, you have to stay within the confines of what what the lender can do. But I think we, we often think with it, you know, we’ve never done it that way. So we’re confined within this box, or maybe that’s just the way that upper management has decided is going to be evolving it for to the benefit of the of the dealer partner always increases customer experience, because they they feel like they’re part of the team. And that’s a that’s a huge distinction from the people, the the institutions that just bring you a rate sheet and say, Hey, I just lowered rates. And having sat in that chair for decades. My usual response to that is, so what does that mean to me? You know, did you change? ltvs? Did you change terms? Did you change credit criteria, lowering rates to me means zip, tell me what you got. Tell me, tell me about it. And if you don’t do that, if you don’t educate me on what it is, I’m going to shove it over here. And I’m going to go back to the thing that I know. We take a break for a second. Win a green tea myself. So I wanted to just identify some common pain points that we come across every day, and that we battle. And I think every lender sees the same challenge. And I know that dealers do and that’s the loan origination platforms, right? There’s there, there are three majors, but there are several other ones out there. And and depending on the lender that you’re after the loan origination platform can be troublesome because maybe you don’t have access or you don’t have easy access, or maybe it’s it’s double entry or something like that. So we have worked very diligently to make that painless, whether it’s a a an API that goes in and allows the single entry, so then push it over to our lls or whatever that happens to be. We focus on that because we know that’s a common pain point. And if it’s too difficult to get to you, nine times out of 10 the dealer just won’t, right it’s it’s just tough. I don’t want to go there or I have to double enter or I have to put things in differently. I don’t want to go down that road. And so we have a an ongoing program to fix those pain points, DMS and integration which is hand in hand with the iOS platform. Is this my DMS integrate with those platform. Can I eat contract and if so, how do you fund electronically Do you accept electronic contracts? What happens when I have different credit scores? I pull TransUnion but you pull Experian, and I’m thinking, I’ve got a tier one. And you’re telling me it’s a tier seven? How do you address that? decision time? Probably one of the biggest complaints, I guess, from dealers we get is, man, you take too long, you know, it’s five minutes, five minutes, let me tell you about back in the day when we used to have to. That’s gone, right? Nobody does that anymore. Five minutes is is is the time and we are constantly after approving that decision, turn time, rate sheet layouts, another big pain, pain point, you know, I can’t find it. And hence, I make mistakes. And then you call me and say, Hey, you made a mistake. The layout of it, the information that’s provided on it is critical. It’s got to be easy to read, it’s got to be easy for me to understand and apply to the person sitting across the desk for me, where your program highlights. If I don’t know, if you’ve got a really robust program with a large scope, I need to know that right? And where do I find them? And then just questions, how do I fix this? How do I look at this individual? What should I do when I have these two different credit scores from two different credit reporting agencies, for example. So here’s some some pain meds, some remedies for the pain points that we have encountered. The issue of LMS platforms, we’ve looked at being on more than one, we have decided not to do that for a variety of reasons. Because DMS integration, which is a it’s an API, it’s a tool that allows virtually any DMS system to integrate with any loan origination platform kind of takes that out of the equation. So that’s the track that we’ve taken for a number of reasons. But it allows the dealer to engage the lender that they want without having to do double entry or without having to switch platforms, right. ie contracting was a was a big challenge. A year ago, we had a lot of dealers, especially independents that didn’t have any idea how to eat contract, and those that didn’t suffered, as you know, and those that did have already had it. They just plop at least here just plowed right through they were really successful through early and late COVID. And so we engaged companies that did contracting and dealers that didn’t and tried to get those together, we offered our own resources to help. And then we tried to engage with them on that. And we’ve been essentially, I would say, essentially, we have been digital only for probably seven years. Everything’s done digitally. So where it wasn’t, wasn’t a jump for us at all. It was a challenge for some of the dealers and still be used paper and had to scan them and upload them and things like that. So so the remedy for different credit scores, I know this will this will make some of you that are in the underwriting world or credit service world cringe, but why not use them? All right, we’re not using the credit score to make a loan decision, right? We’re using the credit score to make a pricing decision. And if you have two bureaus that say, tier one, and one that says tier four, and the one that you’re pulling is the tier for benefit of the doubt, right? Somebody is somebody seeing something that you are not seeing. And so we allow, within certain limitations, the use of all credit scores, within certain limitations that ours have to be auto enhanced, and they have to be 505 or newer. So some some small offenses, but aside from that, I don’t care if it’s TransUnion. Or if it’s Experian or Equifax, you can use that for pricing, not for loan approvals, we’re going to look at it we’re going to say this available loan, you can, you can use different pricing and different terms based on that funding. I think your ideal funding time is 30 minutes or less. That may seem extraordinary. It’s actually done. That is not our norm. I wouldn’t I certainly wouldn’t say that, but we’ve done it. And we can do that. Typically, the the loan isn’t uploaded in enough time for us to do it, but we’re typically seeing day finding so the ability to get to 30 minutes I think is a really good target for for any lender. And as the market continues to get more and more instant, it become You know, maybe it’s 15, maybe it’s 10. But that’s the answer to that pain point decision time. Again, one of the most critical things that dealers look at, if you’ve got someone that lives 250 miles away sitting in your dealership, and credits a little questionable, you don’t want them to take the car home, if you spot deliver 250 miles away until you have a decision. So waiting hours or days on a decision is just not tenable for a typical dealer. And so decision times, you know, ideally a minute or less, and that of course, those are those are automated decisions. But the more that you can do that, the better. You’re loved by those dealers. And I think the better service you provide to those dealers as your partners, and that then is that sense of appreciation, I think, is one one more little nugget, when they talk to that customer about that first impression. We love these people, because I’ve got a list of reasons. And one of them is that they give me a really quick turnaround time on decisions. The rate sheet layout, it’s got to be user friendly, it’s got to be understand well, but it has to be a little prescriptive, right, here’s where you go for this. And I see a lot of them because we we gather them all the time. That just, there’s there’s either too little or too much information, they’re hard to read, they’re hard to understand. And I think that is often forgotten. Part of the relationship is, you know, I’ve got all the information here, this is it, go figure it out. It’s tough, right? If you’re new to the, to the lender, or if you’re new to the position, you need to be able to look at it and get get the key points of it really quickly. And then it needs to give you a direction to go if if you don’t have the answer, who do I call? Or who? Where do I find it if it’s posted on your website or within your lls program highlights easy access to those right? Here’s my program highlights, we will do you know 96 months under these parameters and or we’ll do 120 days first payment under these parameters. And so they’re easy to see the highlights, right. And then for follow up questions be available, we have a dedicated team of resolution specialists, that their entire job is just to answer questions for dealers. And they’re very experienced most of them also with automotive background. So they understand that relationship. And so when someone calls in and has a specific question, they get a really quick specific answer, or they get guidance on how to how to remedy that situation. So we measure program success in a variety of ways. One is price, less density. And of course, concentration levels. price elasticity became an issue several years ago, because we had we had gotten a lot a lot of positive feedback from dealers. So you know, we’re we love where you’re going. We love what you do. And so we started looking at elasticity, as you know, can we command a premium in the marketplace? Do I have to be the lowest price? You know, the lowest rates out there to get this business? And we found no, you know, ask Nordstrom, you don’t have to be I keep using that. But you understand that right? Nordstrom is not the lowest price out there, you can buy the same product someplace else, for probably a lot less money, but you will not get the service that you get, and people will pay for that service. And that’s what price elasticity is right? We will get that. That long, even though we might be 25 or 50 basis points higher than our next competitor. I think we see a lot more demand for the product and our program than we would otherwise because people now understand that we have this continual evolvement of that. So it’s not like you know, well we really like what you did. It’s like what can you do? How can you enhance this and they understand that so that’s another little piece of that bonding mechanism that our our dealers, if they don’t know that the minute we walk in there, they’ll know it within six months that you can come to us tell us of the pain point and if it’s within our power to fix it, we will probably fix it. And dealer to dealer referrals, I would I don’t have a an empirical number to put on this. But I can tell you that as we moved into Washington earlier this year. I We’d guess that 70% of the dealers, the new dealers that we turned on, were referrals from other dealers. Where do you get that? I don’t know. That was the to me, that was very heartening as to what we did. And the people that we put in those positions and, and how they related to the market is that I would get calls almost daily. In fact, up until recently, I was probably activating five to seven dealers a week simply from referrals, my salespeople didn’t even know it, I would get emails, and I will do that I was talking to so and so and they said, to send you an email. And so that is, is a good measurement of success, I believe, as the program is it has really exploded, but it was only because of our delivery to to other dealers. And they also get customer to dealer demand, right? Our members, as we call them in credit unions are our customers, if you if you they get a good experience from dealer a, and dealer a is that kind of that brand advocate, they’re going to go home until friends neighbors about the organization as well. And they will then ask as they go into dealerships, and we’ve had a good deal of that as well. And that’s one measurement of program success. That’s an anecdotal one, I don’t keep track of that probably should. But we’ve had a pretty significant amount of that over the last six months, especially in Washington, we get increased pull flow, or look to book that is a an empirical measurement. And we have seen that we’re and I look to peers, and and the the only peers that I have, that I’m able to peer into our credit unions. And we are right about 10%, eight to 10% above peer for look to book, even though we don’t have a look to book number, right? Well, you can send me every application you want, sooner or later, you’ll find out that some are futile, because we don’t take open bankruptcies and things like that. So you don’t need to send those. But I think the fact that that we’re, you know, eight to 10% over peer is a real testament to a program success, and and a great measure of program success. And then we can also control intake, right? Or a control of intake, I guess is a better way to put that is how do we measure intake from program success. And the way that I’ve started to view that is, if I start out with a new dealer, and they’re sending me everything, you know, like shotgun, and over a period of about three or four months, all of a sudden, we see that that intake drop, but the look the book grows, that controls my intake, I don’t have to underwrite those loans anymore. I don’t have to, you know, take calls on them, why didn’t you do this, and we don’t have to go back for a second looks. But I’m getting more loans than I was. And that’s, you know, it’s part of the part education, but it’s also a measurement, I guess, of how our program is successful in that the people understand that and so my, my, my pull through, actually goes up, my loan volume goes up, my my ra intake goes down. And that, of course, is a real positive for everyone. And then we also get the data from that very same thing, we can control average loan amount. And we control that indirectly, right, which we control that through the program I want. I want these loans, these types of loans. So I pay more for these. I don’t like these, so I pay less, or maybe I price them differently. Or maybe we go into a market that is saturated with x. And I don’t want those and so I can price that market differently because we have different pricing in different markets. And so it is it’s allowed us and I really started to notice this lately, they were able to have some levers that I really hadn’t seen before to control average loan amount, our loan amount is growing pretty dramatically our average loan amount, while intake has been dropping in the last four or five months as I think it has nationally. And our poll through has has continued to go up. So by controlling your, your, your program, right how do you want to present it, you’re able to control what you get out of it. And that’s another element of measuring your success in the market. How what what result did I get from what I just did. And then it also opens new opportunities and I you know I talked about that at length before we were Always looking at new processes, how do we increase this efficiency? How do we reduce fund delays? How do we increase pull through look to book without really affecting that, that raw intake, which I don’t want, right? I want you to send me everything I want to see it because it gives me a real market assessment. So it creates new opportunities for us to look at our program, and then take that program to the dealer enhanced. So now we’re gonna go, now we’re gonna look at this, Is this better for you? Great, because it’s better for us. So wrapping up a little. The, I guess the whole premise here is a dealer, as a customer versus just a vendor, we look very directly at our dealers, as customers, we do some unique things, not just with our program, some things that I that I haven’t shared, we do a lot of partnership events. And that’s probably keep most of those under wraps. Because they’re proprietary, we spend a lot of time with them, trying to develop personal relationships. So they’re their customers, their partners, not just some, some innocuous vendor that’s out there. And we’ve done a lot of empirical work about lift and in return on those things. And it’s been very, very positive. And so, you know, combining polling with, with events and results really drives where we’re going to go. In the future, I think it takes a paradigm shift for a lot of organizations, looking at that every dealer as a partner, right as a, as a measure of your success, and you as the lender, a measure of the of the dealer success. And that’s a that’s a very different perspective, than looking at the dealer as someone that you’re going to go through a rate sheet on it, hope they send you stuff and then go in and say, why aren’t you still sending me business? Well, I don’t like your program, or I don’t like you, we will run into a few of those, right? Understanding dealer pain points is huge. If you want to have a successful program, as a partner, if you don’t listen to what’s going on in the market, if you don’t listen to what the dealer is telling you, you can never resolve them, because you’ll never take action to resolve. And then that comes to the to the point of just doing it right you have to a Kansas listen forever, you have to be agile, really, but to be pretty quick to make corrections or come to market with something that is it’s needed, even if it’s temporary, like increasing ltvs, you know, for the last eight or 10 months or you know, having a different form of assessment of the loan value by an appraisal or something. So, take action, I think you have to measure results. And you can measure results, we do that in a variety of ways that I have discussed, you know, anecdotally is critical, I can’t tell you how important that is to me to just take the temperature every day, every week of the market, where it’s going, where it can’t go. Where we’re lenders maybe don’t want to go and or where dealers maybe don’t want to go and what are we going to do differently as that. That I guess the the entity that wants to really partner, we have to think differently to make that work. We have to analyze those results, of course. Right. And and there’s a lot of analysis that goes on in the background. And those are more I think for us internally as we bring out products, you know, is this going to be? What’s the yield going to be? What’s the coupon going to be if we do this and those those that’s good analysis for us on the on the backside, but it can’t get in the way. I don’t believe it can get in the way. But it shouldn’t get in the way of delivering products to dealers that really deliver on those pain points. And then I think the successes that you have that you achieve, you can leverage those with the dealer because if you get that big Yes, you get the big when you get the smiles. What’s the next thing and as I brought up a little bit ago, we have dealers that say that to us pretty frequently would you bring me today and they weren’t talking about golf balls we’re talking about what’s that program enhancement or that tweak or that thing that I can use to help deliver on my business to my customers, which many of which become your members. permanently. So with that, Amanda will answer any questions that you may have, well, maybe not any questions because I’ve got to keep some proprietary things close to the best. ButAmanda Harris 1:00:19
well, thank you so much. That’s a very in depth book. And I think, you know, some really good information to to for lenders really to keep in mind to start off to say, one question I did had, did have, you know, listening to you talk a lot about a course measuring success, and you know, a lot about the best strategies for how to support feelers as customers, you know, is there any other way to kind of quantify, like, for a lender, their success and, you know, building a strong relationship with their dealers as customers journey, you know, data, Playstation monitoring, or anything else that comes to mind of how they can really look at? Am I doing a good job, you know, where, where I might need to improve anything like that?Rich Black 1:01:07
Yeah, I’ll give you an example of one. We will host events, or we do charitable events, in partnerships with dealers. And and so when we do an event, let’s say we have a partner with them on a sale for a month, right? We look at that, empirically, you know, what did we do before? What do we do the prior year? What do we do two months before? And what kind of volume do we get? Following that? What kind of lift do we get what kind of did it change our credit quality. And in looking at those numbers, and I’m going from memory here, but typically, I think when we did those kinds of events, depending on the length, you know, whether it was two weeks or four weeks or six weeks, we would see a lift for about an equal period at the back end. So you could go back the month before, let’s say we had a month long event, and we’d measure that you measure the month, the lift in the month, and then you would measure the following month, and maybe the following two or three months to see where that lift, tapered off, right, in terms of loans originated. And, and pretty commonly, you would see that expired about 30 months, or 30 days, if you did, it would be about equivalent to the term of the event, right. So if you had a 30 day event, by the end of 30 days, you’re pretty much back to where you started before the event. Conversely, or I was not conversely, maybe in a different name, we, we do some things called partner summit. So we will take a group of dealers of our selection and their spouses or significant others, and we’ll take them somewhere for a week. And we will spend a week with them doing things that they wouldn’t normally do not weird things but you know, rides in the desert at Christmas and motorcycle rides and you know, just just things that you probably wouldn’t do. But we get them together, we have dinners, we do a lot of just relationship building, right, for lack of a better term. And the results of those were really interesting compared to the events. So these are these are empirical results, we’ve we’ve we’ve followed those for a while, is that you would see lift in upwards of 140%, after those, and the left would last for at least 90 days, and then a couple of cases six months, and then it really never dies out, you still hear about it. And the the interesting thing we found is that when you bring the the employee and their spouse or their significant other, there’s a huge difference in lift that it’s just if you just did it at the dealership. And I don’t know that I have any way to to really easily explain that I can just tell you the results of it were almost breathtaking. And so we we still do all kinds of things that are right, those relationship building events or partnership events, as we, as we call them, and we’re still evolving that process, what’s it look like? Where do we go, you know, what’s the length of time? Who do you take, who do you not take? And so I guess that’s a probably the best example I have. But that’s again an ongoing process to just further cement relationships. And we found that when we did that, and when we when we continue to do that, that the payoff is tremendous.Amanda Harris 1:04:59
Perfectly Thank you so much again, rich, I think you’ve given everyone a lot to think about, especially because this will probably be, you know, a new norm going forward as personal approach. We’re seeing that across industry, especially in light of the pandemic. So, very timely, have very insightful discussion. We really appreciate it. And for all our viewers, please make sure you check back to auto finance excellence and auto finance news for more leading industry insights. And thanks again so much for joining us. Thank you, Amanda.