Today’s consumers have been sliced and diced more than a Thanksgiving Day turkey. They’ve been segmented, targeted, identified, cooked, and tracked. They have become prey, stalked mercilessly by retailers and big business intent on learning everything they can about their customers so they can sell them more soap, toothpaste, and orange juice. The smartest businesses know when to send a coupon, when to reach out with an email, and what triggers are likely to cause that particular consumer to jump at an offer.
Are auto lenders doing all they can to achieve the same result?
Algorithms, buying patterns, payment histories, credit reports, and recorded call transcripts all offer insights into consumers’ buying patterns and behaviors. Lenders should be mining that data to develop specific offers meant to woo new business. If I have a 720 credit score and no outstanding debt, it’s likely that I’m not interested in paying interest. So send me an offer for a 0% loan, provided I fully qualify when I apply. If you have a 650 credit score and bank with a different institution, you should get an offer for a mid-interest loan with the option for a lower rate if you open up an account and sign up for auto-pay. If your neighbor has a 680 credit score and has checked out a specific make and model vehicle on your website three times in the past three months, hit her with a rebate offer if she buys in the next 30 days.
Today’s markets are getting smaller, not bigger. Companies that make broad offerings — like network television — are losing ground to those who are offering the right deal at the right time.
It’s important that lenders stay on the right side of fair lending laws when making specific offers to specific individuals.
I’ve written about the importance for lenders to reach out with the right offer at the right time. But this idea takes it one step further to illustrate that lenders need to better tailor their offers to be more specific to the people who are on the receiving end.
There’s a world of data to be mined. Mind you, it’s easy to overthink an experiment like this and get too specific. Lenders need to look at all the data that is available to them, analyze it, and make informed offers that people are going to understand, be interested in, and accept. But simply splashing a generic offer on a billboard or TV screen isn’t going to cut it for much longer.
We, dealers (I was one for many years) have always known that you can’t put a price on service and reputation. These are the things that make each and every dealer unique, not the cars we sell. We all buy from the same outlets and advertise on the same channels but what the public wants is a predictable experience. The only ones I see as threatened by this should be the ones who are only selling cars not themselves or their business.
Good post,Mike! And thanks for the reminder – “It’s important that lenders stay on the right side of fair lending laws when making specific offers to specific individuals.” Just as important is remembering to treat them with the best financial advice (product) that you can for their situation. Banks can play a major role in rebuilding the middle class and that is best done with credit products that will minimize the reduction in wallet size when they pay interest. And it is one step toward rebuilding “Trust” (recent Gallup polls show trust in banks at all time lows). Some of the readers of this posting may work for banks that are engaged in doing the reverse – they are sucking the wallets dry of their customers. Perhaps they will examine their credit product and pricing to include “helping customers” instead of abusing them. If you need their names, let me know.
Mike,
You get it!
Unfortunately, some big banks (Wells Fargo, US Bank, Regions) have the reverse mindset. If they know you need a product and are uneducated or are poor, they will sell you a product that is good for them but bad for you!
The fundamental question is “How does this product help customers prosper and advance financially?” If its chief effect is to keep poor people poor and help folks move down then it does not belong in the line-up of a taxpayer backed, too big to fail bank
And they wonder why the public does not trust them! I feel sorry for their employees that have to face the public.