In last month’s column, we discussed the uncertain business climate, and the fact that many powersports dealers are taking a “wait and see” approach to their 2017 planning. If you missed it, visit http://bit.ly/2hpW1xn. While we haven’t found bedrock yet, the fact remains that the relationship between dealer and lender can always improve. In order to build stronger relationships across the aisle, we need to understand each other’s challenges.
At this fall’s powersports dealer conference, dealership owners shared their challenges when working with their lending counterparts across the aisle. For many lenders, working with powersports dealers is new territory. The products are different, the customer careabouts are new and the financing requirements are unique. There is much to learn and every dealer markets their products a little differently. Without any experience in the powersports market, a lender might mistakenly take a one-size-fits-all approach.
So let’s dig into the challenges facing dealers when working with their lender partners. Again, this is in the spirit of fostering understanding – and increased communication. In January, I’ll talk about how both sides can work across the aisle to build a productive and financially beneficial relationship for both lenders and dealers in the powersports market.
Time is Money
Dealerships often have small staffs with team members wearing multiple hats. And frankly, they don’t have a lot of spare time to chitchat. Lenders showing up unannounced to bring a dozen doughnuts is actually a waste of time. Even worse, is when lenders stop in to visit without offering any new product information or training on existing products.
And speaking of time, dealers are often challenged by lenders inaccessibility. “Bankers hours” don’t work for powersports dealers. 80% of credit applications are submitted between 9-11pm! And there is no banker in sight! Leaving the customer time to change their mind…and the dealer to lose a sale. And let’s not even talk about weekends, which are prime motorcycle shopping days. Having to work around lender hours jeopardizes sales…and profits for the lender.
Change…or move on
The powersports customer is changing. The idea of the stereotypical middle-aged boomer buying a bike to satisfy a mid-life crisis is outdated. Today’s customer is younger, smarter, and faster. The millennial buyer has spent hours on the Internet researching the dealership, the bike, and often the financing options – before he ever sets foot in the showroom. Requiring labor-intensive paperwork and data entry won’t be tolerated by today’s customer. Lenders who have not evolved their loan processes will be left behind.
And speaking of evolution, dealers at the conference referenced lenders’ general failure to evolve or offer innovative products. A lender’s lack of flexibility in deal structures – or creativity in financing – impacts a potential purchase. Trying to move a customer to a different bike or require more equity, affects the customer experience and can lead to negative online reviews – which impact the dealer not the lender!
Who’s On First
Given their limited available time, dealers often struggle with managing their lender portfolio. Often, a dealer will have different lenders for prime, subprime, and mid-tier, as well as those that will finance ATVs, side-by-sides, etc. And each lender has a different set of criteria. That’s a lot to keep track of and manage.
Dealers also feel hamstrung when purchasing inventory, limiting their buy to bikes they know they can finance. Responding quickly to dealer inquiries – and in a cooperative fashion – goes a long way in building a solid relationship. And speaking of relationships, dealers would like to see more interest from lenders in growing relationships with existing customers. However, refinancing with the customer’s original criteria can be problematic. Credit unions get higher marks than banks because they look at individual situations regardless of credit tiers.
At the end of the day though, it’s all about communication and understanding each other’s needs and challenges. Come back next month and I’ll provide some tips on making working across the aisle profitable for everyone.
Glenice Wilder is the vice president of Powersports for EFG Companies. A 33-year industry veteran, Glenice is responsible for growing and developing EFG’s action and powersports market channel. She combines her passion for motorcycles and her dedication to serving EFG’s customers to develop solutions that consistently exceed their expectations. Glenice acts as a strategic partner to assess her clients’ areas for improvement and how EFG can fill that role. She provides insight in how to increase productivity by pairing the right products within the right markets for the greatest return on investment.