Lenders who satisfy automotive dealers by meeting key performance expectations are more likely to capture a greater share of preferred loan applications, according to a J.D. Power and Associates study.
The 2010 U.S. Dealer Financing Satisfaction Study finds that within the prime retail credit segment, lenders with a highly satisfied dealer network (scores of 901 or higher on a 1,000-point scale) successfully book a higher portion of applications they review — 55% compared with 25% among dealers with low satisfaction (scores of 700 or lower).
Similarly, lenders with highly satisfied dealers also close a greater percentage of the loans they approve (77% vs. 46% among low-satisfaction dealers). As a result, lenders delivering higher satisfaction are spending less on processing new loans and also enjoying higher risk-adjusted returns.
In addition, highly satisfied dealers send more of their current business (40%) to lenders that deliver a satisfying experience. In comparison, dealers with low levels of satisfaction send just 20% of business to their lenders.
Highly satisfied dealers are also more likely to send a greater proportion of business to their lender in the future. Sixty percent of highly satisfied dealers say they “definitely will” increase the percentage of business sent to the lender, while just 12% of dealers with low satisfaction say the same.
The study finds that overall satisfaction and ultimately, business results are driven by lenders meeting a set of key performance indicators with three common themes:
- Establishing proactive and ongoing lines of communication.
- Improving speed and flexibility of approval and funding process.
- Providing satisfying interactions with dealers.