Who Let That Trojan Horse in The Gates?

It’s funny sometimes how as auto industry vendors, we over complicate things.  Sometimes, it’s done for the sake of that new product. Other times, it shakes the dust off of that old product. Too often it is done for the sake of the author…coining the newest “catch phrase” in our industry. So I’ll start by saying this: most of what we do as vendors is recycled verbiage, sometimes recycled technology, and too often it is just plain garbage that’s not even recycled.

Same ideas, different vendor. Their “technology” is what makes them different. Their process is far better than the other guy. Terms like “granular,” “ancillary,” and “process” are always following these self-ingratiating conversations. Some GM’s and Dealer Principle’s get it, others too often drink the cool-aid looking for that magic widget that can take them from 50 new to 400 new overnight. There certainly will never be a shortage of cool-aid vendors that is for sure.

So let’s talk about something simple. Something we can take and not have to create a dynamic new catch phrase to describe it. Credit Data. This, I assure you, does not change. Information in, information out. When was the last time you looked at a consumers’ credit report and said “Wow, when did they make that change to the report?” Never. So we can all agree, this Data is what drives the car deal. Can that consumer buy the vehicle they have chosen? Can they get approved for that payment?  The truth all lies in the report. We can sprinkle it with glitter, put a shiny wrapper on it, but if the data doesn’t support the application, the lender isn’t buying it.

In the recent years, promotional bureau access has been granted by the bureaus in limited fashion to Retail Franchise Dealers. The opportunity to pre-screen and pre-qualify has taken its roots in our industry. From my standpoint, it is what we championed for the last two years, putting the power of negotiation back in the hands of the dealer. But as with every sector on the globe, vendors jump in too often without the best interest of the very customers they serve. So when does your data not stay your data in the world of pre-screens and pre-qualifications?  Simple.  Introduce a bank to stand behind the offer.

Now I know what you are thinking: “How can this be bad for us?” Well, my friends, the Trojan horse has been left at your door step. Pretty wrapper, but the fish is still rotten underneath all that paper. Let’s start with the law, the FCRA governing pre-screening. The law is simple, if the customer passes through the pre-determined decision engine, they MUST receive a firm offer of credit. So far so good, my service customer has credit worthy of an upgrade. Excellent. Only here is where it gets dicey.  Since some vendors, well, really one vendor, is offering this shiny object, this is a good thing, right?  I mean you don’t have to worry about standing behind that offer anymore, right? Well, herein lies the proverbial “turd in the punchbowl.” That offer, the one you just paid almost 3 bucks to pre-screen and send that shiny, slick fulfillment piece to…that offer is from the bank, not you. Translation, look up and down your PMA, because any one of those dealers can fulfill that offer that you just paid for. Any one of them, as long as they too, have that lending relationship. You see that firm offer of credit, the one from that bank, must be honored if the consumer decides to take advantage. Hence the “FIRM OFFER OF CREDIT.” They can have it honored AT ANY FRANCHISE DEALER with an indirect lending relationship. Still sound good? Wait, it gets better. That customer data, you know, the one the bank made the offer on? Guess who now owns that data for the purpose of marketing, re-marketing, events, etc? You guessed it…. that very same bank. So now, when your competing dealer pays that bank for their pre-approved mail pieces, guess whose name is included? Right again, that same customer you just paid 3 bucks to pre-screen, fulfill, and approach. Now, did anyone see who let that Trojan Horse in the gates?

Albert Einstein once said: “A man should look for what is, and not for what he thinks should be.” The moral of this data story falls right into that insightful quote.  Sometimes it isn’t what the vendor tells us that we need to worry about, it is what they don’t tell us. The data, and devil, are both in the details gentlemen.