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Confusion over GDPR is still rife in motor retail direct marketing

NEW REGULATIONS governing the use of customer data for marketing are still widely misunderstood across the automotive retail and finance sector, even since GDPR came into force.

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That’s the view of customer retention specialists Chrysalis Loyalty, who say confusion is still evident from their conversations about customer renewal and retention marketing across the industry.

The main area of uncertainty, says Chrysalis Loyalty Product and Marketing Director Mark Fretwell, is around reconciling direct marketing activity with the principle enshrined in GDPR of ‘legitimate interest’.

Chrysalis is encountering a widespread misconception that ‘legitimate interest’ is a one-sided principle relating to the data subject’s interests, when in fact GDPR guidelines specifically provide for the supplier’s right to conduct  direct marketing activity in given circumstances.

It means that many motor retailers are now seeking clarity after receiving often conflicting interpretations from lawyers and other partners.  In some cases there is a possibility that the confusion may result in less rather than more transparency in the communications between dealers and customers – and in some cases, communication activities have been suspended unnecessarily.

Chrysalis believes that a crucial message has been lost in the legal interpretations of many businesses; that in almost all scenarios where a finance agreement already exists there is a legal basis for maintaining ongoing customer contact – often even in the case of ‘lapsed customers’.

Mark Fretwell said: “There remains a lot of confusion over GDPR and especially over the meaning of ‘legitimate interest’ as a basis for contacting customers. It appears that many businesses have been reacting to GDPR as if the new rules infer that direct marketing does not fall under the banner of ‘legitimate interest’ when in fact it is clearly provided for in the regulations.

“It is perhaps no surprise that confusion has led to an over-cautious approach in some quarters because of conflicting legal opinion over what constitutes an ongoing right to remain in contact with a customer.

Chrysalis welcomes the new regulations and believes that eventually the confusion will clear leading to greater understanding and professionalism in this industry. The company points to the message from the UK Information Commissioner, Elizabeth Denham, who recently said: “We are going to be focused on businesses that deliberately, persistently or negligently misuse data. Some people are so concerned about being caught out by the new rules that they appear to be assuming marketing directly to consumers is no longer a lawful activity without specific permission. The reality is that what matters is providing a clear opportunity to opt out of such communications and then respecting that decision.”

Mark Fretwell said: “Under Financial Conduct Authority guidelines lenders have a duty to act in the best interests of their borrowers and at Chrysalis, we have always led with a ‘customer first’ approach, so this is the basis with which we have always approached our platform solutions and decision-ware. Therefore, we welcome the renewed focus GDPR brings to the industry. It is clear that informing a customer where they are in their trade cycle; in some cases perhaps having to inform them of pending excess mileage charges – or more often, what beneficial opportunities they have to renew their current car – falls under such a responsibility.

As a substantial holder and processor of customer data for renewal marketing purposes, Chrysalis proactively sought written advice from a leading QC in the area of European privacy and data law to ensure clarity for the business and its clients on the new rules. The company concluded that GDPR compliance generally reflects ‘best practices’ which most businesses should already employ.

Specifically the company looked at 6 scenarios on behalf of their finance company clients:

1. What preparations will allow our clients to be able to process and directly market to their finance database in order to make contact for such purposes as beneficially managing the customer trade cycle resulting in customer contact at both early renewal and maturing contract phases, for new customers post GDPR introduction?

2. What preparations will allow our clients to continue to process and contact existing customers for both early and maturing renewal as part of beneficially managing the trade cycle, post GDPR introduction?

3. Will our clients be allowed to contact existing customers if re-solicitation permissions were previously set to ‘no’ in the existing database pre-GDPR?

4. Is re-permissioning a necessary action our clients should be taking?

5. If re-permissioning is undertaken by an associated party in relation to the data subject, eg: by the brand partner, and the customer does not respond, is our client able to continue to process the customer’s data for renewal contact and if so on what basis?

6. How can our clients prepare so that they can continue to process data for and contact lapsed finance customers post GDPr introduction?

In conclusion, Mark Fretwell said: “The advice we received is clear, that in most scenarios where a finance agreement exists there is a legitimate basis for maintaining ongoing customer contact – even with ‘Lapsed Customers’.

“Where software systems are used to generate customer communication opportunities this in fact provides an opportunity for dealers and funders to demonstrate both their compliance and the quality of their decision making in supporting consumers’ best interests. It enables them to clearly show that they are treating customers fairly, contacting the customer when it is in their interests to do so rather than when a business is over-stocked or missing its sales target – and enables demonstrating clearly and transparently the basis for decision making. It is an opportunity for the industry to promote and improve its reputation and professionalism”

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Chrysalis Loyalty expansion continues with two new key appointments

EXPANSION continues at international finance retention specialists Chrysalis Loyalty, with two key appointments in sales and customer training.

Stephanie Falconer joins the business as UK Account Director and Lyn Howdon has been appointed to head Chrysalis’s Global Academy.

They are the latest in a series of major appointments this year signalling the company’s ambition to be the recognised world leader in motor finance retention.

Independently owned and UK-based Chrysalis Loyalty currently operates in 12 countries, helping more than 2,500 motor retailers maximise repeat sales by optimising customer communication for dealers, brands and finance providers.

Chrysalis focuses heavily on helping its customers implement customer loyalty programmes through technical and soft skills training to optimise the power of its Key2Key system for users. Lyn Howdon, who most recently led the  UK Academy for leading automotive video services provider CitNOW, will now draw on her 28 year automotive track record to head this function for Chrysalis.

Lyn is one of the pioneers of automotive customer loyalty strategy, having previously developed retention programmes for US-based Half A Car which were successfully implemented across 600 dealerships in the UK, Europe and Australasia.

She went on to lead dealer training for Kia Motors internationally, building the brand’s Worldwide Sales and Service Academy covering 163 countries across five regions.

Her other roles have included running her own successful business focused on training and consultancy to improve customer loyalty and implementing dealer and manufacturer retention programmes globally for Loyalty Logistix.

Stephanie Falconer’s automotive career spans a Who’s Who of leading data and decision-support providers, including CAP-HPI, EurotaxGlass’s and Jato Dynamics. A specialist in software and consultative services, Stephanie has strong relationships with vehicle manufacturers, retailers and finance and intermediary system providers across Europe and the UK. She joins the business from Cox Automotive where she has worked across business divisions serving financing, re-marketing, software solutions, media and insight.

Chrysalis Loyalty founder and CEO Jolyon Barker said: “Stephanie and Lyn are leaders in their respective fields and a perfect fit for Chrysalis as we drive the business toward our ambition of being the recognised world leaders in automotive customer retention.

“Our success to date has stemmed from understanding the challenges and needs of our customer, helping them to implement world class customer loyalty systems and then run them as effectively as possible. The skills they bring – and their commitment to understanding and properly serving the needs and interests of customers – will be invaluable as Chrysalis transforms the customer retention landscape in the UK and beyond.”

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Chrysalis Loyalty steps up integration with best-of-breed 3rd party systems through its open API

A DRIVE to integrate more 3rd party systems with the open API of Chrysalis Loyalty’s Key2Key customer retention system has been announced.

Chrysalis says the move will enable its dealer and captive finance customers to dramatically boost the quality and impact of their customer loyalty programmes.

The Key2Key API has always been ‘open’ for integration with best-of-breed 3rd party system providers operating in the field of customer loyalty.

Photo by rawpixel on Unsplash

But fresh technological developments around the industry are opening up new possibilities which Chrysalis say they are determined to enable as quickly and easily as possible.

Chrysalis founder, Jolyon Barker, said: “No matter how well designed and comprehensive, it is unrealistic to expect one system alone to best-of-breed in every aspect of the increasingly sophisticated processes used in automotive retail.

“That is why the right thing for us to do for our customers is to encourage the best 3rd party providers to integrate through our open API by being as accommodating and supportive as possible.”

As an example, Jolyon Barker points to a project under way in Europe in which an enterprise email marketing system is being integrated with the Key2Key platform to increase transparency for dealers and their brand’s captive finance arm around customer communications.

The integration will eradicate poorly timed or inappropriate communications by ensuring dealer, brand and finance provider effortless transparency as well as instant analysis of the effectiveness of their customer contact.

In a recent white paper detailing customer retention best practice Chrysalis Loyalty highlighted the importance of ‘joined up’ data and communication between dealers and their brands in generating the highest possible sales renewal rates – and proving the best customer experience.

Chrysalis believes that its users are best served by enabling integration of best of breed 3rd party systems to its market-leading customer retention tool.

For example, by integrating two-way data sharing between Key2Key, which highlights the optimal moments to contact a customer for renewal, and a sophisticated call tracking and conversation sentiment analysis tool, users get the benefits of both systems – and additional benefits from combining data to leverage powerful insights that can help transform their performance.

Jolyon Barker said: “Businesses like our own can choose between insisting on developing proprietary solutions to every improvement in their service, or they can do what’s right and work with the best to create maximum value for their customers.

“Because information sharing is so vital to profitable and efficient operations in automotive retail it is wrong to force users to develop their own workarounds when the integration of data between tools can make each one exponentially more valuable.

“Our latest integrations will start eradicating timed or pitched customer communications by creating unprecedented transparency and insight. Our customers will see results within a very short timeframe because we have encouraged the integration of a best-in-class tool through our API.”

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New motor finance retention study reveals big opportunities for funders and dealers

DRAMATIC increases in customer retention are within reach for most funders, even in a falling market, according to new research.

A unique study of current practices among dealers representing 17 automotive finance brands, conducted by loyalty and retention specialists Chrysalis Loyalty, has revealed that big gains are available through optimising customer contact strategy.

Dealers confidentially shared facts and figures to reveal their ratio of cars sold per customer contacted, along with descriptions of their approach to customer relationship and renewal management.

While the most successful dealers achieve one new sale for every 1.4 customers contacted many more are reporting only one sale for every 10 customers contacted and even, in a significant minority of cases, one in 20.

But outside of the highest and lowest performance figures, the key finding by Chrysalis is the consistently high performance of dealers who focus in the most structured way on customer loyalty. Measured over an 18 month period, the global average among 2,500 dealers across all the countries in which Chrysalis operates was one sale for every 2.8 customers contacted.

This average was achieved regardless of a country’s position in the automotive economic cycle, including performance in markets which were falling or static overall.

The key finding of the latest research was that renewal rates in dealerships which run a dedicated customer contact strategy are far higher than in those which approach the issue on an ad hoc basis – for example, when instructed to by a brand or finance provider.

Major factors in the success of the contact strategies of the most successful dealers were a clearly defined approach, disciplined implementation, careful integration with existing CRM approaches and a strong focus on individual skills for staff focused on customer renewals.

As new car sales in Britain fall for the second year running, Chrysalis says their findings are good news for the majority of dealers who still have room for improvement in their customer retention processes – and offer the chance of transformational growth for those who have not yet implemented one.

The other major finding in the latest Chrysalis research is that even for dealers with a defined process for renewals, contact is too often limited to one moment in a customer’s journey through a contract. Evidence shows that a more rigorous approach – beginning the moment a customer is first qualified – consistently results in more renewals.

“This is all good news for most funders and dealers because it demonstrates that many of the new customers they need are already hiding in plain sight,” said Mark Fretwell, of Chrysalis Loyalty.

“We have been able to establish a clear link between the lowest renewal rates and a lack of process for some dealers, who often report that their customer contact strategy relies entirely on being instructed to mount a campaign by their brand or finance provider.

“But even when we drill down into the approaches of dealers with a more structured process we see big opportunities for increasing sales to existing customers – backed by real evidence of what works.

“Despite the industry’s reliance on data analysis for many operations there is still a lack of focus on the most effective change points. As an example, we know from analysis that many customers will renew well before they reach a point in their contract where the cost to change may be zero, or when they pass the point of owing less finance than their car is worth. And yet many funders and dealers with a defined retention strategy limit their customer contact to one of those points.

“In contrast, the evidence shows that maintaining a consistent contact strategy throughout the life of a customer’s finance agreement is what maximises renewals.

“Increasing retention is a vital part of business growth and it is striking to see how opportunities to do that are still wide open across the automotive financial services sector.”

Chrysalis Loyalty has made a white paper detailing this latest research as well as best practice advice – backed by case studies – and tips for implementing an effective customer loyalty programme freely available to funders and dealers. 

Download your copy here

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Dealers should focus on higher renewal rates – not pursue a ‘race to the bottom’ on monthly payments

Dealers should focus on higher renewal rates – not pursue a ‘race to the bottom’ on monthly payments, says Chrysalis

DEALER ‘ADDICTION’ to the lowest possible monthly PCP payments is unsustainable for motor retailers and their brands in the long term.

Instead they should be focusing harder on boosting sustainable business by shortening the change cycle – which means working harder to qualify customers.

That’s the view of finance retention specialists Chrysalis Loyalty as evidence grows that longer PCP terms are increasingly being used as a quick fix in an increasingly challenging market.

Many dealers and brands are already losing greater long-term profit opportunities – and risking their relationships with customers – by chasing short term wins from 48 month PCPs.

But if dealers fail to challenge the industry mantra that ‘it’s all about the monthly payment’ they only pursue a race to the bottom, rather than sustainable growth, say Chrysalis.

According to Mark Fretwell, of Chrysalis Loyalty “some dealers are addicted to the lowest possible monthly payment as a way of signing the customer immediately while sacrificing future loyalty and profitability”.

Using the example of switching a 48 month PCP to 36 months on a popular volume brand model, he argues that both the dealer and customer benefit from shorter PCP terms in the medium to longer term.

Based on industry-standard CAP residual values and a finance rate of 4.9% he contrasts a zero cash down four year term for the car with a deposit of two monthly payments and a term of 36 months.

The increase in the monthly cost to the customer is less than 10% while the opportunity to renew the vehicle for little or no cost to change comes more than a year sooner.

“The model we use to illustrate this is a representative volume vehicle with an on-the-road price of £29,050* and a £1,000 brand deposit contribution toward the deal,” he explains.

“The temptation for the dealer is to go for a 48 month PCP to achieve a monthly payment of £452. But by encouraging the customer to put down a deposit of two monthly payments and increase the monthly payment by less than 10% to £496, the term can be reduced to 36 months and they will be able to enjoy a new car much sooner.

“If this approach were implemented at scale it would result in a 33% increase in sales volumes from renewing customers over the longer term”

“It is even possible for the dealer to achieve a 100% long term increase in this example by explaining to the customer that a £4,000 deposit and a 24 month PCP will enable them to halve the time in which they can change their car.”

Mark Fretwell acknowledges that such an approach involves much more rigorous qualification of customers. But he argues that the increase in overall sales volumes over time – and the customer goodwill that stems from being able to change cars sooner – will bring substantial rewards.

He says: “Instead of taking the path of least resistance with the lowest possible monthly payment conversations should focus on the bigger picture, which must include how often the customer likes to change their car.

“This is about giving the customer all the information they need to make the best decision for them as well as for the dealer.

“The benefit of a relatively small increase in payment and the addition of a deposit makes for a more sustainable long term strategy.

“If we do put customers into four-year deals we know they will want to change earlier but will inevitably find out that they cannot. They are then less satisfied with their existing vehicle but feel stuck and that can only come at a cost to your relationship with that customer.

“Of course brands can keep increasing their deposit contributions to keep the business flowing, but ever-increasing support of that kind is still not a sustainable business model.

“In such a low monthly rate-driven environment how long will it be before we start talking about 60-month PCPs and how will the customer then feel when their opportunity to change has been pushed even further into the future?

“As we face a more challenging market today than for several years it surely makes sense to work a little harder now to maintain the quality of customer relationships and preserve the opportunities to renew.”

 

*How the quotations are calculated: monthly payments highlighted in bold

PCP length (months) 24 36 48
On the road price £29,050
Brand deposit contribution £1,000
GFV (95% of CAP Gold Book)

February 2018

£13,870 £12,136 £10,188
With £0 customer deposit £525 £452.13
With £992 customer deposit £496.10
With £4,000 customer deposit £502.79

 

Picture credit: freestocks.org

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Chrysalis announce appointment of product and marketing director

Expansion is under way at finance retention specialists Chrysalis Loyalty with the appointment of Mark Fretwell to the role of Product & Marketing Director.

Mark Fretwell – whose automotive data and technology background includes senior positions at CAP and KeeResources – is the first in a series of planned appointments in 2018 as Chrysalis Loyalty accelerates an ambition to be recognised as the global leader in motor finance retention.

Independently owned and UK-based Chrysalis Loyalty currently operates in 12 countries, helping more than 2,500 motor retailers consistently and sustainably generate repeat business by identifying the moment a customer can most cost-effectively trade into a new car.

The company partners with nine major automotive brands and finance providers through their franchise networks and the expansion plans range from deeper and wider British market penetration to launching into new geographical territories worldwide.

Founder and CEO Jolyon Barker said: “We are primarily a technology-driven expert data business and that is why Mark is such a great fit for us at this exciting moment, bringing with him more than 20 years’ experience and understanding as well as an impressive track record of success in that world.

“Mark is also highly entrepreneurial and understands that success means delivering value to both sides so his appointment is equally good news for our customers too.”

Branded as ‘Key2Key’ the Chrysalis Loyalty system has been transformational for dealers, who typically report the doubling of their retention and renewal rates after adopting it. By automating the identification of customers in a position to change, Key2Key addresses one of the most challenging tasks in the dealership, delivering pre-calculated offers that produce high levels of repeat business and are also in the best financial interests of the customer.

Mark Fretwell said: “Smart use of data to remove friction and unlock commercial opportunities is one of the most exciting fields in the automotive world and Chrysalis Loyalty is a real innovator in that space. We already have exciting plans to expand our offering in the UK and elsewhere around the world and I’m delighted to be in at the beginning of this new chapter for the business.”

 

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