The end of contract review is single-handily the most important exercise to complete with all of your customers that are reaching the end of their PCP finance agreement, in order to maintain a consistent level of customer retention.
Unless a customer has had a clearly explained end of contract review, how can they truly make an informed decision regarding what they wish to do with the vehicle?
Often sales executives will speak to a customer who has stated they want to end their agreement by keeping the vehicle, without checking that the car is actually worth the final repayment.
Imagine that the balloon payment (which was based on an exact mileage allowance and calculated at the beginning of the agreement so therefore in a different economic climate to today) is worth considerably less than what is due and the customer is allowed to make that decision without being informed of the true value of the vehicle. That’s the quickest way for a disgruntled customer!
Giving the customer 3 important figures will lead to an honest and trusting conversation, which when handled correctly, will 9 out of 10 times lead to an opportunity of either a vehicle replacement or a re-finance quote.
If conducted at the correct time, explaining to customers the need to check the value of the vehicle against the outstanding balance will nearly always lead to an enhancement of the customer relationship.
Often, a customer will assume that their final balloon payment is a guarantee of the value of the car, and therefore it is safe to pay this final amount without a second thought. By explaining to them the true meaning of the final repayment you will create a knowledgeable opinion of your team and arm the customer with the important figures they need to be able to decide what to do.
Current Settlement – Current Valuation – Equity position
Only with these 3 pieces of information can your customer feel like you have told them everything they need and can make their decision with confidence.
Once you have determined why you present these 3 figures and what they mean, you can then create a bespoke solution for all 3 options surrounding the end of a PCP agreement:
Should the vehicle be worth more than the final balance due;
- Confirm what date the final repayment will be collected and/or offer a re-finance package for the balance
- Offer a replacement vehicle quote based on a thorough qualification of the customers’ needs/wants/budget
Should the vehicle not be worth the final balance due;
- Make them aware of their right to hand the vehicle back and start again on a new agreement that does not carry any negative equity over to be cleared
- Confirm their right that they can of course still make the final repayment and keep the car, however, it is only fair to clearly explain to them the difference of true value and agreed final repayment
Customers will quite often forget that they ‘agreed’ to a certain number of equal repayments followed by a final instalment, in order to complete the purchase of the vehicle. Keeping them informed of what the natural path of the ‘agreement’ is and what information they will need to determine whether the natural path is still right for them will lead to happier, better-informed customers and in turn an increase in customer retention.
For more info regarding an easy-to-follow process for this, please get in contact: contact@retain.group
