A leading US-based car dealership moves into the fast lane by leveraging outsourcing

Firstsource transformative solutions across three pillars - the client’s technology, processes and people - ensured 32% guaranteed cost savings over five years.


The Client

The client is a US car dealership with around 150 outlets, mostly franchise-owned. It specialises in serving people with poor credit histories, including bankruptcy or vehicle repossession, and provides the car financing itself.

32%

Guaranteed cost savings

Business Challenge

The client’s business relied heavily on a 20-year old legacy CRM system that supported the entire front and back office, from initial sales enquiries to loan underwriting, contracting, billings, collections and bad debt management. The system was built in-house in the 1990s and had seen little investment over the years. As a result, the client faced a two-pronged challenge.

First, the limitations posed by the 20-year old legacy CRM system made proper process management and continual improvement challenging. Poor reporting capabilities prevented any holistic view of the end-to-end process, and hindered the implementation of structured processes or operational key performance indicators (KPIs). The result: inefficient and sub-optimal manual processes spanning multiple activities such as loan underwriting, lead handling, and inventory management, and rocketing costs.

Second, the client could not afford to invest in either a new IT system or improving the existing one. Funds for capital investment were limited and an increase in operational costs was unacceptable to the board.

The company sought to cut costs significantly while improving the operational performance of all activities. Specific automation and process improvement goals included:

  • Assess lending risk more accurately, enabling them to offer larger loans to the right customers. Key measure: increase overall loan-to-value ratio.
  • Improve lead management and sales performance. Key measures: increase lead-to-appointment and appointment-to-buy ratios.
  • Transform the customer journey. Key measure: turnaround time for customer – from the time of arrival at dealership to closing of the deal.
  • Improve debt collection. Key measures: reduce delinquency and increase agent productivity.

 

Firstsource Solution

The client entered into a five-year outsourcing partnership with Firstsource to transform its technology and processes, and directly manage lead conversion and first line collections. The engagement spans three main areas: financial, technology, and people and process.

#1 Financial: The financial component guarantees the client a savings of 32% over five years on technology and outsourced activities, with Firstsource underwriting the risk. This is contractually guaranteed and achieved with no capex or opex expense to the client.

#2 Technology: This piece involves the deployment of Firstsource’s proprietary CRM and workflow solutions i Leverage and Sympraxis. These solutions are integrated with – in essence “sitting on top of” – the existing legacy CRM system. This approach enabled the client to get the new software up and running within five months, eliminating any need for data migration and significantly reducing costs and risk. The new CRM and workflow:

  • Automates previously labour-intensive steps such as loan underwriting.
  • Provides full visibility into activities and KPIs across all front and back office functions.
  • Enables an integrated, multi-channel approach to collections.

Currently, both the old and new systems run in tandem, with all new customer data going into the new CRM, which in turn backs up all data to the old system. Over time, the old customer data will be migrated to the new system and the old system will eventually be phased out.

#3 People and process: This component focuses on bringing process rigour and a culture of continual improvement to all activities. The client transferred two main processes over to Firstsource: managing leads and first-line collections. The transfer included the 80 people carrying out these activities.

Firstsource redesigned the lead management process to improve lead-to-appointment and appointment-to-buy ratios. Under the new process, before booking an appointment for a customer, the Firstsource team conducts rigorous phone-based screening to check the customer’s loan eligibility. The team also reminds customers about their upcoming appointment, makes sure they know what documentation to bring so they can complete their purchase on the same day, and follows up on any dropped leads.

Next, Firstsource leveraged a multi-channel approach based on data analytics to redesign the first-line collections process. Under this new approach, the Firstsource team contacts customers every pay day, which tends to be every week or fortnight. The team leverages analytics to identify the best day, time of day and channel to contact each customer – for example, some customers might respond best to an early morning text and others to an evening phone call.

 

A leading US-based car dealership moves into the fast lane by leveraging outsourcing

Business Impact

Firstsource ensured that the new CRM and workflow systems were up and running within five months, without any opex increase or capex requirements for the client, leading to several tangible outcomes including:

  • 32% guaranteed cost savings over five years.

 

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