The Back-Up Squad

LOS ANGELES — Auto makers and dealers work at winning over customers, but there are reserve players in the highly competitive brand-loyalty game: captive finance companies.

Can an auto maker's financing unit help keep customers faithful to the brand? Yes, says Lisa McPherson, general manager-sales operations for BMW Financial Services.

But she recognizes that a firm such as hers will never win the MVP award, because of the inherent secondary nature of auto makers' financing arms in the marketplace.

“I like to think people like to do business with us. But in reality, people do business with us because they are buying or leasing a BMW,” she says here at the Automotive Customer Centricity Summit hosted by Thought Leadership Summits.

Still, a captive can contribute to “a complete brand experience” and “help build brand value,” both of which help the parent company and dealers retain customers, she says.

McPherson says she serves two customers: BMW dealers and end users. Most patrons of the German luxury brand lease their vehicles, typically for 36 months.

That lets the captive regularly keep in touch with lessees, she says. “We have 36 chances to communicate with the customer, allowing us to include brand messages and advertising on the monthly billing statement.”

BMW Financial also offers a credit-card program in which participants earn points redeemable at BMW dealerships.

“We want them to go to the dealership because I can't sell them a car,” McPherson says. “The credit card gives us another customer touch point.”

It also promotes good will between her firm and dealers. “How can we expect dealers to champion BMW Financial if they don't really know who we are?”

The period leading up to the end of a lease is a vital time for a captive playing its part in trying to keep a customer in the brand fold.

“We work with dealers to make sure the person coming off lease gets another BMW,” McPherson says. “I don't think a bank involved in auto leasing is interested in those customers getting another BMW.”

As the lease-expiration date nears, BMW Financial does a “countdown to tell customers what they need to do to terminate that lease and to get another BMW,” she says.

Customers receive a combination of letters, emails and phone calls that, among other things, cover their options, such as buying their leased car or leasing a new one.

“We also talk to dealers as to where that customer is in the process,” McPherson says. “We give dealers our customer information, such as vehicle model and amount of payments, so the dealer can have a more robust conversation with the customer.”

Privacy restrictions prevent captives from forwarding all their customer financial information to dealers.

BMW Financial is not above using what McPherson calls “a snoop element.” If, in the course of talking to end-of-lease customers, the firm learns they're eying competitive-brand vehicles, “we'll tell the dealer they are shopping around, but we won't say where.”

It is harder to foster brand loyalty in car buyers than lessees. Dealing with the former “is like herding cats,” McPherson says.

“With leasing, you know when the customer will be in the market for a new vehicle. With a retail purchase, nothing says that in 36 months that buyer will be out of that car.”

Lease customers, with a brand loyalty rate at 41%, are three times more likely to purchase another BMW.