The challenge: Transform CX with severe legacy system constraints and no budget for investment
The client is a private equity-owned auto-finance lender and car dealer with around 150 outlets in the US, mostly franchise-owned. It specializes in serving people with poor credit histories, including bankruptcy or vehicle repossession and provides the car financing itself.
The client first built its CRM system in-house twenty years ago to support its entire front and back office, from initial sales enquiries to loan underwriting, contracting, billings, collections and bad debt management.
However, with little investment over the years the CRM was holding the business back. It was ‘so fragile it can’t be touched’, and frequent system downtimes lead to internal stress and business dissatisfaction. 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). This resulted in inefficient manual processes and skyrocketing costs.
With no budget available to make improvements to the existing system or invest in a new one, the company sought to cut costs significantly, while improving operational performance. Specific automation and process improvement goals included:
- Assess lending risk more accurately, enabling it 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 measure: reduce delinquency and increase associate productivity
The solution: An outsourcing partner to provide investment and guarantee cost savings
We entered into a five-year outsourcing partnership with the client to transform its technology and processes, and directly manage lead conversion and first-line collections. The engagement spans three main areas: financial, technology, people and process.
Financial: We guaranteed the client a saving of 17% over five years, $4.3M, 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.
Technology: Our lean and purpose-built workflow automation suite and CRM system were designed, developed and maintained by the people who actually perform these activities for clients. This mitigates the operational risk that comes with complex software that requires huge teams of consultants to build and configure.
Our system in essence “sits on top of” the client’s existing legacy CRM system – it was integrated with legacy applications through hundreds of AWS APIs. We had the new software up and running in 16 weeks, eliminating any need for data migration and significantly reducing costs and risk. The new CRM and workflow:
- Integrates four front-office and three back-office functions
- Automates previously labor-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.
People and process: We focused on ensuring process rigor and building a culture of continual improvement to all activities. We took on two main processes for the client: managing leads and first-line collections.
We redesigned the lead management process to improve lead-to-appointment and appointment-to-buy ratios. Before booking an appointment for a customer our 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, we leveraged a multi-channel approach based on data analytics to redesign the first-line collections process. Our team contacts customers every payday, either weekly or fortnightly and uses analytics to identify the best day, time of day and channel for reaching out.
The results:
- $4.3M cost savings (17%), contractually guaranteed
- $2M technology investment achieved without any opex increase or capex requirements for the client
- 16-week rapid deployment of new CRM system
- 20% improvement in collections efficiency
