Fixed Ops Journal - October 2021 - F25

FIXED OPS JOURNAL
5
Interview by Dan Shine
minutes with ...
 Nate Chenenko, director, Carlisle & Co.
Dealership service departments that don't offer
point-of-sale fi nancing to customers are missing
a big opportunity, according to research by
Carlisle & Co. Point-of-sale fi nancing, led by the
two largest providers - Sunbit and DigniFi -
lets customers pay for a costly repair in installments.
Instead of a customer possibly skipping a
$1,000 repair bill because he or she doesn't have
the money, the customer might approve the
work if they could pay $100 a month for 10
months. Customers can apply for the fi nancing
on the spot and typically pay lower interest than
their credit cards charge. Payback typically occurs
over three to 12 months. Beyond the interest,
fees to customers are extremely low - a few dollars
for late fees. For dealers, most of the fi nance
providers charge a monthly fee of a few hundred
dollars. Th e fi nance providers also take a percentage
of each transaction, which is typically 1
to 2 percentage points above the credit card interchange
dealers already pay. Carlisle & Co. Director
Nate Chenenko, 35, discusses why dealership
fi xed ops departments should consider adding
this service. Here are edited excerpts.
On the benefi ts for the dealer
First, point-of-sale fi nancing helps service
retention. Although you're not making the service
cheaper, you're making it more aff ordable
by allowing people to fi t the payments into
their lifestyle. We estimate off ering point-ofsale
fi nancing will increase service retention
by 2 points. Not 2 percent - 2 points. For example,
if your service retention is an industry
average 42.5 percent, you may be able to get to
44.5 percent. Th is assumes you only take share
from independent repair facilities - it does
not include any other potential customers you
could conquest. Also, point-of-sale fi nancing
generates higher dollars per repair order,
based on our consumer survey. Part of this is
statistical bias, for a few reasons, but mostly
that customers don't fi nance inexpensive
transactions like oil changes. Based on our data,
we believe customers who fi nance spend
roughly 20 percent more per transaction. Of
course, not everyone fi nances, so we incorporate
that into the math.
On the overall impact for the dealer
Depending on the dealer's existing service
extremely low-risk way to increase your service
retention and fi xed ops margin.
On what automakers are doing to help dealership
fi xed ops departments bring this option
to customers
Most manufacturers have point-of-sale fi -
nance vendors on their " approved vendor "
list, which helps. Some manufacturers are
subsidizing the dealer's cost to use point-ofsale
fi nancing. Th is means they're paying for
the monthly fee or covering a portion of the
transaction fee. However, manufacturers are
only doing this for a relatively short period of
time.
On whether dealership customers, who typically
have a higher income, would be interested
in point-of-sale fi nancing
We see higher take rates on fi nance options
"
" Overall, we feel
point-of-sale
fi nancing is an
extremely low-risk
way to increase your
service retention and
fi xed ops margin. "
NATE CHENENKO,
director, Carlisle & Co.
retention and dollars-per-RO numbers, the
outcome diff ers. Th e average dealer would see
a 6 percent increase in fi xed operations sales.
Th is encompasses parts and service sales.
Th ere are some down sides. Th e fees cut into
dealer margin very slightly - remember, fees
are often only 1 to 2 points higher than credit
card interchange fees. Service advisers must
be trained. And it is yet one more subscription
at the dealership - and dealers already have
so many subscriptions.
Overall, we feel point-of-sale fi nancing is an
from higher-income customers. Th is could be
because higher-income customers are more
likely to be approved. Dealer customers typically
have signifi cantly higher income than
non-dealer customers, so this shows dealer
customers are likely to use fi nancing, even
though you might expect they don't need it.
On what automakers can do to help point-ofsale
fi nancing become more common in the
service drive
We recommend automakers follow this progression:
1.
Conduct research on their customers from
their brand. Our research is industrywide, and
results may diff er for their brand.
2. After that, they should run a pilot. Pick a
few dealers and pay them to use point-of-sale
fi nancing. For some, they should pay the
monthly fee. For others, cover the percentage
the point-of-sale fi nancing company takes.
See which ones incentivize the desired behavior.
3.
Over the long term, track dollars per RO for
point-of-sale fi nancing versus credit cards
and versus cash. And track service retention at
the customer level (do customers who use
point-of-sale fi nancing return more regularly/
consistently?) and at the store level (do stores
that off er point-of-sale fi nancing see better retention
than they did before?). 
OCTOBER 2021
OCTOBER 2021
PAGE 25
"

Fixed Ops Journal - October 2021

Table of Contents for the Digital Edition of Fixed Ops Journal - October 2021

Contents
Fixed Ops Journal - October 2021 - Intro
Fixed Ops Journal - October 2021 - F1
Fixed Ops Journal - October 2021 - F2
Fixed Ops Journal - October 2021 - Contents
Fixed Ops Journal - October 2021 - F4
Fixed Ops Journal - October 2021 - F5
Fixed Ops Journal - October 2021 - F6
Fixed Ops Journal - October 2021 - F7
Fixed Ops Journal - October 2021 - F8
Fixed Ops Journal - October 2021 - F9
Fixed Ops Journal - October 2021 - F10
Fixed Ops Journal - October 2021 - F11
Fixed Ops Journal - October 2021 - F12
Fixed Ops Journal - October 2021 - F13
Fixed Ops Journal - October 2021 - F14
Fixed Ops Journal - October 2021 - F15
Fixed Ops Journal - October 2021 - F16
Fixed Ops Journal - October 2021 - F17
Fixed Ops Journal - October 2021 - F18
Fixed Ops Journal - October 2021 - F19
Fixed Ops Journal - October 2021 - F20
Fixed Ops Journal - October 2021 - F21
Fixed Ops Journal - October 2021 - F22
Fixed Ops Journal - October 2021 - F23
Fixed Ops Journal - October 2021 - F24
Fixed Ops Journal - October 2021 - F25
Fixed Ops Journal - October 2021 - F26
Fixed Ops Journal - October 2021 - F27
Fixed Ops Journal - October 2021 - F28
Fixed Ops Journal - October 2021 - F29
Fixed Ops Journal - October 2021 - F30
Fixed Ops Journal - October 2021 - F31
Fixed Ops Journal - October 2021 - F32
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