Customers hate to wait. That's why BMW Group Financial Services has spent three years developing and rolling out e-contracts to replace paper finance contracts. Jim Henry of Automotive News sat down with BMW's Shaun Bugbee to learn how the program works.
E-contracting is difficult. F&I managers and customers don't always accept it. Analysts have worried in the past whether e-contracts are legally binding. Regardless, BMW Group Financial Services has pressed on. Last week, it added the Mini brand to its e-contracting system.
Automotive News Special Correspondent Jim Henry caught up with Bugbee last week at the captive's headquarters in Woodcliff Lake, N.J.
How's e-contracting coming?
We have 73 percent utilization of the system. We had 150 dealers active at the end of last year, out of a total of 339 dealers. Through the end of March, it was about 185 stores.
What about this year?
By year end, we expect to have about 250 stores. We wanted to get dealers representing the lion's share of our volume first. But we have a plan to get everybody on, including the single-point stores in markets where we don't have that many dealerships, like Idaho.
And we just launched Mini e-contracting.
What about Rolls-Royce?
The focus we have is completing BMW and starting Mini. The Rolls-Royce business is still very personalized. In the U.S. last year they sold about 1,000 cars. We had around 40 percent penetration of that business and three-quarters of that was lease.
And the rest were cash?
And the rest were cash.
Does "73 percent utilization" mean 73 percent for the dealers who participate, or 73 percent of total U.S. volume?
That's 73 percent for those dealers who have it.
Are you doing this on your own, or do you buy someone else's system?
One thing that makes our system different is that we can accommodate lease, retail, certified pre-owned, non-BMW cars, you name it. Other solutions are typically exclusive to certain contract types.
We do work with a company on the signature technology. But otherwise we've been working on our own solution for three-plus years now.
Reportedly, the signature technology is tough. What else makes e-contracting so hard?
It takes a lot of care and feeding that maybe doesn't show, like the states are constantly changing the legalese on contracts and we've got to stay on top of that.
It is going under constant legal review. Just because you were compliant six months ago doesn't mean you're compliant now.
Is it worth it?
We believe it's a differentiator in the market. The customer experience is a differentiator in the market. The biggest thing is it takes 30 percent less time the customer has to spend in the box.
Where do the time savings come from?
The savings are in the actual execution of the contract itself. When the customer is signing all the documents, it also includes the insurance products, the ancillary documents. The customer still reads everything. They still get all their disclosures. It just takes that much less time than going through all the paper documents.
What do customers think?
The major feedback we get is very positive. When we have had less-positive feedback we've looked into it, and it tends to be when the dealership employee isn't fully comfortable with it. Maybe they aren't fully trained with it or experienced with it. And if they're not comfortable with it, then the customer isn't going to be comfortable with it, either. We spend a lot of time and energy training on this.
Can customers opt out if they prefer paper?
The customer always has an option to switch to paper if that's what they prefer. I think when we have this completely rolled out it's going to max out at 85 or 90 percent. I don't think it will ever be 100 percent.
If it takes 30 percent less time, how much time are we talking about?
The average transaction takes 30 minutes, so we're talking 10 minutes off the process. That's not including any time spent waiting for F&I. J.D. Power has started to delineate that in their results. People who wait more than 30 minutes are 50 percent less satisfied than people who wait less than 30 minutes. That's one of the reasons why we're all about the technical process and innovation.––Paul Duchene
