About 22 years ago, I worked at a retail store back in Canada. While I was there, the retailer upgraded to using computers to manage inventory from checking a manually updated catalog. One of the features of using computers was now we were going to be able to cross-sell.
Anyone who's ever sold anything knows what cross-selling is. Someone buys a stereo, you try to sell them batteries. Today, it's impossible not to go somewhere and buy something and not be asked if you want to buy an extended warranty. It makes you wonder if you can buy insurance on extended warranties, we have so many of them floating around the filing cabinets in our houses.
Sales techniques like cross-selling or value-adding have been around since the dawn of time. Buy-one, get-one, two-for-one, buy-one-get-the-next-for-99-cents. There's an entire dictionary of terms used to try and get people to buy more than they need or want.
There was news last week that Seton Hall University, in partnership with Microsoft, will be giving away free smartphones to all incoming freshmen this September.
The goal is to make students more productive and to give them the tools the school deems necessary to succeed.
Should auto lenders follow a similar path? Should lenders offer free smartphones to new customers, indirectly as an incentive to win new business, but also as a tool to decrease delinquency rates? Lenders can give the phones away with apps pre-loaded on them that help remind borrowers about upcoming or late payments, or provide them with easy tools to make payments directly from their phone.
Lenders could also use the phones to entice borrowers to allow themselves to be contacted via cell phones and text messages, improving right-party contact rates.
Long gone are the days of giving away a free toaster to every new customer who opens an account. It's time to be more proactive, as a marketing strategy and a collections strategy. Not often does an opportunity come along that can help both departments at the same time.