Why e-Contracting Doesn’t Work

In the software business, we often blame the customer for not embracing our latest innovation.  This has certainly been the case with e-contracting.  We solved a host of technical problems, from data standards to digital signatures, only to discover – dealers won’t use it.

They have some good reasons.  Laser forms require multiple copies and multiple signatures.  Signature pads cost money and customers don’t trust them.  Laser printers are expensive.  Inkjet printers are cheap enough, but you need one in each office.  Blank paper is $9.00 a ream, compared with contract stock brought in free by agents and field reps.  All things considered, the impact printer works just fine.

This reminds me of when we first put credit applications online.  Dealers already had the perfect solution.  “I go have a smoke while they fill out the app, and then I blast fax five lenders.”  How do you compete with that?

We showed that online credit, combined with automatic approval, closed more deals.  We showed that the internet was cheaper than the fax, and that the system would share data with your DMS.  We also kicked in a $20.00 spiff, as I recall, which we recovered in data entry costs.

Today’s challenge is no different.  Dealers are shrewd enough to know that the benefits of automation accrue mainly to the finance sources and the product providers.  As innovators, it is our job to show what’s in it for them.

Author: Mark Virag

Management consultant specializing in software solutions for the auto finance industry.

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