Wells Fargo Commercial Distribution Finance serves more than 11,000 outdoor product equipment dealers across North America and the rural equipment market is a bright spot for the company that has been partnering with OEMs and dealers in the industry for over 40 years.
It’s been 3 years since Wells Fargo acquired the North American portion of GE Capital’s Commercial Distribution Finance and Vendor Finance businesses and since then, the company has added more than 2,000 outdoor product dealers, introduced its CDFconnect training platform as well as its Customer Online Management System (COMS).
Rural Lifestyle Dealer recently talked with Mike Horak, president of Wells Fargo Commercial Distribution Finance's outdoor products group and Kimberly Manuel-Dickens, strategy leader for the group, about what’s ahead for the company and its dealers.
Mike Horak is president of Wells Fargo Commercial Distribution Finance's outdoor products group.
Rural Lifestyle Dealer: Can you update us on what’s new from Wells Fargo?
Mike Horak: In the outdoor power products group this past year, we've modified our structure to have 10 people who are going out and visiting our dealer customers. They are setting up new customers and are also working with our existing customers on a much more consultative basis. This means they sit down and understand where the dealers would like to take their business in the short- and long term. For instance, we might be learning about whether they are setting up a succession plan or opening up a new location.
So, our team is more engaged with our customers and I have asked them to be more than just inventory lenders. We want to provide our entire bank solution to dealers. When you boil it down, although Wells Fargo might have 90 different products, the ones that resonate with the independent dealer are treasury (banking and checking), commercial credit cards, SBA loans and commercial real estate. We have trained the team to be able to talk intelligently on those programs, but more importantly to listen to see where the customer might have needs.
It is a bit of a change for us. In the past, we were primarily inventory lenders and now we would like to be more solutions providers to the dealers.
RLD: How does this expanded team integrate with what Wells Fargo had previously?
Horak: Previously, we had 5 individuals that were charged with adding new dealers and who primarily talked with them by phone. The expanded team is now expected to meet with our key dealers face-to-face to develop a deeper, more holistic relationship as it relates to the dealer’s overall business.
We have assigned these employees along the lines of OEM relationships to some degree. For instance, one of our employees might work with compact tractor manufacturers and they will have more compact tractor-type dealers in their portfolio. Another one might work with the hay baler segment and they would be working with a group of dealers in that segment.
RLD: Can you explain more about how your team is carrying out this consultative approach?
Horak: In a consultative selling manner, you are asking open-ended questions to get a much better feel for where the customer wants to take their business. So, when the dealer is describing where they want to go with their business, our team offer help as well as to listen for “trigger words,” such as whether they are opening up a new location. They then might say something like, “We have a wonderful team that does commercial real estate loans. Would you like us to bring that person in to help you?”
The approach is based on sitting down with the dealer, listening for the possibility of a need and introducing how we may be able to meet that need. Again, most of our Commercial Distribution Finance customers over the years really viewed us as inventory lenders. Now that we have been part of Wells Fargo for 3 years, we need to get that message out that we are more than just inventory lenders.
RLD: Can you comment on how technology is impacting the future of financing?
Horak: Technology is certainly having a greater impact in the world of financing. As people have adopted enhanced technologies in their daily lives, they certainly expected their financing and banking partners to follow suit. In response, our industry is ramping up better digital and automation capabilities. We, at CDF, are putting the right investments in place as well to ensure we can provide faster and more real-time service associated with today’s standards. Customers will soon see enhancements to our online payment, inventory management, and analytic reporting systems.
RLD: Wells Fargo doesn’t yet offer consumer financing other than for production agriculture customers. Will that change?
Horak: That is under continuous evaluation, but I can’t give you a sense for the timing of it. I think the impetus will probably come more from our OEM relationships that would like to have a retail offering from us as well. We do understand the value to dealers of having a combined retail and inventory finance program that is driven through us. It makes for a seamless financing option for the dealers. While we are not to the point where can deliver that, we are in talks with the broader Wells Fargo team about how to address.
Kimberly Manuel-Dickens is strategy leader for Wells Fargo Commercial Distribution Finance's outdoor products group.
RLD: What is Wells Fargo watching for in the coming year?
Kimberly Manuel-Dickens: Looking at 2019, the general consensus is that we are looking at continued growth in our economy, but certainly at a slower pace than the trailblazing we saw in 2018. We don't have a lot of concerns, but, at the same time, we understand that our customer base will be adjusting to a slower pace. We tie those considerations into how we evaluate our dealer health and help them proactively manage financing costs associated with interest rates.
From time to time, we bring our economists to dealer meetings and strategy planning meetings and reconcile what they are seeing with our internal standards to understand where we need to be more flexible as customers work through these cycles.
Horak: We haven't cycled down from a macro perspective since '08-'09, so we are very mindful of that and want to make sure our eyes are wide open. We want to be able to help our partners if the economy starts to slow a bit from a macro perspective, and we want to make sure we are all watching it together.
RLD: What are you recommending that dealers be watchful of this year for their own businesses?
Manuel-Dickens: As the interest rate environment fluctuates, dealers will need to proactively manage their inventory and financing costs and our COMS (Customer Online Management System) can help them. Through COMS, dealers can can make payments using the secure online banking system, manage inventory, and review detailed analytics and reports. Also, dealers can manage inventory more efficiently with real-time monitoring tools.
For instance, an alert might tell them they are coming off the interest-free inventory flooring period. We want to make sure they stay healthy, such as paying off flooring before they incur too much interest costs.
COMS also helps with the aging of equipment. We want the dealer to be mindful of trying to sell that equipment before it sits on their books too long, creating interest. We are keen on not having dealers pay very much in interest because that is usually where they can get into problems from a deficiency perspective.
We have been working on that now for over a year to get more and more of the dealers to use the system and working with our OEMs to drive that message out to their dealer network.
RLD: What kind of practices are your most successful dealers following?
Horak: I think the ones that do it really well are using online marketing, such as their websites, for inventory that might not be moving as quickly as they would like. Successful dealers can more quickly identify where their issues are and then proactively find ways to move equipment.
Manuel-Dickens: We have seen our dealers make more investments in advancing their web sales capability, how they sell to millennials and understanding that not everybody is coming through their door to make a purchase. In addition to that, I would say the use of general business intelligence systems to see how everything is performing in their operation.