Over the past several years, the use of LPR technology has had a huge impact on recovery rates. As the use of LPR has grown, lenders, forwarders and agents have gotten progressively better in using the data to improve performance and efficiency.
However, there is still one strategy for optimizing the use of LPR systems that is underutilized by many. If used intelligently, an LPR “staging” strategy can lower your average days to repo, speed up auctions sales and reduce costs. Outside of remaining compliant, these are the top 3 goals of virtually all repossession managers. This article will examine the key issues surrounding the use of such a strategy.
What Is LPR Staging
First of all, it is important to understand that a true staging strategy involves capitalizing on real time (live) vehicles sightings vs. the use of historical LPR hits that occurred anywhere from several hours to several months ago. By working with a partner that is capable of responding to vehicle sightings in real time, you will recover 3x the number of vehicles recovered when relying on historical data.
LPR staging programs are designed to run concurrently with your primary recovery strategies (agent, forwarder, skip). In other words, regardless of where the involuntary repossession assignment currently resides, all of your open cases should also be in one or more of the “live” LPR systems as a supplemental strategy. The rationale for doing so is compelling:
- Traditional repossession activity focuses primarily on where people live and work. LPR focuses on everywhere else.
- A very large percentage of LPR assisted recoveries occur more than 100 miles from where the lender thinks the car might be based on available data. LPR provides dense coverage outside of the area serviced by the assigned agent/forwarder.
The timing of the placement of a case with the LPR staging service provider is also important. Since LPR recoveries do come at a somewhat higher costs, those lenders that utilize a staging strategy will usually wait 10-30 days after the initial agent/forwarder assignment before putting the case in the system. This gives the agent/forwarder an opportunity to “skim the cream off the top” at a lower cost. Given the sharp decline in recoveries that occur after 20 days with the agent, we recommend deploying an LPR staging strategy at that point.
How It Works
The diagram below provides a graphical summary of how an effective staging process should work.
Key Administrative Issues
The key to making this strategy work smoothly, from both an administrative and compliance perspective, is system integration and/or well-defined processes. The most important issue is to ensure that when a vehicle is recovered by either the assigned agent/forwarder or the LPR staging service provider, information is shared in virtually real time to ensure that the case gets closed by the non-recovering party.
If you are using one of the primary industry management platforms (IREPO, RDN, IBEAM) and if your staging service provider is integrated into the platform, you should have no problem as each has the capability to manage multiple assignment types on the same VIN. There may be some additional work to do with your platform provider but the basic capabilities do exist within those systems.
Some lenders have opted not to use a separate staging strategy because they feel that they are getting some of the benefit of LPR through the forwarder/agent that has been given the base assignment. While this is true, we believe that significant opportunity is being left on the table….for a number of reasons:
- By utilizing a separate provider, you may get better performance from the vendors getting the base assignments. They know they are competing for the recovery.
- Not all LPR users are equal. There are significant differences in the density of LPR coverage offered by different firms. A firm that has contracted with 95%+ of DRN’s affiliates is going to pick up a lot more cars than a firm that has contracted with only 75% of the network.
- To maximize effectiveness of the live LPR strategy, your partner needs to operate a true 24/7/365 dispatch operation. Not all providers do.
- The speed that your LPR staging provider can issue a repo order to an agent who has called in with a live hit can make a big difference. Many recoveries are lost due to that wait time because the customer has arrived on the scene and stopped the process.
Also, you may well be able to negotiate a better rate for LPR recoveries if you have aggregated the activity with one service provider.
There are a number of financial benefits that come from the use of this strategy:
- Cars not recovered quickly by the agent or forwarder will often get picked up more quickly than if the case was rolled to a skip provider. Faster recovery means high auction values.
- Supplementing the base strategy with LPR staging early will meaningfully reduce the number of charge offs.
- LPR recoveries typically cost less than skip assigned recoveries.
Here is a simple illustration of the financial benefit of deploying an LPR staging strategy after cases have been with the agent/forwarder for 15 days.
Summing It Up
If you can deal with the administrative requirements, there is little downside and a lot of upside to deploying an LPR staging strategy.
Download a PDF copy of our LPR Strategy “Faster Recoveries, Higher Yields and Lower Costs”
Get a PDF copy of our License Plate Recognition Strategy to share among your coworkers and colleagues. Should you have any questions about how to implement an LPR strategy into your repo assignments, contact our team for a free consultation.