Relationships do the work

Relationships do the work

Peter Brook has built his car dealership and his vehicle finance company in the same way, he tells Peter Baber – by fostering relationships.

Lawton Brook is a high-end, single-site prestige car dealer based in Knaresborough selling Bentleys, Aston Martins, Ferraris and so on, and regularly turning over close to £20m. Its sister company, Oracle Asset Finance, provides finance for a range of such dealerships all over the country and, despite being only five years old, already underwrites £250m a year. So what makes both companies such a success? After spending an hour or so with Peter Brook, their founder, or “owner driver” as he prefers to call it, I think I have a pretty fair idea.

It’s not any flash presentation. Lawton Brook is actually one of the more low-key car dealerships I have visited. Nor is it particularly big-spend advertising. Oracle does advertise in the usual Sunday newspapers, but Brook himself has a more unusual choice for the place he thinks his advertising works best. It’s not down to IT either – at least not on its own, but Oracle does make very sophisticated use of its database records.

No, the real ingredient that seems to underlie much of Brook’s way of doing business is the relationships he says must first define every successful transaction. “In most things, but especially in our kind of market,” he says, “people buy things from people. They interact with people. If your whole business strategy revolves around the product, people will only deal with you if they view you as the cheapest.” Getting this right, says the 47-year-old, who has been selling cars for well over two decades, is the reason why he now thinks he has the best job in the world.

“Even when we were starting out,” he says, “working 14-hour days were nothing, because if you were enjoying every minute of it, it didn’t seem like a job. It was more like a hobby, but you were earning a decent living on the back of it.” And that, he says, had a definite effect on his selling success.

“People gravitate towards people who are enjoying what they are doing,” he says. “I certainly was.” Making the most of relationships helped get Lawton Brook off to a flying start in the early 1990s when Brook, who up until then had managed a BMW dealership, teamed up with Jeremy Saville, another former BMW dealer, to launch the company.

“He had got a bit disillusioned about working for a main agent in a franchise,” says Brook. It also helped when, many years later in 2006, as they came to set up Oracle, Brook looked for someone from the finance industry to run it. They found someone when, owing to their growing size, their bank RBS said they >>would have to move from the local Harrogate branch to RBS Corporate in Leeds.

“RBS Corporate’s vehicle finance arm was Lombard, run in Leeds by one Andrew King,” says Brook. “We hit it off from day one. He was very enthusiastic, and always ready to go that extra mile. When you come across people like that, you always gravitate towards them. So when he said: ‘I am thinking of going on my own. Would you support me?’ I said: ‘We can do better.’” In fact, Brook had already been thinking about setting up a dedicated vehicle finance company, mainly because he had been so unimpressed with what was out there.

“There were a couple around,” he says, “but they were very much lifestyle businesses. With them, a broker would find the name of someone in the market for a motor vehicle, try and extract as much profit as possible from that person, and then farm their name out to every lender in the market place. That has a lot of negatives against it, because the chap has a lot of credit searches against his name.” Once again, Brook felt the problem with such a deal was also the skewed relationship with lenders further down the line.

“It doesn’t add any value to the lender,” he says, “because they are processing deals but never actually get to write the business. They have a cost there, but are never making any profit.

“We thought we could add value to the lender, because we have a level of loyalty to them. We weren’t giving customers to them and ten others. Instead we would think who would do the best deal.

“So we showed Andrew what our ideas were and he started in a tiny office. We were very keen on keeping the overheads low until we knew it would work. But from day one it was a great success.” Making sure relationships gel remains a key consideration today too, in the way Oracle goes about recruiting. In the last round of recruiting, the company only needed three more people to add to its existing staff, but it nonetheless asked 60 to come individually into the office and all of them were interviewed by Brook personally.

He has no regrets. “If you get the right people in,” he says, “it is so much easier to manage.” He is so determined to make sure they get the right person – that in fact on more than one occasion he has paid the successful candidate’s rent for their first few months in Yorkshire while they relocate. Above all, he is looking for people who can get their message across in a concise but understandable way. It’s why, he says – unusually for a finance firm – almost all the sales staff are educated to degree level.

“Success is all down to how well individuals communicate,” he says. But much of this is also a result of the way the company chooses to view what they do. Brook says it is much more, once again, about nurturing a relationship than might be the case with conventional finance companies.

“When we were first thinking about this business we looked at different markets, and the one we want to model most closely was the insurance market,” he says.

“If you have your vehicle insured with a customer, they will write to you, and you feel like you have a long-term relationship. There just wasn’t that relationship in the vehicle finance market as it was. We wanted to write to them on a regular basis. As a result we have a lot of repeat business. Most of these guys change their vehicles every three years, so we are always already talking to a customer at a time when they are thinking of changing a vehicle.” It stands to reason that, despite being based in Knaresborough, many of the company’s clients are based in the South East and the city in particular. But talking to these customers has led to changes in the way the finance the company offers is structured.

“We balance their finance package so they have a large payment in March when they have just received their annual bonus,” he says. It’s a result of doing this customer research too, that has affected Oracle’s preferred choice of advertising. Brook says one of their most successful channels has been JetAway, the Jet2 in-flight magazine. It’s not hard to see why.

“How many phone calls have we had from people sitting on the beach in Marbella?,” he says. “I’ve lost count. These guys run very intense lifestyles, and never have time to do the personal stuff they need to.

“They love their holidays for two to three days, but four days in they get kind of bored. That’s when they ring and say, ‘I’ve seen your advert’. It always makes me laugh when I am on a Jet2 plane and see our advert torn out.” The cause for building better business through warmer relationships hasn’t always gone smoothly – Brook had originally intended to launch Oracle several years earlier than 2006, but the man they had chosen to lead the new venture got cold feet when his wife became pregnant. Curiously enough, it was exactly the same thing happening to Brook that made him decide to launch out on his own back at the start of the 1990s.

“He was then in a different position to us financially,” he says. “He thought, ‘I need to be careful here, and can’t take the risk right now’. It was the opposite reaction to me. So we parked the idea for a few years.” Because of the nature of the cars Oracle finances – generally only those costing in excess of £25,000 – there have inevitably been some disappointed customers as well.

“You always have to remember that from a lender’s point of view the main thing is getting their money back,” he says. “We quite often say to a potential customer, ‘With the greatest respect, I am afraid you are just not right. You don’t fit the profile of what our banks are looking for.’ We also couldn’t fund a Citroen Saxo, say, because we spend a lot of time finding out about the customer, and it wouldn’t be worth it for a car like that. So in the nicest possible way let them down, always keeping in the back of your mind that in five years they might be needing a Porsche.” They might indeed, and they might be needing much more than a Porsche. Brook finds the Sunday Times Rich List interesting reading from a personal point of view, because of the number of people he recognises.

“I look at it and say, ‘He’s a customer of ours, and he’s a customer of ours’.” But why should people who are already worth so much need the services of vehicle finance company? Couldn’t they afford to buy their dream cars outright? Brook says it’s a question he is often asked.

“Why do Premier League footballers need us?” he says. “The answer is that normally, at the rates we offer, rather than buy the vehicle outright they can get a much better outlay for money by putting their cash somewhere else to have it working for them.

“The rates in UK are at the lowest they have ever been. You clearly want to maximise how you make your money go to work for you, and the one thing about high net worth individuals is that they have very, very good advisers. Always remember that the cost of owning your car isn’t just the price – the hidden cost is depreciation. A car that costs £50,000 today may still be worth £50,000 in two years, so you would buy it, even though it seems an incredible sum. But if you buy one for £25,000, it may be only worth £15,000 in two years, so it’s not as good a deal as a more expensive vehicle. But the only way you can maximise that kind of benefit is to use car finance.

“We can look at future values. We have expensive software that allows us to look into the future. So we have a pretty good idea what that car will be worth in a year.” That is why at Lawton Brook they often persuade customers to go for cars which are different from the ones they may have initially set their heart on, because the other car has a much better resale potential.

So what, then, of plans for the future? “We have started funding classic cars,” he says. But at the moment his eyes are beginning to focus on taking Oracle into Europe. “In a couple of months we are meeting with one of our lenders in Germany, as we see that as a market.

“The high-end vehicle side in Germany is a very buoyant market. In fact it’s the second biggest market in the world outside the US.

“China is just coming online too. We wouldn’t go there now, although I would never say never.” Germans do, however, have a much more cautious attitude to debt.

“But that’s not to say you can’t put a model in there that works for you, and a lot of our lenders are pan-European now. Could we sit there as a niche player? It’s always worth exploring.”