The Forwarding Generation and the Value of a Box of Donuts

How Repo Forwarding Changed Agency Marketing

EDITORIAL

A few months ago, I was reviewing a new agency submission for the CURepo Directory. The company checked several boxes that immediately caught my attention. They were members of two national repossession associations, ran LPR and provided a physical address and contact information. In other words, they were a legitimate, established repossession company. But there were some little things missing.

No website, no logo, no company description and no well written marketing materials to speak of.

Twenty years ago, that might have seemed unusual. Today, it is surprisingly common.

In researching repo news stories where the repo company is known, I often look them up online. And often, there was little or no internet presence.

And why would they need it in the age of repossession forwarders? Many agencies are very successful in the forwarder model.

But in many ways, it highlights one of the biggest changes the repo industry has experienced over the last two decades.

The loss of direct lender relationships and the rise of the forwarding generation.

When Agencies Had to Market Themselves

There was a time when repossession companies survived or failed based largely on their own ability to develop lender relationships.

The agencies marketed themselves. Owners hired business development officers, attended credit union meetings and visited bank branches with business cards, marketing material and the obligatory boxes of donuts.

They joined every national association they could to get in their directories. They attended conferences not only to learn, but to sell. One of the biggest questions attendees always had for conference promoters was always “Which lenders are coming?”

The lender was the customer.

The goal was “old school” simple: build enough trust that a financial institution would place assignments directly with your company.

Obviously, success depended on operational performance, but it also depended on visibility. If lenders did not know who you were, they simply would not hire you.

Marketing mattered.

The Rise of Forwarding

Then the forwarding industry matured.

Forwarding was nothing new. The repossession industry invented it going all the way back to the 1920’s. But it was usually a secondary function to satisfy clients by providing coverage outside of their own areas of operation.

This practice was an industry standard for decades until the first major successful fulltime forwarding company, Kevin Flynn’s infamous Renovo, arrived on the market in 2005. Soon after, a parade of new forwarders opened and the market boomed.

Much of the industry revolted, myself included. Many saw the interception of the direct lender to agent relationship was at risk and they were right.

But the forwarders persisted and over time, they grew into taking the lion’s share of the market.

Forwarders created tremendous efficiencies for lenders. Instead of managing dozens or hundreds of individual agency relationships, a lender could rely on a centralized network to assign, monitor, and manage recoveries.

Despite some industry pushback, for many agencies, this was actually a welcome development.

The need to constantly pursue new clients diminished. Assignments arrived through established networks. Compliance requirements became standardized. Performance metrics became increasingly important.

No longer did smaller agencies have to compete with larger agencies at an unfair advantage for lender’s attention. The forwarder was already doing that on their behalf.

Gradually, many agencies shifted their focus.

The customer was no longer necessarily the lender. The customer became the forwarder.

That distinction may seem subtle, but it changed how many companies approached their business models.

An Unintended Consequence

Forwarding solved many problems. But it also created an unintended consequence.

Many agencies stopped marketing themselves.

Why invest in a website if assignments are already coming in?

Why spend time developing lender relationships if a forwarding company is handling client acquisition?

Why create brochures, service descriptions, and online profiles when your scorecard and recovery rates are what matter most?

Why spend all that money on donuts!

For years, this approach worked.

In a high-volume assignment environment, agencies could remain almost invisible to the outside world while maintaining full assignment queues.

The industry became filled with many small companies that were excellent at recovering collateral but largely unknown outside their forwarding networks.

The Visibility Problem

Today, that reality is beginning to change.

Volumes have softened in many markets. Lenders continue to evaluate vendor performance. Some institutions are exploring regional preferred-agent programs. Others are increasing direct engagement with recovery providers.

As this occurs, visibility matters again.

Not because a flashy website makes a company a better repossessor. It doesn’t.

Some of the most professional recovery operators in America have outdated websites or none at all.

At the same time, some companies with polished marketing materials struggle operationally.

The issue is not appearance. The issue is discoverability.

When a lender, credit union, or vendor manager searches for a qualified agency in a particular market, they must be able to find that agency.

Ironically, the problem that the original repossession associations solved with the directories in the low tech past began rearing its ugly head.

An old truth reemerged; if a company cannot be found, it cannot be considered.

The Next Competitive Advantage

In the current repo thin environment it may come to be that the agencies that thrive in the coming years will likely possess two qualities.

First, they will continue to demonstrate operational excellence.

Second, they will become visible.

That visibility does not require expensive marketing campaigns.

It may be as simple as maintaining an accurate online profile, participating in industry directories, providing company information, sharing service areas, and making it easy for potential clients to understand who they are and what they do.

In other words, visibility is becoming part of professionalism.

A Return to Balance

This is not an argument against forwarding. Forwarding companies remain an essential part of the repossession ecosystem. Forwarding is not going away.

They provide value to lenders and agencies alike. Many have helped professionalize the industry and create opportunities for companies that might never have gained access to national clients otherwise.

Aside from advertisers, I have many friends in the forwarding industry and even spent a year marketing in one. The assignment slowdowns hurt them too.

As a result of low volume and lenders looking for new strategies, perhaps the pendulum is swinging back the other way?

If so, how far will it shift and for how long? Who knows.

With twenty years of forwarding evolution under its belt, an entire generation of repossession companies have become completely reliant on them. They’ve learned how to become excellent vendors while forgetting how to become visible businesses.

As direct assignments continue to rise and lenders increasingly seek trusted partners, agencies may find themselves rediscovering something previous generations already understood.

You can be the best repossessor in town. But if nobody knows you exist, somebody else will always get the call.

And that may be one of the most important lessons the forwarding generation is about to relearn.

Are we going to see the return of agencies dropping off boxes of donuts with lenders and collections managers?

Probably not. But I think we may see some renewed interest in self-marketing.