Synchrony’s Small Business Partners Target the Cost of a Missed Yes

Watch more: Need to Know With Anita Chalkley of Synchrony and Chris Taylor of Discount Tire Service Centers

A customer who walks out of a tire shop without completing a needed repair presents a problem that neither a credit score nor a sales report might be able to fully explain.

The customer may have been declined for financing. Or they may never have applied, may have been offered financing too late, or may have reduced the job from four tires to two because the full purchase did not fit the household budget. For merchants, these distinctions determine whether financing converts demand into completed purchases.

The gap between what transaction data records and what happens during a sales conversation emerged as a central issue in a PYMNTS discussion with Anita Chalkley, senior vice president and chief credit officer for Home and Auto at Synchrony, and Chris Taylor, vice president at Discount Tire & Service Centers.

Taylor said the company wants to know not merely whether a customer received a “no,” but whether the customer downgraded the purchase and whether an employee raised financing during the conversation.

“The biggest part is measuring that human element, which can be difficult if the data really doesn’t show,” Taylor said.

An employee who waits to mention financing may already have prejudged what the customer can afford, a practice Taylor described as “selling out of their own wallet.”

Synchrony approaches the problem from the underwriting side. Chalkley said its Synchrony PRISM underwriting system draws on thousands of data attributes, including partner information, Synchrony data, traditional bureau information and alternative data. The objective is to approve customers without extending credit beyond their ability to repay. Synchrony therefore measures sales and completed purchases alongside whether accounts are being paid.

Taylor applied a different test at the store. Did the financing pay for the work the customer needed?

“The approval rate is the easiest metric for us to really fool ourselves with,” Taylor said. “If a customer got approved for $700 and they have a $1,300 bill, they really just got a slightly more expensive ‘no.’”

That makes the size of the credit line, the completion of the repair and the subsequent performance of the account parts of the same outcome.

Discount Tire also watches whether customers return and whether higher approval rates coincide with more refunds, complaints, disputes or buyer’s remorse, Taylor said.

Synchrony monitors delinquencies and losses, along with complaints and other customer feedback, Chalkley said.

What the Application Cannot See

The limitations of conventional data become especially apparent with consumers whose financial lives do not fit neatly into established credit files.

Chalkley cited her own experience moving to the United States from Australia as an adult. Although she had owned a home and used credit in Australia, that history did not accompany her into the U.S. credit system.

Synchrony is also using customer-consented cash flow information to reassess some applicants who otherwise would be declined. Roughly 40% of customers offered that option consent to sharing their bank account transaction data, Chalkley said.

The merchant may possess another layer of information.

Taylor offered the example of a self-employed customer arriving in a work truck. A thin credit file may reveal little about that person’s business, while the merchant can see that the vehicle itself is essential to earning income. A long-standing customer who has paid cash for years may likewise have a limited credit profile but an extensive service and purchase history with the merchant.

Taylor described another signal as “budgeting out loud.” A customer facing a higher tire or repair bill may ask for the minimum work required to keep the vehicle safe.

“Some systems might treat them like a hesitation or a risk, but in my opinion, that actually looks like discipline,” Taylor said. “That looks like financial discipline and budgeting effectively.”

Commercial customers make the consequences more pronounced. For a tradesperson or small business owner, an operable vehicle can be a productive asset rather than simply transportation. Losing a customer after a false decline can also mean losing future consumer purchases, referrals and potentially their business on a commercial fleet account, Taylor said.

Merchants can provide information such as the amount a customer wants to finance and the length of the customer relationship, helping lenders calibrate credit lines, Chalkley said. There are also less formal signals, including changes in foot traffic, prices and customer sentiment.

Both executives also described attempts to improve the point at which financing enters the purchase. Chalkley cited online visibility, prequalification without an impact to a credit score and assisted in-store applications as different routes for customers. Taylor said Discount Tire trains associates to mention payment options at the beginning, middle and end of the sales process rather than presenting financing only when a customer is struggling to cover the bill.

Watch the full interview with Anita Chalkley and Chris Taylor to learn:

What credit data can miss.

How merchant observations can inform financing decisions.

Why the timing and consistency of a financing offer can affect customer behavior and employee practices.