Winning the fleet management firm of the year in the 2012 BusinessCar Awards capped a year for Alphabet that saw it begin to smoothly incorporate ING Car Lease, creating a new leasing superpower, as chief exec Richard Schooling tells Paul Barker

Alphabet’s ?637m (£534m) acquisition of ING Car Lease, sealed last September, created a new major player at the sharp end of the UK leasing market with a combined fleet knocking on the door of 100,000 units in this country alone, and 460,000 across Europe.

It lifted the new, expanded Alphabet to number three in the UK charts, behind only Lex Autolease and Leaseplan, compared to the previous pre-merger positions of sixth for Alphabet and eighth for ING.

Alphabet chief executive Richard Schooling claims the merging of the two brands has been pretty much seamless, and as far as the majority of customers are concerned, the two are already operating as one company.

“One could argue that we are there already: for new customer acquisitions we are on one system and there is only a 2% overlap of existing customers [between ING and Alphabet], which was a bit of a surprise when we were both running at 50,000 vehicles,” Schooling tells BusinessCar. He said only “about a dozen” customers had a sizeable number of vehicles with both leasing companies, which made it easy to target them and ensure they are well managed through the process.

“We’ve been able to determine where their biggest strengths are, which account manager works best with them and the attributes of the business to see how we can work in one way as opposed to two organisations,” says Schooling.

He claims the major surprise has been how well Alphabet and ING have slotted together. “The one thing that’s been amazing is there has been a relatively similar culture of the businesses – a few weeks ago we were competitors and you wouldn’t see that today,” he declares.

While the outward-facing profile is that of one company, the two are still separate legal entities until the formalities are completed, and work is still going on behind the scenes with service providers and systems to bring them together. “There will come a phase where we decide which is the right system to go with and I anticipate us moving to a single platform by the end of this year or certainly early next year,” explains Schooling. “But from a customer experience perspective it should make no difference.” Former ING?boss Ian?Tilbrook is managing the merger.

He claims the merging of two formerly competing businesses has been straightforward, with no black clouds in the distance. “I absolutely don’t have one thing I can think of where I fear the day we have to tell customers [about it] – it’s not on the horizon,” he proclaims. “We had a conference last week and if you were at the back of the room from a rival company you wouldn’t have believed we were competitors recently.”

No redundancies

Alphabet claims there have been no redundancies as a result of it taking on ING’s UK business. “We need more staff. One of the brilliant things about this acquisition is that ING had a strong reputation, good customer service, great people, good products and service, and a steady stable profitable organisation that was well managed,” declares Schooling. “That meant the acquisition wasn’t about buying something we needed to do a lot with. We haven’t come in to transition, it’s not a situation where to make it pay back you have to drop a lot of cost.

“In fact, to make ING pay back you have to invest,” he continues. “And because there’s not a great overlap of customers, we don’t have to drop a load of resource. We don’t foresee a drop in service provision – we intend to utilise everybody.” The Leeds premises will remain as a northern base, with the company’s headquarters remaining in Hook, Hampshire, while the Bracknell location is likely to be rented out.

ING comes with a few added bonuses in terms of increasing Alphabet’s skills base. “We now have a level of light commercial vehicle competence we didn’t enjoy before,” admits Schooling. “We have LCVs but it’s only about 5% of our business, whereas ING was significantly more than that and it also has people that understand the ins and outs of running LCVs and can bring that to Alphabet LCV customers.”

ING was also stronger than Alphabet in the public sector, an area Schooling will “seek to embrace”, while the acquisition has helped “balance out” the firm’s portfolio. “We were a little premium top-heavy and we’re more balanced now,” he says.

Growth

Alphabet’s UK boss doesn’t see combining the two leasing firms as the end of his expansion ambitions, as he’s looking to continue the growth the company has enjoyed in the past few years rather than view the ING acquisition as the end of a process. “Look at Lex and Leaseplan, we could easily maintain good quality service at the level of Leaseplan, but I don’t envy the challenge of Lex,” he says. “150,000 units is one thing but 250,000 is huge and brings a grater challenge.”

Bridging the 50,000-unit gap to Leaseplan is, though, on Schooling’s agenda. “I absolutely see us up with Leaseplan, depending on what they do or whether they have other growth plans, but where they are now it’s achievable in a number of years, although I won’t say how many because I’ll then be targeted on it internally!

“Steady organic growth is very much the long-term aim. We have in excess of 300 people across two companies – we can really satisfactorily serve the needs of the customer,” continues Schooling. “We are continuing to grow, we need to be building that plan in.”

Alphabet’s UK chief predicts that becoming a larger leasing company will prove beneficial in itself. “As the number three player we will deal with more corporates, and this year we really want to be able to demonstrate that as well as getting our act together as one organisation, we’re conquesting new business and big business too,” he says. “Being in the top three does open doors to a degree – there will be cases where we’d be more obviously on people’s shortlists, but being on a list doesn’t get a deal. You have to deliver a high level of service, innovative product and value.”

Alphabet is keen to avoid falling into the trap of losing customer focus during a growth spurt. Having previously been quoted as saying Alphabet will maintain the “level of drive and dynamism some people feel has been missing from the upper echelons of existing players”, Schooling sought to clarify that statement to BusinessCar. “Some organisations have been a little too inwardly focused and what’s important to us is to make sure that doesn’t happen – not just during our merger process but arguably more importantly afterwards,” Schooling says. “Being number one or two in the marketplace means the opportunity to be perceived as a bit complacent. We are two businesses with a history of good service and not compromising, and we will add greater value by being one of the biggest players in the marketplace.

“It’s an exciting time for us at the moment: we’re able to drive added value – one plus one equals three, based on good people and service not based on cost reduction, and with innovative products, with more coming through the year,” he concludes.

Expanding the service offering

One method of growth Alphabet will seek to exploit in the wake of the ING Car Lease acquisition is to expand its service offering.

“Alphabet has always been into more varied ways of delivering service with the likes of eco schemes and salary sacrifice. We’re very much at the edge of these and can bring added value to the ING customer base,” says Alphabet’s UK boss Richard Schooling. “Funding cars is what we do, maintenance is the next biggest, then accident management and daily rental are equal. Then we’re down to more risk-based products. Driver licence checking, MID updates, providing risk assessments and consulting are all important, but important to select groups of customers more so than others, whereas the other areas are important to everyone as a basic requirement.”

Daily rental is be another area Schooling is seeking to expand, with Claire Rowland appointed head of rental last year. She moved from her previous role as head of sales for Enterprise Rent-A-Car’s fleet and retail broker channel. “The appointment of Claire is a sign that we’re looking to do more with that side of the business,” admits Schooling. “We’ve always done daily rental for the last 15 years, but it’s not been at the forefront of what we do. We didn’t tend to promote it as a stand-alone business – it was there if customers needed it, but we didn’t promote it as a stand-alone business.”

He says Alphabet has not previously looked for stand-alone daily rental contracts with firms that don’t lease through Alphabet. “If a major company wants a rental solution, we would be very happy to talk to them,” he says. “Rental, risk management, fuel card, accident management and driver licence checking – all these things we do well today, but to a degree we have not shouted about them with customers.”