Are you ready for the glut of lease vehicles about to hit the market?
According to J.D. Power, nearly 2 million vehicles are coming off lease over the next five months. Attracting and selling to end-of-lease customers is a huge opportunity to emerge stronger from the current market downturn.
Competition for these buyers will be fierce. Other dealerships, banks and captive lenders are all going to want a piece of the pie. Aggressive retail programs launched during the quarantine add to the competitive landscape.
It pays to increase your lease portfolio. Customers will likely come back to you for service, and the trade cycle is short. If you deliver a great customer experience, customers will happily return every couple of years to trade up. This means you not only get repeat sales, but also quality used inventory, potentially with a known service history.
We generally see that most dealership lease portfolios are around 5-10 percent of overall business, but you can double or triple that penetration with the following four tactics.
Update your website now with actionable information.
Customers may not be packed in your showroom right now, but you can bet they are researching vehicles online. According to J.D Power, as many as 14 percent of end-of-lease customers are thinking about their next vehicle a year before lease end. Only 3 percent were thinking that far ahead in 2017.
Therefore, now is the time to update your website with details of your lease program. Include options to defer payments and extend or terminate leases.
Out of necessity, car buying and leasing processes have moved online which makes online retailing tools a “must-have.” Implement or improve your digital retailing strategy with tools that are accurate and fully integrated with your CRM, desking, and inventory solutions. This gives the best customer experience, eliminates double entry of data and allows you to control the sales process while migrating some of your process online.
Transparency and trust are crucial to a successful online retail experience. Make sure your tools display penny-perfect calculations with a dynamic payment builder and provide complete information about F&I products and trade-in details. What customers see on deals online, they should see on deals in your store.
When a lead comes in, it’s imperative that you get back to the customer within one hour. As I highlighted in my last blog, companies that respond to a lead within the first hour are 7X more likely to have a meaningful conversation that can lead to a closed deal.
Create targeted marketing campaigns and follow up using your CRM.
Get out in front of prospects and end-of-lease customers with multi-channel, targeted marketing campaigns. When you proactively reach out with a relevant offer, you have a much better shot that customers will work with you instead of a competitor.
Lean on your CRM to segment your customer database. Create targeted lists for current customers who are coming up on the end of a lease or are on track to go over mileage. Another list should be populated with every unclosed lead in the last 90 days. Finally, create a list of customers who purchased a vehicle at least two years ago.
Follow-up is key and the best practice is to make seven calls and five emails per lead over a 30-day period. If that’s too much for your staff to handle, consider pulling in an external BDC for overflow. A trained automotive BDC will ensure proper follow-up and free up your sales team to concentrate on low-funnel opportunities.
Provide lease options to every customer early in the process.
Provide lease and finance options to every single customer early in the sales process. Earlier is always better because the customer has time to process and think about the benefits of leasing compared to financing before they make their final decision.
It’s easy for your sales managers to access lease information if your desking tool is integrated with rates and residuals. The best tools offer grid presentations so you can present up to nine different financing and lease options for side-by-side comparisons. This way, customers can see at a glance which option is right for them.
Another great strategy is to have your sales managers find the “sweet spot,” or lowest profitable lease offer, for potential lease vehicles on your lot. Print out this information for every salesperson to study, and display it prominently on your website. A great deal is hard to pass up. For example, I know a Honda dealership that’s offering a 36-month lease on a 2020 Honda Fit for under $200 a month. That’s a great opportunity to get into a new vehicle for a low monthly price.
Make the customer experience easy.
Customer satisfaction is the key to retention and loyalty. Studies show that the average overall satisfaction score is 862 (on a 1,000-point scale) among mass-market lease customers who leased again with the same brand. Overall satisfaction among lease customers who switched brands is 778.
So, what increases satisfaction? An efficient, fast and personalized experience. Set your dealership apart with tools and processes that help customers during these uncertain times as our economy recovers.
For example, implement technology that allows customers to schedule lease inspections and returns online. Consider creating a BDC leasing team equipped with information and scripts to answer questions about turning in vehicles, the steps to terminate a lease and other details about lease end. Blow your competition out of the water with a program where an employee picks up an end-of-lease vehicle at the customer’s home and leaves a new vehicle for them to test-drive.
Increasing lead penetration rates is a solid strategy to help your dealership succeed now and as business returns to normal. Refresh your website with lease information and online retailing tools, mine your CRM for multi-channel marketing campaigns, train your sales staff to always present a lease option and get creative with new tools and programs that give customers the easy and fast experience they want. Increase your lease portfolio to 40-50% and you’ll have a book of business that is virtually pandemic-proof.