As vehicle shortages drag on, the effects trickle down to more than just new- and used-vehicle sales. Customers also face challenges as their options for new leases dwindle.
Dealerships must do more in this environment than just sell and service vehicles. Playing the role of customer advocate helps avoid the risk of losing loyal customers who are frustrated with dealerships that fail to help them.
Customers returning to market encounter few options and historically high prices, and customers approaching the end of their lease are hit especially hard. Lease costs are high, options are low and many lease customers who historically like having a new vehicle they don’t have to service will end up buying out their leases. According to NADA’s annual report, consumer leasing of new vehicles has dropped 6.5% in the past two years.
With price increases, lease payments on new vehicles are much higher than they were when many customers last signed a lease. Lease customers have the option to buy out their lease for the initial cost of the vehicles, which is much lower than prices of new vehicles or even on the same make and model due to price increases.
While this doesn’t sound bad(negative?) on the surface – it’s a vehicle sale, and you may be able to also sell a service package to these customers who prefer not to visit the service drive – your customer may be upset when they don’t get the lease they want. With vehicle equity high, these customers may sell their vehicles to other dealerships, using the vehicle’s inflated value to offset the cost of a new-vehicle lease or purchase. The only thing worse than angry customers are customers lost because your dealership failed to meet their needs.
Prioritize Proactive Communication
How do you prevent customers from leaving your dealership when lease options are not as robust as they were a few years ago? The best defense against this, and competitors’ conquest attempts in today’s hyper-competitive market, is consistent customer communication at every step. All customers return to market at some point, but lease customers have specific due dates, making it easy for dealerships to keep up with their purchasing journeys.
Comprehensive and highly accurate data is key to this process, enabling dealers to confidently engage lease customers with relevant and personalized messaging appropriate for the stage in their journey.
Dealers should get on their lease customers’ radar as early as 12 months before the lease ends. This is when you set the stage: Touch base with customers to gauge satisfaction with their current lease and address any immediate concerns. It’s also best to discuss current and projected rates and availability and inquire about customers’ future lease or purchase plans.
Six months out, again set expectations regarding current rates and availability. This can lead to a discussion about pre-order or reserved sale options that shows you’re doing everything in your power to have your customer’s preferred vehicle ready for them when their lease ends. Also, emphasize the importance of building a personalized end-of-lease plan that addresses timing and the vehicle-transfer process.
At the three-month mark discuss pre-order or reserved sale options and estimated delivery dates, as well as lease extension options to bridge the gap between contracts if the desired vehicle is not available or is delivered later than expected. Look for similar models immediately available that may meet your customers’ needs.
Get to Know Your Customers
Understanding your customers and their preferences is key to keeping them engaged and keeping their business when they return to market. Throughout this yearlong process, you’re getting to know your customers, and they can see your dealership is doing everything possible to get them the vehicles they want.
These proactive discussions offer an opportunity to find out why a customer is leasing. Is it for the service aspect? Is it a better fit for their budget? Discuss options they may not have considered, such as buying out their lease through your F&I department and purchasing a service package.
Since lease buyouts are the worst-case scenario in this market, it’s essential to ensure the customer processes their lease buyout at your store instead of through their captive finance company, leaving the customer with a positive experience to keep them coming back.
Dealership leaders must think ahead and be proactive during these ever-evolving times in the automotive retail world. Communicating and engaging with customers is the best way to meet their needs and stay top of mind when they decide to return to market. It also allows you to build a personalized return-to-market plan that takes all options into consideration.
Following these tips will help you keep loyalty customers, because they’ll feel supported and informed, regardless of inventory challenges.
Ricardo Rodrigues (pictured, above left) is senior dealer relations manager at automotiveMastermind.
