Dealerships, lenders and automotive brands have been slow to change what is often an uncoordinated set of communications to consumers at the end of their vehicle leases, most parties admit. If they want to improve customer satisfaction with that process, a more digital and personalized lease-end process may be the answer, they add.
"The evolution [of the lease-end process] has been very, very slow," said Jim Houston, senior director of J.D. Power's automotive finance practice.
J.D. Power expects 3.7 million vehicles to come off lease industrywide in 2018, rising to 4.2 million in 2019. In March 2019, the expected peak, 425,000 leases will come to term.
"Everyone is rationalizing in their head that, 'I probably need to do something different because I've got a ton of cars coming back,' " Houston said. "Making sure [lenders] are effectively managing inbound vehicles starts with customer communication."
J.D. Power's surveys show that a coordinated effort by the dealership, lender and brand drives the highest levels of customer satisfaction, Houston said. And, much of the time, personalized, digital communication is most convenient for the customer.
Ford Motor Credit Co. ranked No. 1 in lease-end satisfaction in the mass-market category of J.D. Power's 2017 poll of lease customers. For Ford's captive, a simple, transparent lease-end process keeps customers coming back to the brand, lender and dealership, said Shannon Mokhiber, Ford Credit's vice president of global marketing.
There should be a unified message among all parties so there are no surprises for the customer, she said. "As we're going more and more digital, it's about having more and more of that messaging available to customers on their terms," she said. "It's about getting that right message to the right consumer at the right time."
Personalization
Ford Credit launched a personal Web page within its account manager application for lease customers. The Web page tells customers when their lease agreement will end, shows their mileage and gives them excess wear-and-use standards. Ford Credit plans to continue to evolve the platform and personalize it over time.
In January, GM Financial launched personalized Web pages for its lease customers as well. The click rate for personalized links in emails has been more than 400 times higher than click rates in traditional emails, said Alicia Gadley, senior vice president of customer experience management for GM Financial.
Southeast Toyota Finance also has personalized Web pages for customers and revamped its lease-end email process last year, said Brent Sergot, group vice president. The new process is largely data driven, he said. "We take a look at how the customers want to engage with us," he said.
About a year before a lease expires, Southeast Toyota contacts customers via personalized email and direct-mail messages. "Depending on how that client engages, we'll increase that level of connectivity through the process," he said.
Based on engagement at the nine-month mark, Southeast Toyota will add touch points at six months, three months and one month. Depending on how customers engage, they might get another, more detailed email, he said. The engagement rate has increased 17 percent since Southeast Toyota revamped its email strategy.
Ford Credit, Southeast Toyota Finance and GM Financial are a few of the first leasing companies to digitize the lease-end experience, but others are beginning to make their processes more digital, Houston said.
If Nissan Motor Acceptance Corp. has customers' email addresses, it will use them, said Kevin Cullum, the captive's president. But in line with most captives, the lender relies on mailers and brochures as well. Nissan Motor Acceptance directs customers to its portal, the Nissan USA website or the website of the dealership the customer leased the vehicle from.
Honda's captive uses mailers, messages on monthly statements, call campaigns and 90-day end-of-term brochures to communicate about lease end. But "we are looking at ways to further utilize email and texting," said Ferrell Kemp, vice president of national operations for American Honda Finance.
Honda also is testing document-sharing and digital signature technology, he added.
'Empower customers'
Still, even with various communication channels, there is some friction in the lease-end process, said Jagdeep Dayal, who runs Chase Auto Finance's private label business. "We believe better use of technology, particularly digital, will help to ease it," he said. "Technology can empower customers with more information."
Chase operates like a captive finance company for five brands: Maserati, Jaguar, Land Rover, Mazda and Subaru.
Lenders should give customers lease-end information through as many channels as the customer wants, but primarily through email or the lender's website, J.D. Power's Houston said. Customers are more satisfied when they receive personalized emails or find information online than when they get calls from a lender's call center, he said.
The majority of leasing companies still communicate primarily through snail mail, said Paula Tompkins, CEO of ChannelNet, a software company in Dearborn, Mich. ChannelNet develops lease-end technology and personalized Web pages for captives and other leasing companies.
The industry is stuck in its model of using call centers, direct mail, brochures and letters to communicate with customers, despite that approach being more expensive than a digital one, she said.
Say a captive has a midsize portfolio of 430,000 lease customers. If the company sends customers two letters for 60 cents each and a brochure for $4 each to prepare for lease end, it would spend $1.1 million on mailings per year, Tompkins figures. If the captive invested in a digital lease-end program, such as ChannelNet, it would spend $684,000, she said.
Consumers who lease through one of ChannelNet's captive clients get a personalized Web page that includes information on inspections, mileage, incentives, lease-end options and, in case they want to investigate what may become their next vehicle, inventory. Some of the pages also include credit applications and other digital retail tools, Tompkins said.
Southeast Toyota soon will work on improving its reporting tool for dealerships. The lender currently gives dealerships a report that shows their maturing lease customers, along with a log of when the customer called, which is indicative of them being in the market, Sergot said. "In terms of aligning the level of communication and raising the dealers' awareness, [that is] something we're looking to tackle in the future."
You can reach Hannah Lutz at hlutz@crain.com -- Follow Hannah on Twitter: @hm_lutz
