Consumers are drowning with information online in their car buying journey. Learn what’s distracting your visitors, how to engage them and proven tactics to keep their attention. Download Storyboard
In a previous article we discussed how rising lease penetration, record CPO demand, and off-lease volume supply were creating an emerging opportunity that looks to be sustainable given previous and current-year market dynamics. Digging deeper in to the data, yet another opportunity has emerged: leasing and millennials.
According to Edmunds’ analysis of car registration data provided by Polk, leasing has accounted for 28.9% of all new car purchases by millennials (ages 18–34) in 2015. That percentage exceeds the industry-wide lease penetration rate of 26.7%, and reflects a 46% increase in leasing by millennials over the past five years. By comparison, the share of leasing among all car shoppers has increased 41.7% during that period.
The findings suggest that millennials are more willing than older generations to sacrifice the long-term financial benefits of car ownership in favor of more affordable near-term options or more luxurious vehicles that are typically most affordable through leasing. This is really good news as dealers seek to capture and retain millennial-generation buyers.
As you know, leases link customers back to their leasing dealership when the time comes to lease or purchase again. Your competitors know this too, which is why they go after your lease customers aggressively. In order to win, you need to be more aggressive—and smarter—about retaining them for your dealership.
One of those smarter ways is to utilize data mining in your lease retention strategy. More specifically, data mining enables you to get ahead of the standard 90–120 day lease-end marketing cycle. It does this by monitoring customer, vehicle, and market conditions to identify time-sensitive pull-forward opportunities. This strategy puts your dealership and its new lease offer in front of your customers well before banks and lenders, lease-conquest marketers, and other dealers begin their lease-end conquest cycle.
Retention of millennials is even more important when you consider that the average consumer will purchase or lease about nine new cars over a lifetime, per CNBC. Steven Paul Matsumoto of Stigmare says the lifetime value of one retained customer from future leases or purchases and resulting lost service revenue—and referral business—is $175,000.
As Polk’s data indicates, millennials offer dealerships a growing segment of lease opportunities. Based on their early stage status in the overall lifetime value curve, capitalizing now can prove to be a high-value short- and long-term investment.
Brian Skutta is CEO of AutoAlert, Inc., Skutta brings to AutoAlert more than a decade of leadership in helping auto dealerships sell more vehicles and retain more customers. He has a proven history of successfully managing innovation and growth, most recently at VinSolutions and Autotrader.com’s Trade-In Marketplace.