Early connections boost lease satisfaction

Less than half the time, dealers and lenders reconnect with lease customers before the end of the lease, a study by J.D. Power and Associates found.

That's not good enough, said Jim Houston, senior director of J.D. Power's auto finance practice. Instead of waiting until lease expiration, dealers and lenders should set themselves up for lease-end satisfaction at the beginning of the term, he said.

With leases accounting for 30.2 percent of all new-vehicle transactions through November this year, according to J.D. Power, learning how to satisfy lease customers has become increasingly important.

J.D. Power conducted the 2016 U.S. Lease End Satisfaction Study in cooperation with four lenders, surveying a wide range of lease customers, not just those of the four lenders. The data was collected from June 28 to Aug. 2, based on 1,986 responses. Of the respondents, 987 had leased luxury brands, and 999 had leased mass-market brands.

The study, the first of its kind by J.D. Power, measured satisfaction of customers who are within six months of the end of their lease.

J.D. Power found that lenders and dealers are connecting with customers before lease end just 47 percent of the time. That means most customers wait until they turn in their vehicles to complete their inspections and may be surprised by additional charges.

If they connect sooner, customers could complete inspections ahead of time and make necessary repairs, J.D. Power said.

"Typically, the consumer just takes a vehicle back to the dealership and does the inspection there," said Houston. Luxury customers preferred to conduct the inspection at home or work, but the location of the inspection didn't matter to mass-market lease customers.

The timing of the inspection did have an effect, though. Inspections done before turn-in had the highest levels of satisfaction, Houston said.

"It is important to have it concluded prior to turn-in," Houston said. "The surprises are what drive customers batty." 

Customers also indicated that they wanted to see inspections completed in 30 minutes or less and that the inspector should interact with the customer and establish a rapport while completing the report. 

The dealer and lender should ensure that consumers understand their lease obligations before they leave the dealership at the beginning of the lease term, if they want to ensure satisfaction at the end of the lease, J.D. Power found. 

Most leasing companies have lease-end information on their websites, "but typically, the customer isn't aware of that information. They don't know where to find it," Houston said. 

J.D. Power suggests that at the beginning of the lease, dealers and lenders give customers lease-end information, such as a checklist of what will happen in the last six months. The customer needs to understand, for example, the wear-and-tear charges, where to turn in the vehicle, how to buy the vehicle if the customer chooses to do so and what happens at the inspection, Houston said. 

"Consumers that walk out of the dealership fully informed, [with] the terms and conditions, are much more satisfied," he said.

For mass-market lease customers, lenders should initiate contact four to five months before their lease contracts expire to capture the highest levels of satisfaction among customers, the study found.

"In the mass market, a lot of the lessees were relatively new," said Houston. "So understanding what their options were [early] ... caused them to have higher satisfaction."

For luxury customers, lenders should initiate contact one to three months before lease termination. Luxury lease customers are usually repeat customers, Houston said. Because of that, they are more familiar with the end-of-lease process.

For luxury customers, letters and brochures reminding them about lease end and outlining the return process yielded the highest satisfaction, followed by phone calls. Phone calls yielded the highest satisfaction among mass-market customers, followed by letters and brochures. 

Currently, many lenders direct customers to self-help tools on the website and remind them of the months remaining on the lease contract with a note on their billing statements. 

J.D. Power suggests that lenders, dealers and manufacturers put together an end-of-lease marketing package that includes frequently asked questions, customer options, wear-and-tear definitions with estimated cost ranges, and physical templates to assess damage and prepare for charges at lease end. 

It's important that customers receive a combined package, Houston said. 

"They aren't engaged in receiving three separate marketing packages," he said. "The preferred method would be to have one tool the customer can use versus a fractured approach."