Ad agency Tier10 leveraged Urban Science data to optimize its Tier II off-lease mail strategy and saw a 2.6% conversion rate.
- Increase Honda vehicle sales and steal market share.
- Increase efficacy and efficiency of identifying, targeting, and conquesting consumers.
- Leveraged Urban Science data to both expand and refine targeting capabilities.
- Target both conquest and same-brand off-lease consumers with the highest statistical probability of upgrading to the Honda brand.
- Starting 12 months before the end of their leases.
- Successfully influenced consumers to defect to the Honda brand, delivering as much as a 28:1 ROI with a conversion rate as high as 2.6%.
As off lease opportunities continue to grow, a record 4.3 million leases ended in 2019 (Edmunds), making effective lease retention and conquest strategies imperative.
In Q3 2020, lease penetration was roughly 24% (Cox), compared to the record high of 29.6% in 2016. Lease remarketers are well-accustomed to cyclical swings in their portfolio performance. They went from large losses on end-of-term units in 2008 to record gains on units sold in 2011. Strong equity positions enabled lessors and dealers to strategically use pull-ahead lease programs to stimulate new sales, retain customer loyalty, and enhance customer satisfaction. A 24% lease penetration rate suggests ongoing demand which equates to millions of vehicles re-entering the market, improving CPO inventory and ultimately tons of opportunity for our clients to maximize.
Swings between gains and losses are also amplified by the fact that lease return rates increase when equity positions are more negative. In the 2008 recession, when wholesale prices were at their lowest, lease return rates were well above 80%. This is compared to 2011/2012, when as wholesale values reached new highs, returns rates fell well below 50%. With the pandemic shaking the global economic foundation there was a need to capitalize on increase in lease return rate opportunities. The key to capturing returning lessees is coordinating communication through the right channels at critical moments in the auto shopping journey, sometimes starting as early as 12 months before lease end. Marketing to the off-lease audience when they are thinking about their next car is essential. In addition, coordinated lease-end communication practices and marketing efforts across Tier I, II, and III lead to increased retention, significantly influencing customer satisfaction.
Tier10, a DDH company and sister company to Team Velocity, leveraged data from Urban Science, banks, credit unions, and third-party data providers to significantly expand its targeting capabilities. This data included more detailed FICO score filtering, registration data, and end-oflease credit data with permissible purpose. Using this data, Tier10 identified conquest and same brand off-lease consumers with the highest statistical probability of upgrading a new Honda. Taking it a step further, Tier10 used proprietary data from Urban Science to purge customers that lack brand loyalty, ensuring its consumers had the most refined list of customers to target.