Well over two million cars were registered in the UK in 2014, with over two and a half million forecast for 2015. Yet only about a fifth of these vehicles are leased. Further more, SMEs and consumers are under-represented when it comes to the number of cars leased in the UK. The story is very different in the United States with well over a quarter of vehicles leased and rising.
I have travelled to the USA on many occasions and noticed a couple of cultural differences regarding finance. Firstly, people of all demographics seem to be trading in stocks and shares, not just a select few. The other thing is that people lease cars on a no-brainer basis. So what is it about the UK that is different?
In search of the answer to that question my team conducted market research with business leaders and consumers and found that the answer is broadly down to a couple of factors. The first is that there is some mystique around vehicle leasing for most. This is due to the very competitive car finance market in the UK with banks, dealers, leasing companies and asset finance businesses all jockeying for business. In addition, the leasing sector does not improve the situation with myriad options and variables that serve nothing but to confuse a potential customer. The second factor is that even when a potential customer does take the decision to lease, the process by which they are confronted is time-consuming and frustrating.
Most consumers in the UK do the following when they are after a product or service: They sit down in front of an electronic device be it a PC, tablet or phone and search for what they want, even if it is just market research with no intention of buying online. However, many people are time poor and want instant gratification when looking for goods and services online. Even an additional click to get to where they want to be on a website may be a click too far. Seriously. We are becoming increasingly impatient when online.
So, to leasing and an online solution. To derive a solution, one must look at the situation through the eyes of your potential customer. This is extraordinarily difficult to do as our expertise and viewpoint colour our thinking. A quote from the enigmatic film character Yoda springs to mind “you must unlearn what you have learned”.
To shape the solution we looked at leasing as if we were an FD of a manufacturing business, an HR manager, a young person who has bought into the idea of leasing, a procurement manager and so on. What we found was not pretty. We had two types of experience. The first were beautifully crafted corporate sites belonging to leasing companies. The problem with them is that they overloaded us with information including mention of finance leases, contract hire, salary sacrifice, sale and lease back and so on. That is not to mention the ancillary services such as fleet risk management, GAP insurance, fleet management and others. Could we get a quote? No. The remaining sites we found seemed more promising including some pictures of cars and the potential to get a quote. That was the upside. The downside is that we also found many sites with a lot of special offers. In fact there are some sites out there with thousands of special offers. In marketing superlatives are used all the time, but really, how special can several thousand special offers be? Oh, and forget about choosing your own colour or adding any options. We also found a couple of sites claiming to be simple. Maybe through the esoteric eyes of a leasing professional, but certainly not to the SME or consumer looking at it in their lunch break.
The issue doesn’t just stop there. The process of financing or leasing a car is fundamentally piece-meal. You can see the car in a dealership but to shop around online, you need to reach for your phone or tablet. Then, unfortunately, if you want to compare deals you need to reach for those legacy items: a pen and a piece of paper. It is not so bad for some that want a business lease as they might just want a low emitting medium- sized estate. That said, the good old pen and paper need to come out once again. We have nothing against pens, or paper for that matter. However, reaching for these things is indicative of one thing: It is going to take some time, something precious to us all.
The final thing that really frustrated us was the spoofing that we found. There are many sites out there that purport to be online solutions with nothing more than a few pretty pictures with a form designed to harvest our details, no doubt with the low rate lease purchase intention of hustling us over the phone or by email. Did I mention that these very same businesses shut at five? So no browsing on your tablet whilst watching Corrie then. We also found an online marketing campaign being run by one business for a Ford Fiesta for £89 a month. Not bad, but when we clicked through from the advert we just landed on another page with hundreds of special offers (all of course based on five thousand mile a year contracts with massive deposits). Oh – and there was no Fiesta deal. I am not entirely sure I understand the commerciality of spending thousands of pounds on marketing to just rob a few unsuspecting web users of their valuable time and ultimately not do any business.
The silver lining? We built a brand new and enhanced platform addressing all of the issues we had identified. It is more defined by what we don’t do than what we do. We don’t do vans, we don’t do PCP, finance leases etc