USING DATA ANALYTICS TO TAILOR YOUR LEASING PRODUCTS

​It’s a complex and competitive market out there and any business is more likely to grow market share if it can offer products tailored to specific customer types.' 

Central to this is a detailed understanding of customer needs, including the various push and pull factors that drive customer decisions and ultimately their final purchase choice.

As an example, one of the largest segments of the UK leasing market, the 50+ age group, is also perhaps the least well catered for.

At first glance this seems a segment unlikely to be profitable. However, a more data informed outlook would show that potential customers in this segment are:

• Financially stable - with long established credit histories, large life events behind them (property purchase, raising a family, mature careers, perhaps already nearing or at retirement) and more likely to have substantial savings
• Value conscious - so less likely to be influenced or limited solely by price and looking to maximise their utility from any major purchase. In other words, they are potential customers for used premium leasing products
• Cash rich/Income poor - and take a long term view on price. A typical consumer will focus on the upfront cost e.g. purchase price, monthly lease and the initial deposit. But this segment is more concerned with on-going regular costs and are willing to incur a higher upfront cost in order to secure a product which has lower ongoing life costs - they do not want irregular costs that would disrupt their fixed income
• Lower insurance risk - therefore lower cost and greater range of potential lease or purchase options vs younger segments across a wider range of vehicles 
• Low cost risk - their use of the asset e.g. annual mileage, is lower and their wear and tear costs on the asset are minimal. Out of contract expenses e.g. excess mileage, are also low and the associated administrative work for the lease company is reduced
• Most populous segment - the sheer number of potential users within this market is far larger than any other (younger segment), as there are numerically more people within these age groups than below. The rate of growth of this segment is also generally the fastest due to the natural ageing of population, and is less likely influenced by forces such as net migration and Brexit

The main risk associated with creating a product for this segment is the asset maintenance cost, as this generally increases exponentially with asset age. However this can be quantified and built into the product via fixed maintenance costs which, as an added consumer benefit, provides the customer with known costs and therefore peace of mind
 
Good data analytics is essential to understanding your customer in order to create better and more relevant products for each segment.

At Blue Label Consulting we can help develop your analytics capability and increase growth opportunities across your customer base. Contact us here if you are interested in finding out more.

 
Brendan Jayagopal
Founder and Managing Consultant
Blue Label Consulting

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