Service Agreements Down?
Customers who lease vehicles are admittedly hard to sell service agreements to. Additionally, some of you may have a well-heeled customer base that trades in a vehicle every two to three years. These people are just as difficult to sell service agreements to.
When the market changes, we need to evaluate both our product mix and how we are presenting them to the customers. During this year’s NADA convention I had the opportunity to view some different menus from different dealer groups.
I noticed that on one menu, service agreements were only listed as an option in the Premier package; the other three categories had no evidence of a service agreement. The flaw of this plan is that when you offer anyone a choice between something and nothing, the nothing will win every time. Although this offers fewer choices, leading to a faster decision, it is not necessarily the best one for the customer or the dealership.
The best plan is to provide everyone a choice between something and something. This way, they will choose something, and the nothing will occur less often. Review your service agreements. What can you change? Deductibles can be zero, $25, $50, $100, or disappearing. Terms can be different also; it could be 6 year / 100K mile, 5 year / 100K mile, 5 year /75 K mile, or 4 year/ 60k mile. Look for ways to provide choices for peace of mind-and a hedge against inflation. Customers realize that our vehicles, as perfect as they are, are still made here on earth and not in heaven. As you know, everything man makes breaks — the question is when?
When the presenter is talking about protection against mechanical repairs, perhaps the time has come to include maintenance with the service agreement. Most OEMs regard a maintenance agreement as a service agreement sale.
If you are using a menu, try creating a plan for maintenance right below a service agreement. Use the power of asking to build the power of customer retention.
Dealer Marketing magazine, April ’05, p. 27