Last month, in an effort to maximize recall completion percentages, FCA US announced that it would offer $100 gift cards, or extra trade incentives, to owners of recalled vehicles if they come in and get the work done. This is the perfect opportunity for FCA US dealers to piggyback on this OEM program to increase service revenue and capture more business. Undoubtedly, customers have experienced frustration in past attempts to get the recall work completed, simply due to lack of resources and parts availability, that’s if they were even aware of the recall in the first place. Now that the parts are readily available, these same customers are ripe for dealerships to reach out to.

However, to make the most of this opportunity, it helps to know that OEMs can only reach out to whatever owner they have listed in their databases for these recalled vehicles. Since some of these vehicles date back as far as 1993, chances are very good that these vehicles have switched hands at least once and are no longer with the original owner. It’s therefore very possible that the current owner has not been notified and is unaware of the recall. FCA US dealers would be wise to also make an effort to identify the current owners of these vehicles to identify eligibility for the $100 spiff. This could greatly increase the potential opportunity.

Another benefit that FCA US dealers should focus on is the increased trade value that FCA US will kick in for new vehicle purchases - up to $2,000 according to Automotive News. This double whammy presents opportunities to generate increased service revenue and also pick up additional sales. That customer with the 22 year old vehicle which has little value in a trade-in situation, could easily use that as a nice down payment -- rather than sell it privately for substantially less.

This program is a great opportunity for FCA US dealers. Those that act on it through an extensive outreach effort will undoubtedly benefit through increased business in both sales and service. Don’t delay -- every moment your dealership isn't contacting these consumers in your PMA is an opportunity for your competition to get a head start. There’s no better opportunity to gain new service and sales customers than when you can offer added value at no cost to your dealership, with the manufacturer footing the bill. Take advantage of this development and you will see that your efforts are well rewarded.

In an unprecedented move, AutoNation CEO Mike Jackson recently announced that AutoNation will no longer sell any vehicle with an open recall – new or used. According to Automotive News, this effectively grounds up to 10 percent of AutoNation’s inventory.

AutoNation’s initiative could actually increase its brand image and make the chain more appealing to car shoppers. Knowing that any vehicle they choose to buy will not have any pre-existing issues that need to be repaired will certainly be viewed as a bonus. However, the man-power, time and loss of potential revenue required to implement it nationally could well be cumbersome to many dealers - especially smaller ones who have limited inventory. But, Jackson claims in the article that they are nearing completion of an automated system that will allow dealerships to identify and block the sale of any vehicle with an open recall. He has vowed to make this system available free of charge to any dealership that wants it.

While they can afford to replace this grounded inventory by acquiring up to 10,000 more pieces of inventory for their dealerships, many dealers won’t be able to financially follow suit. Accumulated flooring costs alone from aging inventory would be a hefty bill. In addition, it will become extremely important for dealerships to search for their retail-able pre-owned inventory within their own stores -- auction prices for used vehicles are certain to skyrocket with increased demand by dealers seeking to replace these grounded units.

This move provides a very strong unique selling proposition for AutoNation to relay to consumers. Jackson is certainly making a statement and there’s no doubt that this news will reach the public’s ears and make them take notice. In addition, it’s almost certain that supporters of recall legislation will rally behind this move and use it as an example to fortify their positions. It’s hard to believe that any consumers will object and dealers who do could find themselves in a precarious position -- caught between financial reality and public opinion. It will be interesting to watch this initiative develop and see how it affects AutoNation’s bottom line and also customer perception.

Recall campaigns can easily be one of the most lucrative service opportunities. Sadly, however, most dealers only reach about a third of the potential recall customers in their area. This is because they simply comb through their DMS and any information received from the factory for owners in their PMA. Personally, I feel this is a very shortsighted approach that leaves some pretty big holes in their market.

To start with, waiting for a factory-backed and publicized recall is exactly what your competitors do – so how do you get a jump on that competition?  Consider becoming a little more proactive in your marketing efforts. Simply utilizing the data you already have is not enough nowadays.

Imagine your recall work tripling. I am sure you would welcome that fixed ops revenue.

So what potential work are you missing and what can you do to capture it?

1. Secondary Vehicle Owners - Think about all of the used vehicles that your competition has sold. I’m not just talking about the nearest franchised dealer, but also off-brand dealers, independent used car lots, buy here-pay here… basically every place that sells used cars. These are all potential customers. And, if these cars were purchased from anyplace other than a franchised dealer, the customers may not ever get notified that their vehicle has a recall.
    
2. Vehicle Owners Outside your PMA - All is fair in love and car sales, right? You don’t know what recall marketing your competition is doing. Perhaps they aren’t doing any at all. What about customers outside your PMA that don’t use a franchise dealer, but take their service work to an independent facility? All of these consumers are possible customers. By making the effort to obtain this information, you can potentially reach an enormous pool of consumers.
    
3. All Open Recalls for Each Vehicle - Make a commitment to investigate all open recalls for each vehicle.  Frequently consumers come into the service drive and know about a recall of which the service advisor is not yet aware. That should never happen. Why not get a head start by identifying open recalls and pouncing on them before the factory or your competition does? 
    
4. Rank Recalls by Safety Risk and Profitability - Consumers are much more inclined to quickly respond to a recall when a safety issue is involved. These campaigns have a high percentage of success. Take advantage by proactively identifying them and initiating campaigns. In addition, by prioritizing your marketing efforts towards the most profitable recalls, you can maximize the service revenue gained from your marketing efforts.
    
5. Use a Multi-Channel Outreach Approach – Todays consumers have many choices as to how they receive information. Ensure that your marketing includes all potential communication outlets - first class direct mail, email, phone, digital marketing and more. In so doing, you can increase the odds that the consumer receives your message AND that they actually pay attention and take action.

Service work is hyper-competitive. With recalls, rather than competing against every dealership and independent repair facility, you’re only competing with your closest brand franchises. Target consumers in your area that aren’t being aggressively marketed to. You stand to gain additional service work through recalls AND future service business.

In the largest buy back action in U.S. history, the National Highway Traffic Safety Administration (NHTSA) and Fiat-Chrysler America (FCA) have agreed that, in addition to paying a $105 million fine, FCA will offer to buy back 500,000 RAM pickup trucks from consumers. The value FCA has to pay consumers for their vehicles is extremely consumer friendly - the original purchase price plus 10 percent, minus depreciation. These values are likely more than the owner could get from a dealer in a standard trade-in valuation.

In looking at the models and years covered by this buyback, it seems that the ages of these vehicles eligible for buy backs range from 2008-2012. An example value provided by the Associated Press, is that “a 2010 Dodge Ram 1500… could fetch $20,000 in a dealer-trade-in, assuming the truck has 60,000 miles on it and is in ‘good condition.’” The article also states that if Chrysler had to buy back even a quarter of the trucks at issue, it could spend $2.5 billion.

There should be a flood of consumers hitting the market ready to take advantage of these terms and purchase new vehicles. The big question is, how many of these consumers will stay brand loyal, and how many will defect to other brands?

This is the biggest such action in history, and, with the severe penalties to the OEM and the mandatory buy back offers, it could cause consumers to consider switching brands. It will most certainly instill doubt in many consumer’s minds about the quality and safety of these vehicles.

The totality of these events creates the “perfect storm” of opportunity for off-brand dealers. There are 500,000 possible car/truck buyers out there for enterprising dealers to conquest. These consumers should be very willing to entertain and investigate other brands. The key is to recognize that this opportunity is on the horizon. Begin efforts to reach out to vehicle owners affected by this buy back offer with compelling reasons why the consumer should consider switching to your brand. As part of the agreement, FCA has agreed to notify owners of eligible vehicles. A well-timed offer, with a solid value proposition, could result in better than normal response rates and conquest sales above the norm.

One thing is for certain -- every FCA dealership presented with a vehicle owner initiating a buy back will do everything within their power to sell these consumers a new vehicle, rather than simply cut them a check and watch them leave. So, stay ahead of your competition -- begin formulating a strategy to identify these consumers and craft a compelling offer for the consumer to bring their business to your dealership. Buy backs on this scale aren’t going to happen very often. Take advantage of the opportunity to gain some conquest sales. With a potential 500,000 of them waiting to happen, there is plenty to go around.

As reported by Automotive News, Volvo is rolling out a lifetime warranty on parts and labor for all vehicles serviced after the factory warranty at any Volvo dealership.  Volvo claims that “the lifetime parts and labor warranty is a commitment to both quality vehicles and quality customer relationships” and that “everyone should feel confident that Volvo is here to support our customers throughout the ownership of the vehicle.” This offering includes extra benefits, such as software updates, diagnostics, personal service, alternate transportation and a car wash for free. Volvo has extended this offer to all Volvo vehicles, regardless of age. It will be valid at any Volvo dealership in North America.

With the recent unprecedented number of OEM vehicle recalls, which has caused wide-spread consumer concern about vehicle quality, this move is certain to be welcomed by Volvo owners. The fact that Volvo has required the repair be completed at a Volvo dealership should also be great news for Volvo service departments. This offer applies to vehicles of any age. So, Volvo service departments are likely to see a higher volume of older model Volvos as consumers that previously defected to independents, now return to a Volvo franchise for the peace of mind a lifetime warranty brings.

Volvo dealerships now have a very strong value proposition to offer customers and would be wise to immediately incorporate this into their marketing efforts, just as Volvo undoubtedly will.

Customer loyalty is a quirky beast. When a customer returns outside of warranty, sometimes dealers are forced into an adversarial position, and place blame on the customer. With this new lifetime warranty offer, Volvo dealers should be able to reduce such situations. Or, at the very least, solve them without having to eat repair costs at the risk of poor CSI scores, unfavorable reviews, or backlash on social media by an unhappy customer.

Volvo’s new plan should help build a perception of quality and make servicing a vehicle at a Volvo franchise more attractive to consumers. As a result, Volvo dealers will enjoy less defection after warranties expire. They should also acquire more customers with older vehicles in their service drives – which equates to more sales opportunities, if handled well. Looks like Volvo managed to roll-out a program that will prove to be a win-win-win for the OEM, the franchised dealers and, most importantly, the consumer.

The National Highway Traffic Safety Administration has been battling with lawmakers in an effort to gain additional funding in order to handle – amongst other things – the 33.8 million Takata airbags recalled. In the most recent hearing, the NHTSA Administrator, along with several senators provided examples of how extremely underfunded the agency is. Here are few of those statistics:

• The Federal Aviation Administration has 30 times the budget of the National Highway Traffic Safety Administration and 6,000 employees, compared to 90 at NHTSA. – Sen. Richard Blumenthal, D-Conn
• The U.S. Railways had just 10 deaths last year, but 700 government employees oversee them. In contrast, there were 32,719 lives lost on U.S. roads last year. – NHTSA Administrator Mark Rosenthal
• The NHTSA gets over 80,000 consumer complaints per year, but has just one person reviewing them for half a day… if the person spends four hours per day looking at complaints, that’s over 80 complaints per hour, less than a minute each.

In the hearing, senators warned that consumers are growing tired of recalls and are apathetic about getting their Takata air bag inflators replaced. It was stated that, despite a dedicated website with information about the recalls, most consumers aren’t aware of it. The NHTSA went on to say that it does not have the budget to properly track down and notify all the vehicle owners that need Takata air bags replacing -- a little under 34 million vehicles.

Besides the Takata recall, there are also several other recalls that automakers are working hard to identify and notify their customers about. 2014 was a record year for recalls -- more than 60 million vehicles were recalled in the United States, double the previous annual record in 2004. In all, there were about 700 recall announcements — an average of two a day — affecting the equivalent of one in five vehicles on the road.

Recall fatigue is certainly understandable and a very realistic phenomenon. Not many days have gone by in the past year without a recall from one automaker or another. Consumers are now not only confused, but are also very likely starting to feel apathetic towards the news. There is also the opposite end of the spectrum -- consumers that are aware of recalls on their vehicle but that don’t believe that the parts are available to fix it – whether that impression was given to them by the many news reports indicating as much, or because of a real problem at a dealership due to a sudden run on parts.

Targeting your market by sending out your own notices to vehicle owners, stating that your dealership is prepared and has the capacity to repair their recall, could be a very smart marketing move right now. It could very easily result in a windfall of additional recall work. And let’s not forget the many opportunities that exist in both sales and service simply because a consumer is at your dealership. Take advantage of this moment and focus your service marketing efforts towards capturing this service work while you can.

There’s no better story about the perils of loyalty than that which played out in the summer of 2010. At the time, Lebron James was the most desired free agent in all of basketball. For the prior two seasons, he had been pressured by fans to announce whether he would stay with the Cavaliers, or leave for another team. Cavalier fans were intensely loyal to James, who was a first-round pick in 2003. He proceeded to showcase his talent over the course of seven years in Cleveland by making six all-star teams and brought the Cavaliers to their first ever NBA Finals.

In early July 2010, Lebron made his decision. With a great amount of publicity, including his own nationally televised special named “The Decision,” Lebron broke the hearts of Cavalier fans and the city of Cleveland when he announced that he was joining Dwayne Wade and Chris Bosh with the Miami Heat. Fans labelled him as selfish and the owner of the Cavaliers issued a scathing public announcement. Fans expressed their feelings of anger and betrayal to such an extent that police had to be deployed to keep the peace. James, however, set out to accomplish the one thing he had not yet done, but wanted most of all -- to win a championship. He felt he had a better chance to do that in Miami.

And he did. Two of them, in fact, in his 4 seasons with the Miami Heat.

This season, Lebron returned to Cleveland. His explanation was simple: Cleveland was his home. And he told this to the fans in an essay published in Sports Illustrated, explaining his love for Northeast Ohio, it’s people and his desire to bring them the trophy they’ve never had. He didn’t promise he could deliver. In fact, he told them to be patient and that it probably wouldn’t happen this year. And fans forgave him.

As we all know, he then led the Cavaliers to the NBA Finals and Lebron was on the verge of delivering on that promise in his first year back. His fans have left behind the vehemence and animosity they harbored for the 4 years they spent watching their hometown hero bring championships to the Miami Heat. Lebron is debatably one of the best professional basketball players… ever. And was on the precipice of delivering that elusive championship to Cleveland a year earlier than promised.

This story perfectly illustrates the fragility of customer loyalty. These fans were extremely loyal from the time Lebron was drafted -- all the way up until they felt betrayed by his decision to leave. They needed a hero and Lebron was it. The minute he gave up on them (which is how many fans interpreted his decision), they gave up on him. I doubt that anybody would have predicted that Lebron would ever be welcomed back. But a little humility and some maturing saw him thoughtfully apologize and endear himself once again to his fans.

I thought this example provides great food for thought for those situations in our retail automotive industry where we have unhappy customers. The current recall crisis is a prime example --- there are literally thousands of inconvenienced drivers, many of whom, I am sure, are rightfully upset.

People are human and hopefully these customers understand that other people (and companies) make mistakes. They will forgive you if they believe you are sincere in your apology. They will however need to see that your business is making a real and effective effort to rectify any error.

The next time you have a disgruntled customer, approach the situation with sincerity and show the customer through your actions that your apology is sincere. You might just be given a second chance.

You made the commitment to capture more recall work. You’ve done your due diligence by notifying your customers. You’ve obtained lists of in-market customers subject to recalls that haven’t been to your dealership before, and reached out to them. You’ve spent the time and energy to really saturate your market using every form of communication to maximize your reach. Now the phones are ringing. Appointments are being made. Parts are being ordered. Customers start showing up to get their recall repair completed. This windfall of additional service business is going to increase your revenue.

What happens, however, when the recall work is completed?

You have one of two choices: You can be happy that you got that additional work and send the customer home knowing their vehicle is repaired. Or, you can integrate a strategy into your recall process in an attempt to gain the recall repair work AND retain these customers for future work.

Customers that arrive for recall repairs can naturally be nervous about their vehicle and, by extension, the brand and your dealership. They may be skeptical that their vehicle will be repaired correctly. Let’s not forget the unfortunate case of the Takata airbag recall, where some consumers had their recall repair done with parts made by TRW. Later it was discovered that the replacement parts were also defective, so customers were forced to return to the dealership to get the same repair done again. This second recall affected more than two million vehicles.

Establishing trust with the customer is essential in order to keep their service business in the future. To do that, it helps to have a thorough and comprehensive plan of action for all customers that come into the dealership for repair work. Simply checking in their car and trying to upsell these customers won’t score you any points. Prove to the customer that they genuinely care about the health and safety of their vehicle – and the customer – by conducting a complete inspection of the vehicle each time they come in for service. And be sure to go over the results of that inspection with the customer.

Use these vehicle inspections to establish a baseline with the customer right from their first appointment. Ensure that they understand that your goal is to make their vehicle as safe as possible. A green, orange, red approach helps them track what needs immediate handling and what can wait a few weeks. The key is keep it consistent so that a natural progression is seen in their vehicle service each visit.

For any customer coming in for a recall fix, please, please, research their vehicle and identify other possible recalls that may exist. Too many times I hear of customers that bring a vehicle in for recall work, get the recall fixed, only to discover after the repair is completed that there was another recall that could have been fixed at the same time. The customer has already been inconvenienced and this just compounds the issue. The more thorough you can be, the more the customer will understand that you are simply trying to ensure that their vehicle is safe and properly maintained.

Equally important is to ensure that the customer has an excellent experience at your dealership. Just as the old saying goes, you only have one chance to make a first impression. Many of these recall customers could be new to your dealership. And, due to some pretty severe media reports, some are likely to be pretty concerned about their safety. By bending over backwards to ensure that they have an excellent service experience, you have the opportunity to begin a relationship with the customer and increase the chance that they will return.

Show your customer that you care about their vehicles safety. Provide an excellent service experience and these customers should recognize the value that you offer and show their appreciation by returning. Don’t simply settle for the recall repair. Think long term and you could end up with a customer that contributes to your bottom line for years to come.

Following tremendous pressure from the NHTSA, Takata has expanded the recall on its faulty airbags. In fact, it just doubled the number of vehicles that are subject to recall to 34 million – that’s one in seven vehicles on the road today – and the largest recall in automotive history. Since then, consumers have been flooding the NHTSA website, searching to see whether their vehicles are affected. In fact, according to an article in Automotive News, daily website traffic increased by 62 times -- to an incredible 598,000 searches, up from 9,662 per day. Consumers want answers and, once they get them, they’ll be looking to dealers to help them.

Be prepared for a large surge in recall-related questions and ensure that you have answers for your customers. Due to the incredible volume and the reported shortage of parts, there is not much dealers can do to expedite parts orders to handle these issues. But, most consumers will want their vehicles fixed as soon as possible, perhaps fearing for the safety of themselves and their loved ones.

That being said, apparently it is going to take years to handle all the vehicles involved in this recall. I am sure there will be many customers unwilling to drive a vehicle that has a faulty airbag for months, let alone years. They will therefore search for an alternative – namely, a new vehicle.

When recalls happen, it is certainly wise for dealers to reach out to every customer in their market to inform, educate and try to earn the recall work. However, when repairs are in short supply and a dealership knows it won’t be able to accommodate customers, that dealership may want to consider offering solutions that are designed to replace the customer’s existing vehicle with a new one.

Conquest marketing is certainly not a new thing. Many dealers, however, don’t consider open recalls as an opportunity to generate vehicle sales, only one in which to acquire additional service business. These two things don’t have to be mutually exclusive. A properly designed and executed recall marketing strategy can be an effective sales tool. Targeting vehicle owners affected by recalls that are known to have a parts shortage can be an effective marketing campaign. This is the perfect opportunity for an aggressive dealer to present options to these customers on how they can trade-in their existing vehicles.

The bottom line is that if a consumer is unwilling to wait for their vehicle to be repaired, they will most likely have started searching for a new vehicle. By marketing to these consumers, chances are that your dealership will be the first to reach out and contact them on this matter. This could give you a head start on your competition.

A recent article in Auto Remarketing reports how Penske Automotive Group is using recalls to increase their service business through recall work, but also as an opportunity to sell more vehicles. “I think recall business is good,” Penske Chairman Roger Penske, stated. “We welcome it. I think that’s why we’ve committed to the large fixed operations that we have in order to be able to handle it as it comes in. And I think it also gives us the chance — think about this one — it gives us the chance many times to see vehicles which we haven’t seen. So, it gives us the chance to connect with a customer with an older vehicle and in many cases we’re converting those into used-car or new-car sales.”

Penske makes a great point. However, the very first thing to get an effective handle on is how to connect with these recall customers in the first place. How do you get through to them and inform them of the recall so that you can connect and get their service business? With the incredible amount of recalls over recent months/years, it has become somewhat of a challenge to get the consumer’s attention. Many dealers send out bulk mail notices to customers in their DMS. Oftentimes, these notices are assumed to be solicitations and never read. How many times have you trashed a letter simply because it had a bulk mail symbol?

What has been found effective in reaching these recall customers and driving them into the service department is a multi-pronged marketing approach. Consider using telephone, email and direct mail.

For your direct mail don’t just send a bulk mail piece. Send recall communications via first class mail. Yes, it’s a little more expensive, but it’s also more likely to be read. Make sure that envelope it’s mailed in is designed to brand the dealership and the OEM, and that it is very clear that it’s about a recall. In addition, be sure that the envelope is NHTSA and Department of Transportation compliant. Lastly, consider that the more eye-catching the envelope is, and the greater sense of urgency it portrays, the more likely it will be opened and acted upon.

Once the letter has been sent follow up with an email communication. Reinforce the message from the mail piece. Ensure that the actual content of the e-mail leans more towards the educational side. Don’t simply state there is an open recall and ask them to make an appointment. Educate them about the recall and how it could affect the safety of their vehicle. Be specific and stress the importance of completing the work.

As far as the telephone is concerned, make sure your staff are trained in how best to handle these customers. Many can be upset or worried about the safety of their vehicle. Remember that to the customer, your dealership is an extension of the OEM. Be empathetic, apologize to the customer for any inconvenience the recall may have caused them. Be sure to set them at ease by providing all the information they need.  And do please schedule them efficiently. Make sure their parts arrive in a timely manner and that that their work is completed as promised. Or, if there is a shortage of parts due to a high volume recall, be sure to communicate appropriately so the customer understands the situation.

And let’s not forget the fact that recalls can provide opportunities in the sales department as well as your service department. Effective recall notifications can act as an excellent form of marketing to boost your bottom line in both sales and service. The trick is to make sure that the customer feels like you’re helping them, not trying to sell them anything. Get that across and you’ll generate more opportunities than you can handle.