Several dealers reported record months in the service drive. With a record number of RO’s hitting the lanes each day, it is a gold mine for selling service contracts. Service contracts are a security net for both the dealer & the customer as s/he will most likely return to service their vehicle.

Here are the top reasons you should offer service contracts in the lane:

A Drop In Deferred Services?

With customers declining large service items a contract - in some instances - can offer the customer the ability to purchase the service with the discounts s/he receives. Or in this case, their contracts would cover the OEM maintenance intervals, which should be stressed to the customer as being important.

If they already have a contract that includes these items, then s/he is far more likely to return to have their services completed.

                                   What percentage of your customers have a service contract?

Vehicles Serviced past OEM Retention Requirements

OEM’s usually have retention requirements for your in PMA (primary marketing area; assigned customer base) customers, which can range between anywhere for 3-5 years depending on the OEM. Dealers spend thousands of dollars marketing to their customer base. Giving away everything from oil changes to steeply discounting services, which can have damaging - devaluing - effect on your dealer's image and pricing. Where customers will continue to expect that service at a low discounted price.

Whereas, if they have a contract they aren’t thinking about the price. Instead, they are thinking about the value the contract offered them. Giving them the peace of mind knowing that their vehicle is being serviced.

Revenue for Dealers

If service can pick up 10-15 contracts per month in the lane that is 10-15 more customers that will keep within their retention time frames. All of which is highly beneficial to the dealership. This service customer is also more likely to be a repeat purchaser vs. a customer who does not service their vehicle regularly with your dealership.

The bottom line is the service lane should continue to diversify its revenue streams. One of those sources of revenue is selling service contracts in the lane. This not only benefits the customer and service advisor, but it adds money to the bottom line.

Does your dealer sell service contracts? If so, has it been successful? If it hasn't been successful why not?