Notifications & Messages

Jared Hamilton
From: Jared Hamilton
Hey - It’s time to join the thousands of other dealer professionals on DrivingSales. Create an account so you can get full access to the articles, discussions and people that are shaping the future of the automotive industry.
×
Mike Gorun

Mike Gorun Managing Partner/CEO

Exclusive Blog Posts

The Perennial Sales Starter Kit

The Perennial Sales Starter Kit

Outside of having some online training that I could do on my own time, a 2-Day Sales Training Course, shadowing the top Sales Consultant (at my initiative)…

How SEO Impacts the Service Department

How SEO Impacts the Service Department

Digital marketing in the dealership often is viewed and conducted solely from a sales perspective. But the service department, often called the "backb…

What 89% of salespeople are failing to do...

What 89% of salespeople are failing to do...

  According to Dale Carnegie only 11% of salespeople ask for referrals. We all know how valuable referrals are but when it comes time to ask for a …

Why Your Online Shoppers Don’t Take the Bait

Why Your Online Shoppers Don’t Take the Bait

You think you’re dangling an enticing lure in front of your customers’ eyes. You plan to set the hook and reel them in. But what you don&rs…

Click-to-Call [Infographic]

Click-to-Call [Infographic]

  Most dealers understand the importance of making it easy for customers and prospects to find contact information. Websites often have prominent &…

Is Your Prepaid Maintenance Plan Priced for Success or Doomed to Fail?

 

Many dealerships allow their finance managers to price prepaid maintenance programs (PPMs) high enough to shatter success from the start. They overprice PPMs thinking that the real benefit comes from profit built into the plan and forfeiture. While some new buyers will take the bait, the typical consumer, when asked to pay $895 for three years of scheduled maintenance, simply adds up the cost of nine or ten oil changes and a half dozen tire rotations and says, “Thanks, but no thanks!”

Successful PPMs are priced in such a way that even if a customer pulls out a calculator and – looking at the service menu – adds up the pricing for oil changes and tire rotations, the total represents at least an equal amount to what the F&I manager is charging them for the PPM.

Dealers who understand the full purpose and potential of PPMs price them well below the actual retail value. Instead of trying to turn huge profits in the F&I office, these dealers focus on the long-term potential of each customer. When incremental upsell can average over $90 per PPM visit, dealers quickly see RO numbers increase – as well as revenue. Statistics also show that up to 83% of customers will repurchase a future vehicle if the dealer can keep them returning to their service lane for regularly scheduled maintenance. With these two factors alone, even a PPM given away for free would more than pay for itself by the end of its contracted term.

With this type of program properly priced and executed, PPM sales penetrations can reach up to 50% or more, providing dealers opportunities to continually win over their customers.

Does your dealership sell PPMs? If your penetration is less than 50%, you could be pricing them too high. What do you think? 

 Unlock all of the community & features  Join Now