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From: Jared Hamilton
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Mike Gorun

Mike Gorun Managing Partner/CEO

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The Lowest Hanging Fruit for Revenue Doesn’t Want to Buy a Car

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There is a group of people that seems to sit in limbo when it comes to dealership marketing messages, especially when it comes to service. This group of people tend to have cars in the 2-year old range. Yes, they’re probably getting the dealer’s random e-mail messages with service coupons. But, this is also the time when these vehicle owners may have to start shelling out more significant money for repair or maintenance work.
 

Many consumers don’t realize that they can still purchase extended warranties and/or prepaid maintenance plans once they have left the finance office. How often do your service advisors inform customers that they are still eligible? Are you sending relevant messages to this group of people? The manufacturer and finance companies are. An acquaintance of mine has a 2-year old car and has received numerous solicitations from Ally Financial for an extended warranty. They even offered 0% interest and to roll it into his monthly payment. Yet he received zero offers along this line from his dealership.
 

Extended warranties and prepaid maintenance programs bring in great revenue to dealerships. I bet that your finance departments are doing their best to sell these at the point of purchase. Why, then, aren’t service advisors making an effort to offer these programs to customers? Chances are their pay plans aren’t structured in a way that gives them any incentive to do so.
 

Consider educating your service advisors. Train them and implement a process in which they inform ideal service candidates about these programs and incentivize them to sell them. You may find that your post-sale warranty and prepaid maintenance penetration increases. Not only does this increase revenue but, at least in the case of prepaid maintenance, it ensures that the customer is tied to your dealership for as long as they own the vehicle. There’s no better person to sell a new car to then the one that bought their current one from you and that has been getting it serviced with you for years.

Denim Simkins
@mike - great points!! I am a huge supporter of of prepaid maintenance. I have seen first hand where this will really drive the customer retention number up. With the added car count and a solid customer centric process a little increase in labor and parts sales really fall to the bottom line and increase profit. In addition a service advisor that believes in an extended warranty they are offering will have a higher closing percentage than even an experienced F/I person. Typically the relationship the service advisor has with the customer allows for the conversation to be coming from a protection standpoint vs. salesmanship..
Roger Conant
I have to say that we do a good job of presenting VSCs in our service center. And I believe that the main reason we do has to do with the fact that there is absolutely "0" objection from the sales/F & I culture to us doing this. In fact, the GM actually encourages us to do it! A lot of stores don't have that kind of cross support between sales and service...we do, and it makes a huge difference in our willingness to present these products.

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