While there are many different types of service repairs – warranty, recall, etc. –undoubtedly the king of them all, when it comes to profit, is customer pay repair orders.

Of course, getting a customer to pay for that oil change they came in for isn’t difficult at all. However, when that same customer is presented with unexpected service recommendations found during the multi-point inspection, the degree of acceptance all of a sudden declines with the increase in repair order costs.

Many service advisors are very knowledgeable about their trade. However, they still encounter resistance from customers. They tend to be one of, if not the busiest employees in the dealership. Wearing that sales hat to upsell any needed service recommendations can be tough, purely due to the pressures of time.

Here are five suggestions that can help get results and ease some of the pressure in the art of upselling. Yes, this might add a little time into the process for a very time-starved service advisor. But, once you get the hang of it, it will not be that much time. In fact, these processes tend to lead to a FASTER process as there should be less customer upsets due to any misunderstanding, happier customers and faster approval of recommendations.

1. Be Transparent – Many service advisors fail to get work accepted purely because the customer doesn’t understand the recommendations. What does 2/32 on a brake pad mean to the customer? Or what the heck is a ball joint or timing belt? It can sometimes seem to the customer that the advisor is speaking a foreign language. Visual presentations tend to work much better. Consider showing the customer what is wrong, either in person, or via photo or video. It’s much easier for a customer to comprehend the need for new brake pads when you can say “Mrs. Smith, here is your brake pad and here is a new brake pad. See the difference?”
2. Give Detailed Explanations – Showing the customer what’s wrong is only part of the process. After showing the customer the brake pad, explain how the pads embrace each side of the disc and, when the customer pushes on the brake pedal, the two pads apply force to the disc which slows the vehicle down.
3. Create Urgency – Continue by explaining why it is urgent to get the repair done. As those pads get worn the brakes get less effective and, if not replaced, can cause even more damage. Left as is, they will wear down completely and impact the disc, which would then also need replacement. This helps the customer recognize what the advisor recommends is a safety issue and that failure to repair the item could lead to more costly repairs in the future.
4. Offer Pricing and Payment Options – The second major reason service recommendations get declined is lack of available resources to pay. Whether the customer comes right out and says they cannot afford it or not, most people turn down work because they either can’t afford it at all, or can’t afford it RIGHT NOW. By offering your customers every payment method possible, you increase the likelihood the customer will accept more work on the spot, rather than walking out the door shopping your prices, or procrastinating until their next visit.
5. Follow up – Last, but certainly not least, follow up with all of your service customers after the visit, regardless of whether the service recommendations were completed or not. Why? The follow-up provides two opportunities: First, if the customer did accept the work and the repair was completed, you have the opportunity to check in with them on the status of their vehicle and thank them for their business. This continues the trust and rapport-building process and contributes to customer experience and loyalty. Second, if the customer declined the service, it gives you a second opportunity to check on the status of the customer’s vehicle and invite them back in for the declined service. This call will reinforce the need for and urgency of the repair, which could easily sway the customer and build trust.

Give these a try and see if your customer pay revenue increases while building trust and rapport with customers -- ultimately leading to a better customer experience and well-earned loyalty.

Sitting in the service department waiting room staring at the clock waiting for your vehicle to be repaired isn’t the most fun thing in the universe. It’s not quite like going to the dentist, but for some people it is a close second. Perhaps that’s the allure of the Jiffy Lubes of the world – the promise of the 30-minute oil change.

What is a dealer supposed to do to make a customer’s wait a little better? Dealers have tried many things, from installing cafes, televisions and, in some cases, movie theaters. These can be expensive investments and – unless someone is waiting a long time for service – they may not be interested, or have enough time to watch a whole movie.

I came across an interesting article on this topic that was recently carried by Automotive News. According to the article, one dealer may have found a novel answer -- pool tables, pinball machines and classic arcade games.

A New England dealer was moving house and had no place for his pool table and video arcade machines. So, he decided to put them in his dealerships. To his surprise, he found customers loved them, the wait for their vehicles seemed to pass faster, and it was a more pleasant experience.

When customers enjoy their experience in your service department, they’re more likely to tell their networks and recommend your dealership, which is important in this age of infinite customer choice for their service needs. A great customer experience can even overcome a slightly higher RO -- if value and trust has been built by that experience.

Maybe Pac-Man is all it takes to entertain a customer? Well, it’s perhaps not such a bad idea. According to the article, Dave & Buster’s is popular because the games entertain adults. The video game industry runs in the billions and the average age of a video gamer is 31.

This dealer stumbled upon an excellent way to engage customers. Whether you think this is a good idea or not, consider that the underlying problem this solved is one that’s similar at every dealership – boredom.

Simply having a television and free coffee is no longer enough to entertain today’s customers. Think outside-the-box and be a little creative – like this dealer did. Consider finding some fun and engaging activities for your waiting service customers. It could be just the thing your dealership service department needs to liven up the guests and transform their experience. And it does not have to cost a lot. In fact, it cost the New England dealer nothing at all.

It is at the very least something worth thinking about as it could result in additional profit and revenue through more service business and – potentially – due to happy customers -- some brand advocates.

According to a recent report from the JPMorgan Chase Institute, many Americans need more than a year to recover from a $1,500 financial hit.

That’s apparently the approximate amount nearly 40 percent of American families paid to cover what they describe as extraordinary medical, auto repair or tax bills annually — requiring more than a year to recover their financial footing, with potentially serious impact to their physical and emotional health.

 For this study, the JPMorgan Chase Institute examined anonymized data from about 250,000 Chase checking account customers (weighted for age and income to reflect national averages) from January 2013 to December 2015

I am sure you have seen many ROs that are $1,500 or more. So, what is that customer to do when faced with an unexpected auto repair bill, if they happen to be one of that 40 percent who simply cannot handle the financial burden? You could argue that they should simply use a credit card. However, thirty two percent of Americans already have high credit card debt and may not have the available credit to cover the expense.

The irony of traditional credit cards is that you can get credit when you don’t need it, but can’t when you do. Someone carrying high credit balances is less likely to be approved by that OEM credit card your dealership offers.

Consider offering more payment options. Many dealerships simply offer the normal cash, debit or major credit card (including OEM branded ones) to their customers. There are, however, other alternatives that exist for service financing. The more options provided to the customer, the more likely they will accept the repairs based on the terms that best suit their needs. This then relieves them of any anxiety due to unexpected repair costs, and provides your dealership with the service revenue.

It’s the same in car sales -- all that matters is to help that customer buy a car on terms that work for them, within their financial budget and constraints. Customers that are offered alternative payment methods – such as low or zero interest short-term financing – tend to perceive that offering as a helpful act by the dealership, which helps create a relationship and a loyal customer.

A recent study by Forrester quantified the monetary effect of increasing customer experience scores by a single percent. The results were quite astonishing.

A single one-point increase in customer experience can mean as much as an additional $873 million per year in revenue for auto manufacturers, and incremental revenue per customer of $48.50.

How many customers does your dealership see in a year? What if you could add an additional $48.50 in revenue to each and every one of them? Luxury brands make out slightly better with an increased per customer revenue of $104.16.

Let’s look at a modest store’s traffic and try to quantify that. If a store is selling 100 cars per month, that equals 1,200 cars per year. Add in service traffic and that dealership could easily be talking about 6,000 transactions per year (if you consider a ratio of service to sales customers of 4:1 -- and that’s probably on the conservative side). That equates to additional store revenue of $291,000 per year, without changing a thing. I’m sure you can imagine what those numbers would mean for your specific store, based on your sales and service volume.

Now that we know the potential financial implications of a SINGLE-point increase, imagine the exponential increase which could be created with a multiple point rise. You may be thinking, “This is all great, but how do I increase my customer experience scores without increasing staff or investing in building improvements?”

 Here are a few suggestions:

1. Be friendly - Take a page from one of the most popular companies with the most loyal brand followers in the world – Disney. Disney trains all employees to understand that when interacting with guests they are “on-stage,” which is why they name their employees “Cast Members.” The idea behind this is that every guest in the park is important, and each “Cast Member” should remember to always interact in a friendly, courteous manner and be as helpful as possible.
   
   Customers should feel welcomed and appreciated. If you do nothing else, this simple mindset – reinforced through training and accountability – could help increase your customer experience score. Employees should always have time to interact with customers in meaningful ways, without the customer feeling as if they are a nuisance, or that the employee has more important things to do. The only customer that matters at any point in time is the one standing in front of you.
    
2. Make it easy – It’s easy for customers to get frustrated with a dealership when there is friction between your goals and how you go about achieving them. Whether this means streamlining your processes, analyzing customer experiences, or assessing individual employee interactions, the goal should be to ensure each department and employee is able to perform their tasks in the most efficient and customer friendly way possible.
   
   Accomplishing this creates a better customer experience and makes your dealership more efficient, allowing for more productivity from everyone. This also creates less frustrated and more engaged employees, who then service your customers better – again improving the customer experience.
    
3. Technology – This could mean one of two things – learning to use the technology you already have more effectively through training and enforcement, or identifying pain points in your dealership’s processes and finding technology that can solve it for you. Technology is only effective if it is used properly and consistently. Make sure that all your staff are trained on each piece of technology your dealership uses and create processes and assessments so they use it effectively.
    
4. Options – In general, people like options when it comes to spending money. Whether you’re shopping for a television, a blender, or considering a larger purchase such as a house or new vehicle, every single retailer will make it as easy as possible for you to complete that financial transaction.

With the advent and adoption of technologies such as ApplePay, consumers want to pay in the way that’s most convenient for them. Checks and cash are not used as often as they were. In fact, many people don’t even carry cash, preferring to use debit or credit cards. And, there will be times when the customer wants to transact with you – especially for needed repairs – but may not have available credit or cash on hand. Having alternatives such as an OEM credit card or repair financing is simply another way to make it easy for customers to do business with you and increase revenue.

Increasing your customer experience by just one-point shouldn’t be out of the question. It will take effort, buy-in, training and, in some cases, enforcement. However, in the end, your dealership will see increased profits, customer retention and loyalty.

There are a lot of choices for consumers as far as where to take their vehicle for maintenance. And, while consumers are required to visit franchise dealerships for warranty and recall work, the majority of service revenue lies in regular maintenance. That is why a great and consistent customer experience is so important each and every visit. These days your dealership has to stay top of mind with your customers – and keep them happy.

I just read an interesting blog on the consumer site techfeatured.com, which reports that many service advisors are ill-equipped to advise consumers on what’s best for their vehicle. With a claimed (according to the blog) 80 percent turnover in advisors, the blog tells the story of a customer that visited a Honda dealership for their first oil change at 7,500 miles. The customer requested the tires be rotated since, per the manufacturer, that would be due at 10,000 miles, yet he wouldn’t need to come back for the next service until 15,000 miles. The service advisor simply brushed it off, telling the customer it was too early to rotate the tires. This caused the customer to become frustrated as he was simply trying to ensure that he maintained his vehicle per the manufacturer’s scheduled maintenance.

It doesn’t matter who was right or wrong, really. Perhaps the vehicle could go 7,500 more miles without a tire rotation – 5,000 more than the manufacturer recommended. And it probably could for a vehicle that new. The failure here resides in the service advisor’s inability to advise and communicate with the customer in a way that made the customer feel understood. The customer needed to be able to trust what the service advisor had to offer in terms of advice. By brushing the customer off, it simply left the customer confused and, potentially, untrusting of the advisor and, by default, the dealership.

Hey, I know that a service advisor has one of the busiest jobs on the planet and it is tough managing the time they can take with each customer. However, it would not have taken much time to simply explain tire tread along with wear and tear, visually inspect the tires and educate the customer.

The customer should be able to explain their vehicle’s problems in layman’s terms and the advisor should be able to know the questions to ask to get the “who, what, where and when” information out of the customer to properly document the repair order for the technician.

Can all of your advisors do that? Consider doing a mystery shop to see how your advisors do. And they perhaps some training is in order.

The holiday season is upon us. That means extra money is needed for things such as traveling, presents and decorations. This time of year is typically when an increasing number of consumers find themselves in a tight financial situation. And, when it comes to unexpected vehicle repairs, lack of funds can put a damper on their holiday spirit. Most customers aren’t going to forgo gifts for their children to accept service recommendations. It isn’t because they don’t think their vehicle should be maintained, it’s simply that they don’t have the disposable income available. Credit cards use rises more during the holidays than any other time which can leave little available credit for those vehicle repairs. This can mean a decrease in accepted service recommendations at this time of year as consumers put off any needed repairs until after the holidays.

If your dealership offers additional sources of financing it can provide consumers with a convenient way to keep their car well maintained without dipping into any cash or credit they need to celebrate the holidays with their families. But it is not enough to just have the financing available. At this time of year it is more important than ever to ensure that every customer is aware that your dealership has multiple payment options available.

1. Add messaging to your website on both the home page and on the service page informing customers that your dealership has financing options available for repairs. If available, post a link to the application for service financing to help expedite the process and help the customer to get pre-approved. You’d be surprised how many customers– even those not necessarily in a position of need – will take you up on a short-term, no interest loan, simply for convenience.
    
2. Include information about your payment options in your service appointment confirmation and service reminder emails.
    
3. The service manager should train each service advisor in how to inform customers that financing is available whenever service recommendations are presented. Ensure that the service advisors know not to prejudge any customer based on appearance, but that they should inform every customer. This could mean the difference between those service recommendations being accepted or declined.
    
4. Install signage in your service department waiting room and at the cashier informing customers that financing is available. In addition, train every cashier to include financing as a payment option upon checkout – cash, credit, debit or financing. Also train cashiers in how to help a customer apply and ensure they can answer typical questions the customer may ask.

Offering financing as an additional payment option for consumers is a simple way to increases service recommendation approvals. It provides your customers a way to keep their car maintained properly without sacrificing any of their holiday plans. Customers who do take you up on the financing will appreciate it and this extra option could cause them to choose you the next time they need new tires or funds to help cover some other auto repair bills for themselves or another family member. Keep the holidays the “most wonderful time of the year” for your customers. They will leave that much more satisfied – leading to increased loyalty and profitability – a win-win.

Recently I’ve seen several blogs and articles about the customer experience and an article in Automotive News really caught my attention and sparked my interest. It is all about how seven minutes is far too long for a service customer to wait before they are even acknowledged.

Seven minutes doesn’t seem like a long time. But when you think about it from a customer’s perspective, standing there totally ignored while waiting to be assisted -- those seven minutes could seem like forever!

According to the article, Lee Certilman, owner of Nardy Honda Smithtown in St. James, N.Y., has a pet peeve: waiting in line. As he walked his service department, he noticed customers waiting to be helped by service advisors with no other customers in front of them. Turns out they were finishing up paperwork from the previous customer. Certilman noticed this several times and so felt he had to do something to handle the situation. He used his security cameras to gather information and discovered that this was not an anomaly. In fact he saw one customer waiting for seven long minutes, so he decided to come up with a remedy.

The dealership sells 3,000 units per year and enjoys a CSI score of 93 to 98 percent. The high volume and CSI scores show that the dealership is doing something right. As one of the top three Honda dealers in the district, Certilman is proud of his customer service. However, he realized something needed to change as it was obvious some customers were forced to wait too long and as a result were receiving a less than excellent experience.

But what could he do to illustrate to the service advisors, cashiers, and other front-line employees exactly how long seven minutes FEELS to a customer?

He had them sit in front of him, in silence, for seven minutes without speaking.

According to Certilman, it hit home for his service advisors.

Customer experience is about more than just providing great amenities. Don’t forget the importance of the human element. To today’s busy consumers, in many cases, amenities may actually be secondary to the service experience itself-- the helpfulness, attentiveness and feeling of welcome they receive upon arrival. Today, speed and efficiency are vital to a good customer experience.

This high-volume dealer is very likely servicing more cars per month than it sells in a year. Consumers already think BUYING a car takes too long. How do you think they will feel if they find dropping their car off for service takes too long as well?

Many excellent technologies and services exist that can help improve the customer experience and expedite service lane efficiency. From scheduling, to the customer welcome, to the vehicle walk around and inspections, to customer interaction and presentation of recommendations, simple process analysis and change can make a huge difference.

All we’re talking about here is seven minutes. And that’s not even seven minutes to complete the transaction -- but seven minutes waiting to be acknowledged. Ensuring that your service advisors quickly and efficiently acknowledge and welcome a customer can make a huge difference. It’s a simple thing to do and does not need some huge process change.

That Keurig. Those free pastries. That car wash. They mean nothing if the customer has to wait too long for their presence to be recognized.

Consider taking the time to analyze what’s going on in your service department. If it means sitting your advisors in front of you for seven minutes of silence in order for them to get it, that seven minutes could be worth more than any investment in a dealership movie theater, Starbucks, or other amenity.

We’re well into conference season and some conferences can be quite overwhelming -- Exhibit halls packed with hundreds of vendors all vying to talk to dealers and hundreds of speaking sessions to choose from. Conferences can also be a significant expense for a dealership, especially if multiple employees are sent. However, if planned well, conferences can prove to be extremely valuable and money well spent in keeping dealership staff up-to-date on cutting edge technology and new sales & marketing techniques.

Most conferences offer up a little bit of everything, so knowing how to get the most out of each conference is the key to getting the best bang for your buck. In that spirit, I’d like to offer up some tips:

1. Do your Homework – Most conferences offer mobile apps and online interactive class schedules which you can use to organize schedules. Or, at the very least, the conference will offer an agenda which can be reviewed so you can map out sessions of particular interest or of need for the dealership. Don’t wait until you get to the conference or you’ll find yourself staring at the agenda every hour between sessions, trying desperately to identify where you want to go next. With a little advance planning, your day can go smoothly and will be more productive.
    
2. Divide and Conquer –If you send multiple people it is wise to ensure that the attendees cover as much ground as possible. All too often, attendees from the same stores tend to stick together and attend the same sessions. However, you tend to get more bang for your buck if your staff has an organized schedule and attends different concurrent sessions in order to bring back as much knowledge as possible.
    
3. Come Prepared – Wearing appropriate clothes isn’t about impressing other attendees. Many first-time conference goers tend to overdress for the occasion. In fact, most conference attendees dress in business casual attire, with some choosing to wear polo or button down shirts with their dealership logo. Comfortable shoes are a must as attendees will do a lot of walking to and from sessions and within the exhibit hall. In addition to dress, a preferred method to take notes is important – whether a laptop, tablet, or simply pen and paper… and be prepared to take a lot of them. It’s very easy to get overwhelmed by all of the information, and just as easy to forget it.
    
4. Visit Your Vendors – One of the most invaluable and most overlooked practices is to simply visit all of the vendors in the exhibit hall that you already use. Often, your vendors do demos and announce new features or products that you may not be aware of. It’s not always easy for that sales rep who is juggling a bunch of accounts to reach out to everyone personally right away. Conferences are frequently where product launches happen. Simply visiting your vendors and asking them if there is anything new that you should know can put you ahead of the game.
    
5. Visit the Other Vendors – I know that many attendees walk down the exhibit hall rows feeling surrounded by sharks. Trust me. They don’t bite. Those vendors that you aren’t familiar with could very well have new technology that can help your dealership be more productive or sell more cars. Getting to know the resources that are available to your dealership through vendors and any new technology, simply means that you’ll know your options when a solution is needed.
    
6. Relax and Unwind – At the end of each day you may be presented with cocktail networking receptions and/or parties thrown by vendors. If you’re a social type and attend these, make sure to mingle and meet your fellow peers. Some of the best connections and friendships are made at conferences. And, having someone to bounce ideas off of throughout the year is invaluable. As for vendor parties, if you’re a dealer or dealership employee, you’re likely a shoo-in for a ticket -- with one caveat – you need to find out early in the conference what parties are happening, who is throwing them and which you’d like to attend. Many parties have space limitations so if you wait until the day of the party to visit the vendor’s booth for a pass, you may find that they don’t have any left. Get the information and visit them early for your best chance at a pass.

When the conference ends you will very likely be somewhat brain dead! I am sure you will have a bunch of notes, a lot of new knowledge and action items to implement. Don’t be tempted to put them aside and get back to what you’ve been doing. If you do, you may find the next conference rolling around as you wonder what the ROI is as you still have a bunch of notes and action items that you have not yet done anything with from the last one.

Make a commitment to use the knowledge you’ve gained, share it with those at your dealership that couldn’t attend and make changes at your dealership based on what you learned. Only with positive change made through definitive action can a return on investment from a conference truly be realized. To your success!

When a customer buys a new car from a dealership it’s almost a given that service also just gained a new customer. Most of the time, if the customer is local, they will start bringing their vehicle into the selling dealership for regular maintenance and service. Some manufacturers even include a period of free service. This can further incent a customer to patronize the dealership and offers the dealer more opportunity to develop a relationship with the customer and avoid defection to independents.

In the customer ownership lifecycle, these are the honeymoon days, if you will. But what happens when the honeymoon is over (namely once the vehicle is out of warranty or the free service is no longer free)? Statistically, this is the most crucial time for dealers as far as customer retention because this is when most customer defection occurs.

One day you have a regular service customer that’s been visiting your dealership for a couple years and then… poof… they disappear. What happened, and how can you prevent this?

The customer starts making decisions on their very first visit as to the likelihood of continuing to service their vehicle at your dealership after their free service period expires or upon warranty expiration. Everything from how efficient the process is, to how welcome and helped they feel, begins to craft their feelings.

But it’s not only the environment and efficiency that matter. Build value in service at YOUR dealership (vs. independent).  And that starts by earning the customer’s trust. Frequently, dealership service is more expensive than independents – labor rates are higher and parts are more expensive. Consumers are already trained to think this way. Why? Because dealerships have trained them to and the constant barrage of marketing from independents announcing low priced services has made them believe that.

While dealers certainly try and position themselves as low (or, at the very least, competitive) pricing in sales, how often do you see a dealer marketing the same thing for service? Not often. This is a hill that many have to climb in order to overcome consumer perception about value.

People shop at Nordstrom even though they know it will be more expensive. Why? Because they know that the shopping experience will be good and they trust the quality of the merchandise. This perception is exactly what many dealerships need to instill in the minds of their customers from the very beginning. But how?

Service advisors are, in reality, salespeople. If a service advisor never upsold a customer, they probably wouldn’t be in that position long. That being said, service recommendations are only valuable to a customer and the dealership if they are accurate and timely. Instead of trying to sell the customer everything, focus on what is time-sensitive. Understand that preventative maintenance and timely services should be the priority.

Don’t try to sell the customer a service prematurely, such as a timing belt at 50,000 miles, when it’s really not scheduled until 90,000 miles.  Presenting the customer with something that doesn’t need to be done yet is doing them a disservice. It’s also a major red flag, especially if they obtain a second opinion and are told that they really don’t need what you recommended at that specific time.

Build a trust-based relationship with your customers and be honest in your recommendations. If everything a service advisor offers is timely and needed, those recommendations will be appreciated and will help to build trust and customer loyalty.

Use the various technologies available to educate consumers on the service recommendations you’re advising by showing them what’s wrong, why that service is important and how it benefits their vehicle. Pictures and video tools can powerfully help illustrate this to the customer, whether third-party informational videos, or actual video walkthroughs of their specific vehicle (i.e. this is what a healthy air filter looks like and this is what YOURS looks like).

Through accountability and consistency, your dealership can easily become the consumer’s go-to for service. But it has to be earned and cultivated from day one, not the day after their warranty expires.

Be the dealership where the customer’s needs come first. You should find that your customers appreciate it and they will come to trust you and be quicker to accept your recommendations.

Customer loyalty and retention in service are critical components of a healthy service department. Start focusing on what’s best for the customer and you won’t have to worry about them sticking around – they’ll stick around because they want to.

There’s nothing more disheartening to a service advisor than presenting a customer with a list of service recommendations only to hear the customer agree that they need the service, understand its importance and value, but they simply don’t have the available funds to complete it.

In such a highly competitive market that service advisor knows that when the customer walks out the door, the likelihood of them returning is not great. They will probably price shop the service and end up getting the work done elsewhere.

Sure, there are times when the “can’t afford it” excuse is simply that… an objection. But even the service advisor with the best sales skills can’t overcome the objection when the customer truly doesn’t have the money to pay for the services. However, there is a way to overcome those objections and assist customers that want the service but can’t pay for it all at once, regardless of their credit:

Offer them options!

I’m not saying start accepting bitcoins, or trading service for cows. But here’s the deal: Many dealerships limit the forms of payment they accept to cash, check and credit cards. And some now even refuse payment by check.

Not all of your customers have money sitting in the bank waiting for emergencies, or credit cards with available credit just waiting for their use. There are, however, plenty of options available for all types of credit customers. They are worth investigating so you can offer your customers all the many types of financing available – and let them choose the right one for their needs. It is a great way to improve the customer experience. And today’s sales process is increasingly all about that customer experience.

With that in mind, many of the dealers I talk to don’t really know about the different types of service financing options available. Here’s a brief summary of potential options depending on your customer, which I hope helps:

1)    Low Risk Customer: For customers with excellent credit

• Credit Cards – This is the option that almost every dealership accepts as a form of payment. While the upside may seem to be that it’s simple, there are unseen costs involved including processing, terminal and service fees, etc. And, just like any credit card processor, you pay a percentage of the total charge. Plus, you are banking on the fact that the customer has enough available credit on their card, which isn’t always the case.

Options: Synchrony, CFNA, OEM Manufacturer Card

2)    Mid Risk Customer: For the broadest spectrum of customers

• Simple Interest Loans – These loans are similar to car loans in structure – but in much smaller amounts. They allow a customer to finance the repairs – oftentimes at much lower interest rates than a normal credit card – and, in many cases, offer an interest-free period where the customer can repay the loan with no interest.  Several companies offer this type of loan. While the interest rates are credit-based, many have a wide range of credit scores they consider for loans and can finance the more credit challenged customer as well.

Options: Confident Financial Solutions (CFS), NetCredit

3)    Highest Risk Customer: This is a point-of-sale solution for those with no other options

• Secured Loans – This type of loan is typically secured by some sort of collateral. Because of this – and depending on the collateral – lower credit scores are considered and could qualify for these loans. While not as high of a cost to the consumer as a payday loan, the interest rates for low credit customers can go as high as 40%.
   
• Lease Agreements – This type of financing is typically reserved for the highest risk consumer. Leasing auto parts (and service) is costly but could be a viable option for those customers with the most challenged credit. The pros for the dealer are that they get the service business. It also gives that consumer who has no other resources an avenue to get their vehicle repaired. As opposed to rent-to-own products, this arrangement tends to come at a high cost to the consumer, typically resulting in repayment of double the amount financed over the entire term. However, it will help those that are truly in need.

Options: Springleaf Financial, One Road Lending

As you can see, there are many options for payment you can provide for your customers. The simple fact of offering all of these options will, by itself, help increase service revenue as car repairs, in general, are a necessity for many and maintaining a vehicle properly will, in the long run, cost them less.

I am not in any way suggesting that as a dealer you should act as a financial advisor. Just provide your customers with all the available choices. Let the customers decide which payment method best fits their needs. You may be surprised which they select. Either way, you’ll get the service business that might otherwise have walked out the door and down the road to your competition.