Whenever those in the industry discuss vehicle service contracts, the focus tends to be on profits. While the F&I revenue they generate is important, perhaps more dealers should be focused on how service contracts can help their stores promote and maintain customer loyalty.
Findings from F&I provider Assurant Solutions show that vehicle service contracts (VSCs) play an important role in building brand loyalty and keeping dealers engaged with the consumer.
The provider of specialty protection products believes all dealerships need to focus on making sure that the customer has a great experience before, during and after the purchase so that they return to your store when it's time to buy again. This is why, when it comes to vehicle protection programs, they focus on the customer experience and not just profits.
4 Tips to Promote Vehicle Service Contract Penetration
Assurant recently sponsored a consumer insight study concerning VSCs, and they provide four tips to improve the customer experience when it comes to selling them:
- Communicate the Value
The majority of consumers are aware of VSCs (92% according to their data), yet not many (37%) bought one for their most recent vehicle purchase. Perhaps this is because there is not enough information about them on dealer websites. The vehicle purchasing process has changed. Many buyers do extensive online research and only head to the dealership when they have a firm grasp of what they are trying to purchase. This means that if you have no information about your VSC offerings on your website, you only have a small window of time in the F&I office to convince a consumer of their worth. Include information on VSCs in your online content, and buyers can familiarize themselves with them at their own leisure. Buyers who are better informed about the value they can provide are more likely to purchase them.
- Clarify the Benefits
Make sure that the consumer understands exactly what they are buying, the range of coverages available, and how to take advantage of all of the benefits a VSC offers. The best way to do this is to find out why the buyer might be interested in a VSC and use real-world scenarios to explain their value. If they have a tight budget, educate them about the costs of major repairs. If they plan on having the car for a long time, explain the limitations of any warranty the vehicle may be under and show them how a VSC reduces the expenses of long-term ownership.
- Tailor Your Offer to the Needs of the Consumer
All buyers are not created equal, that's for sure. Ownership plans, driving habits, what brand they are buying, protection wants and needs; it all varies drastically from customer to customer. So, what your store needs to do is tailor VSC pitches to each consumer, individually. Understanding the customer's needs and accentuating what is important to them is critical with VSCs. It will allow you to know what selling points to drive home, as well as what term, miles or coverage tier will best suit those needs.
- Have a Consistent Follow-Up Process
Every dealership and F&I professional needs to have a consistent follow-up process for those customers who choose not to purchase the service contract. There's no reason to not keep trying if you miss at the point of sale. In a recent F&I and Showroom article, F&I professional Ron Reahard states that every follow-up program should contain two components: a process to sell VSCs in the service drive, and an ongoing, multi-phase direct marketing approach. Whenever a customer brings in their vehicle for service, tell them that additional coverage plans are available right now and let them ruminate on that while their vehicle is ALREADY in for a repair. As for direct marketing, sending an offer whenever a customer's OEM warranty or current VSC is set to expire is a must. You can reinforce the customer bond and maintain loyalty with quality post-sale service.
The Bottom Line
Focusing on the customer experience when it comes to VSCs can help you make and keep loyal customers for a lifetime. Speaking of loyal customers, subprime consumers are renowned for being extremely loyal after finding the dealership that gives them a chance.
Auto Credit Express is the nation's leading subprime lead originator. Our team can get these serious and soon-to-be-loyal car buyers into your store, and we also provide dealer products that help you maximize your store's profits with these buyers. To learn more about what we can do for you, give us a call at 888-535-2277 or fill out our contact form on our website.