Because Honda-brand buyers think their cars will never break down, pitching extended-service warranties to them seems like a lost cause.
But don’t tell Ron Reahard about the alleged futility of trying to sell service contracts during finance-and-insurance product presentations at Honda dealerships.
“Honda customers think God made their car,” says the president of Reahard & Associates Inc., an F&I training firm. “They say, ‘I don’t need an extended warranty because Hondas don’t break down.’
“If you can’t handle that statement, you shouldn’t be working in a Honda dealership F&I office,” he says at an F&I Management and Technology conference.
Reahard offers tips for overcoming objections from people who think extended service contracts are for cars built by mere mortals.
“Hand them a car part and say, ‘If this breaks down, we can’t fix it; we need to replace it,’” he says, referring to today’s typical repair order.
In the past, parts were simple and repairable. Today, they are components that usually are replaced, not repaired because of their complexity. That’s something a prospective extended-service contract buyer should know, Reahard says.
Another selling technique he proposes when dealing with resistant customers who think their newly purchased vehicles are repair-proof: Ask them if they would buy a car without a factory warranty.
“When they say, ‘no,’ ask, ‘When would be the greatest chances of problems occurring, in the first four years of ownership or the four years after that? If you wouldn’t buy a car without a warranty on the first four years, why would you not want a warranty on the next four?’”
Good F&I managers get customers involved during the product presentations, Reahard says. “Don’t tell them when their car will be out of warranty based on the number of miles they drive a year. Hand them the calculator and let them tell you when it will be out of warranty. That’s more powerful.”
Dealing with customer objections is part of a sales job. But Reahard says its a big mistake for sales people to cause an objection or bring one up on their own.
But when they respond to an objection and get a positive response, they’ve earned the right to ask a closing question, which is a nudge toward a positive buying decision, he says.
“Closing is not about outsmarting customers, it’s about helping them make the best decision.”
But sales people often miss opportunities to close, or wait too long.
“If you don’t ask for it, you don’t get it,” Reahard says. “If you keep selling and don’t ask for the sale, customers eventually realize you’re selling. They feel you are trying to sell them something, not help them.”
Ineffective sales people talk too much, he says. “We can make money with our ears if we listen to what customers say.”
In the art of detecting customer receptiveness, eyes help, too. “A nod from the customer means it is time to ask for the sale.”