Dealers Rate Providers

Findings of the 2nd annual J.D. Power and Associates' Dealer Service Contract Satisfaction Study once again prove interesting as more than 3,100 dealers grade their providers. Respondents represent more than 4,500 dealerships of all makes and geography. Dealers were asked to rate their satisfaction with their primary service contract provider on a variety of issues, and help provide feedback to an

Findings of the 2nd annual J.D. Power and Associates' Dealer Service Contract Satisfaction Study once again prove interesting as more than 3,100 dealers grade their providers.

Respondents represent more than 4,500 dealerships of all makes and geography. Dealers were asked to rate their satisfaction with their primary service contract provider on a variety of issues, and help provide feedback to an industry that had no real benchmarks or standards until this study. I served as project consultant for the study.

It provides insight into dealer attitudes on their service contract provider's strengths and weaknesses, marketing successes and failures, vulnerabilities, and areas of opportunity to expand or improve their businesses. Given the National Warranty collapse and fallout of last year, the study takes on even greater importance.

Dealers rate providers on three primary categories: service levels, products and financial administration. Within these three groups are 17 separate measures upon which the service contract companies were evaluated.

In addition, the study looks at the F&I office and the other products typically being sold there and the importance dealers place on these product's sales efforts.

It also looks at the reasons why dealers select their specific provider, the percentage of business that they send to their primary provider, and the number of providers they have in total in their dealerships.

It examines the market share each provider has, the type of program (retro, reinsure, etc…) that the dealer has, sales penetration levels, and the impact and usage of menu sales.

Thirty different providers are evaluated, including most factory programs and almost all major independent providers.

Some of the key findings are as follows:

  • Independent providers finish with higher satisfaction scores than factory-sponsored programs. The average independent provider has a score of 785 (a theoretically perfect score would be 1,000), the average factory program 714. In almost every measured category and individual attribute, on average, independents out-rank the factory providers.
  • JM&A is the highest rated provider with a score of 812. Universal Underwriters finishes a close second with 808 points. Last year's winner, CNA, finishes third with 789.
  • Honda/Acura Care is the highest-rated factory program at 781, and Toyota Extra Care second with 775.
  • Dealers who use independent providers as their primary provider report service contract sales penetration rates of 32% on new cars and 40% on used. Dealers who use the factory provider have penetration rates of 28% on new cars, 33% used.
  • The impact of the menu-style selling system is staggering. There is a significant difference in reported sales penetration levels between those dealers who use a menu and those who don't. Dealers who use one report 33% sales penetration level on new vehicle sales versus 24% among those who don't.
  • 61% of dealerships have adopted a menu sales system in F&I. With the increased concern and attention paid to proper legal disclosure and compliance in the F&I office, the menu system has continued to gain acceptance. Its practice of presenting 100% of customers 100% of featured products 100% of the time boosts sales when performed properly. JM&A leads the way with the highest percentage of their dealers reporting they use menu selling
  • GAP is the second most emphasized product sold in F&I after service contracts, followed by aftermarket accessories, service maintenance agreements, and credit insurance, respectively. The priority and effort placed upon these sales vary significantly by manufacturer, make, and menu usage.

Bryan Dorfler is an F&I consultant. E-mail: [email protected]

TAGS: Dealers Retail
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