F&I FOCUS

Dealer A: Why is your service contract penetration so high? Dealer B: Heck I don't know, our F&I managers sell to about 20% of our new and used customers. Dealer A: That's pretty good, but you guys are sitting at about 28% on the composite what gives? Dealer B: We're doing a pretty good job through the service drive Dealer A: Yeah, well we got signs hanging in our service department telling our customers

Dealer A: “Why is your service contract penetration so high?”

Dealer B: “Heck I don't know, our F&I managers sell to about 20% of our new and used customers.”

Dealer A: “That's pretty good, but you guys are sitting at about 28% on the composite — what gives?”

Dealer B: “We're doing a pretty good job through the service drive”

Dealer A: “Yeah, well we got signs hanging in our service department telling our customers that they can still buy them before their factory warranty expires”

Dealer B: “Everybody has those.”

If you really want to boost your service contract sales, they must be promoted through the service department in addition to “the box.”

You're doing your customers a disservice if you don't mention to them that they still have time to purchase a service contract before its too late. The key term here is “mention.” Just hanging a sign might draw a few people, but not many.

Employees must do the rest, and that includes service advisors. Look at the top reasons dealerships don't promote F&I extended warranty agreements effectively enough through the service department:

  1. Advisors feel they do not have enough time because they're focusing on selling parts and labor.

    Response: That depends on how many repair orders they are juggling and how many tasks each advisor is responsible for (closing work orders, warranty administration, cashier, etc.)

  2. Advisors are not properly trained on what to say and not say when it comes to promoting service contracts.

    Response: That can be easily rectified.

  3. F&I managers feel service contracts are their products to sell to their customers, not the service department's.

    Response: Is the tail wagging the dog?

  4. Service advisors have a “bad taste” about service contracts from having to deal with some difficult claims adjusters from some warranty companies.

    Response: This is the undisputed heavyweight cause of grief for service advisors.

  5. Some service advisors take a what's-in-it-for-me attitude) They turn people over to the business office and often don't hear “boo” afterwards.

    Response: Why not have the business managers spiff the advisors for every person they turn over, rather than every person who buys a contract?

All of these concerns can be remedied. Sometimes it may take a different mind-set and maybe different products being promoted, or maybe training of the advisors.

Valentine Volvo in Calgary, Alberta enjoys one of the strongest service contract penetrations for all Volvo North America stores. A big reason is that they promote them through the service drive.

Look at why service contracts should be sold — or at least promoted — through the service department:

  1. Advisors are well aware of the high cost of repairs.

  2. Advisors can pull up vehicle histories to find out which are better candidates than others.

  3. Advisors normally have the best customer rapport in the dealership.

  4. Who doesn't bring their car back to the dealership within the final months and mileage before the warranty expires? When that happens, advisors should take an extra minute or two to inform customers that they still have some warranty options before it's too late.

Otherwise, it may be too late to get that customer back in during the fourth-sixth year of ownership.


If you would like to find out how effective your dealership is at promoting service contracts through the service drive, fax 403-283-4188 or email [email protected].

TAGS: Dealers Retail
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