Over the past several years, it has been harder and harder for a dealer to compete with the “fast-lane” facilities popping up on every corner. Dealers are perceived as (1) taking too long to perform the service, (2) being more expensive than and are not as convenient as independent service shops.

What most customers don’t realize is this is not the case in most instances. Dealers now have “fast-lane” (Express Lane) type offerings, generally accept competitor’s coupons and have extended service hours – sometimes, far past the hours of an independent facility.

The question is: how do we educate the customer?

First, we must educate our dealers. Most dealers continue to treat the “fast-lane” customer like they would a warranty claim customer. They don’t let the customer feel the “fast-lane” process. As the dealer’s representative, we must help them to understand the difference. Reminding the dealer that just because it is a “fast-lane” customer, doesn’t mean they can’t make money! Most “fast-lane” facilities have an average customer pay repair order in excess of $65! The dealer must become good at talking the talk of the “fast-lane” mentality. Oftentimes a separate check-in process as well as a pay plan incentive are necessary to get the greatest results with a “fast-lane” customer.

As an agent or an administrator there are products and processes available that can assist you in becoming the dealer’s hero. Here are some examples:

Loyalty programs can assist in driving the service retention within the dealership. One proven version of loyalty program is a Lifetime Powertrain Warranty. This assumes that the administrator has written the contract in a way that assists the dealer in creating a reason for the customer to return to the selling dealer. Some things to look for when offering a Lifetime Powertrain Warranty:

1. Does the administrator provide an email reminder service that reminds the customer about their need to do the maintenance required on their vehicle, along with branding the dealership at the same time?
2. Does the administrator have anything setup to assist the customer in finding out what maintenance service needs to be performed and to remind them that dealership is the best place to service their vehicle?
3. Does the contract “freely” allow a customer to take their vehicle to ANY facility for maintenance or are there parameters that help keep the customer servicing with the selling facility?
4. Is the dealership notified every time that the customer decides to service their vehicle with another facility, giving the dealer the opportunity to call the customer and direct that customer back to their dealership?

We have to remember that once the customer leaves the selling dealer for maintenance service, the chance of them buying a vehicle from the selling dealer drops from 83% to 17% – that is a HUGE swing, making it even more critical that the customer services their vehicle with the selling dealer.

Another program we have found to be a big winner in the service retention area is prepaid maintenance. But, more specifically, a prepaid maintenance “give-away” with an upsell opportunity in the finance department.

The benefits of this type of program are unbelievable.

1. Every customer is provided (in most cases) their first year of oil changes upon purchasing their vehicle. This serves a few different areas of opportunity:
   1. It gives the customer a reason to return to the selling dealer for their maintenance.
   2. If a customer services their vehicle with the selling dealer for the first year, they are more likely to continue servicing with them after the “free” oil changes are gone.
   3. It allows the selling dealer to easily track through the administrator all of the customers that have NOT returned to the selling dealer, allowing the Business Development Center to call and capture those customers (Providing the administrator offers this reporting functionality).
   4. It allows the finance manager the opportunity to talk about something positive and the ability to “extend” the prepaid maintenance program for the entire ownership term at a competitive or reduced price; generally up-selling closer to 50% of the customers to a longer program.
2. If the dealer has chosen to only sell the Prepaid Maintenance Program in the finance department, they still receive some benefits, but as you can imagine, the penetrations are much lower.
   1. Most finance departments maintenance penetrations are between 15-25% if they are not upselling from a “give-away” type program.
   2. Keep in mind that some type of retention is better than none. By offering prepaid maintenance, this will provide at least 15-25% of their customers a reason to return.

3. The dealer can also offer the prepaid maintenance program on the service drive!
   1. Allows the dealer to capture those customers that DIDN’T buy a car from them and now make them a future buyer!
   2. Creates the opportunity to upsell those customers that didn’t take advantage of the upsell to a longer program in the finance office, the second chance to take advantage of the long-term savings available in a prepaid maintenance program.

Every dealership should have some type of program that is geared to bringing the customer back into their service department. Let’s do the math, and you will quickly see why you will be your dealer’s hero.

These numbers are based off an NADA study that showed that 83% of the customers that perform their routine maintenance with the selling dealer will return to them to purchase another vehicle. If a customer ONLY performs their warranty work or nothing at all with the selling dealer, then only 17% will buy their next vehicle from the selling dealer. On national average, only about 23% of the customers service with their selling dealer.

If you could double that with a service retention program, look at the amazing difference in future customer retention:

Over a five year period, the selling dealer would have 1564 MORE customers returning to them to buy a vehicle. The best part – NO ADVERTISING expense is required to sell these vehicles! In addition, the selling dealer has the opportunity to earn profit on the maintenance, plus the other items, like tires, brake pads, windshield wipers and more. This doesn’t include the increased opportunities in the finance office as well!

Now, you have truly become your dealer’s hero!

Administrators are often urged to provide products to agents and dealers that are “cheap in price and low in value.” Agents and dealers flock to the “easy and cheap” products. Unfortunately, most of the administrators that entered the industry with an easy, simple and cheap product are the same administrators that are no longer in business…the short-term, fast-lived companies: API and Ultimate are a couple examples.

The quality administrators will begin to take a stand and live for the long run, not the quick and easy business with little substance. Administrators that write contracts that don’t meet customers’ expectations or that are filled with loopholes to avoid payment have given our industry a black eye.

Products that are written with the intent not to pay a claim tend to be cheaper products and will only cause each and every administrator trouble in the future. These products drive poor CSI, upset dealers and ultimately cost everyone more money.

A product should be written in the same way that the F&I manager is going to sell it. The long-term CSI and the protection of the customer and dealer should be the most important components of the product.  Let’s take a look at a few examples that are potentially harmful to a customer and a dealer, ultimately leading to the agent and the administrator receiving the “black eye”:

Service Contract Refund Programs – Time Only

How the F&I manager sells it: “The best part Mr. Customer is that if you never use your service contract, we will give you 100 percent of your money back.”

What the customer heard: “If I don’t use it, as soon as it expires, I get my money back.”

The reality: With Time Only refund programs, customers have to wait until the contract expires by TIME. So, if they were sold a 7-year/100,000 mile program (most popular) and customers drive 100,000 miles in five years, they have two choices: (1) keep their car another two years and not trade it (not good for future car sales) waiting for the contract to expire by TIME or (2) take the hit and not get a refund.

With the second choice, the customer is mad and the dealer has to either eat crow and refund the customer or lose the sale. Both options are horrible for the dealer and the customer.

Tire and Wheel Road Hazard Programs – Without Curb Damage

How the F&I manager sells it: “The best part Mr. Customer is that if you ever have a flat tire or damage to your rim for whatever reason, this program will repair or replace your tires and/or rims at no charge.”

What the customer heard: “Everything is covered, even if I hit a curb.”

The reality: Tire and wheel coverage that does not cover curb damage ends in disaster for everyone involved. More agents have expressed their frustration with this product because they end up paying these claims out of their pocket or their dealers have to pay out of theirs. Why not just sell your dealers on why they should have a slightly higher priced product that does what the customer perceives it to do? It should pay for damage, no ifs, ands or buts!

Windshield Programs – Repair Only

How the F&I manager sells it: “The best part Mr. Customer is that if you are driving down the road and a rock hits your windshield, it will be fixed.”

What the customer heard: “No matter how big the crack or hole is, my windshield is fixed.”

The reality: The contract only pays for repairs (usually up to a 6-inch crack). The reality is that very few damaged windshields can be repaired and most need to be replaced. So here we are again with a contract written that doesn’t perform according to the expectations of the customer.

Most dealers and agents become trapped into finding the least expensive 4-and-1 or 5-and-1 “combination” product. Watch out because these are the very contracts that are written one way and presented to the customer a completely different way. Sure, they are easy to sell, but who are they benefiting other than the administrator? Certainly not the customer or the dealer in the long run.

Unfortunately, many products developed with only cost in mind are too early in their shelf life for dealers to have learned their lesson. As administrators, we all need to band together and create contracts that perform according to the perception of the customer and the dealer. Remember the old adage “if it is too good to be true, then it is.” When a dealer or an agent is shopping for the “best deal,” it isn’t always all about cost.