Here's How to Extend Yourself

If you ask a customer to pay $1,500-$2,500 for extended warranty coverage, you better say more than, “It pays for major repairs.”

So says Andrew Blazanyik, Resource Automotive's executive director for training.

He says there are 25 good reasons to buy such coverage. Among them:

Mentioning the benefits in an upbeat way will help a dealership finance and insurance manager sell more warranties, Blazanyik tells an F&I Management and Technology conference.

Who wins when such coverage is sold?

“Everyone wins,” says Blazanyik. “The dealership, the customer, the F&I manager and the service department because 95% of repair work is done at the dealership where the contract originated.”

He speaks as someone who has both sold and bought the coverage: “I've bought service contracts on every vehicle I owned, and I've always been unlucky enough to get my money back on all of them.”

He says dealerships sell more when extended warranties are mentioned early on, such as during trade-in discussions, the vehicle walk-around or a demonstration drive.

“Dealerships doing that have 40%-50% penetration rates vs. the industry average of about 30%,” he says.

Sales people deserve a spiff if they “plant a seed in a customer's mind” before introducing him or her to the F&I manager.

“But don't reward people for something someone hasn't done,” says Blazanyik, a licensed clinical psychologist. “Whatever the pay plan, you need to reinforce what you want your people to do.”

Accordingly, he says, if an F&I manager fails to sell a service contract, a showroom salesperson who beforehand planted the seed by touting the coverage shouldn't be penalized.

Good service-contract selling, whether on the showroom floor or in the F&I office, creates value, maintains credibility, demonstrates benefits and justifies costs, says Blazanyik.

“There are fundamentals of selling,” he says. “There is no silver bullet. Well there is one: the close; always ask for the sale.”

He cautions against using scare tactics.

“If a customer is excited about buying a new car, don't make him depressed,” says Blazanyik. “Think about it. I'm buying a $30,000 car and I'm pumped about that. And you start talking to me about dying or becoming disabled. Or about the possibility of my car breaking down at 3 a.m.

“Talk instead about maintaining the excitement of owning a well-running car, about the positive aspects of extending a relationship with a car, about the high value a car with an extended warranty gets at trade in. Don't talk about the transmission conking out on Christmas Day.”

Blazanyik also notes that many perceived price objections merely are reactions, not rejections.

“If someone says, ‘Gee, $2,000 is a lot of money,’ it doesn't mean you should say, ‘Yeah, it is,’ and run to a manager to see if there is a special of the day. Instead say, ‘No, it really isn't because here are all the benefits you get.’”

Blazanyik offers a simple system for selling more extended warranties: “Get good people, train them, reward them, check on them and make sure the managers know what they are doing. This is what happens at successful dealerships.”