Pre-Paid Maintenance Plans Help Both Customers, Business

The car business is a people business, so put others first. That can mean going the extra mile to exceed expectations and following up to thank customers and get a read from them on how you’re doing.

Customer retention takes a whack each time a customer isn’t satisfied, whatever the reason. Service come-backs irk them – and open safety recalls inconvenience and aggravate everyone.

So keeping customers happy and keeping them coming back is increasingly a full-time job for everyone working at the dealership. The first building block in an efficient retention program is people – your people. Develop them, so their knowledge, attitude and perspective equip them to engage the challenges their day will bring so they don’t turn off customers and turn them away.

A second building block is program-based and designed to bring customers back, service after service.  Whether this is an OEM-branded retention program, a rewards or points card-type effort or a dealer-branded prepaid maintenance plan, make sure it:

Unfortunately, not all retention programs provide hard assurance that their promises are more than hope. Hope is important, but for measuring the success of business investments like retention programs, you want more than that – you want hard, revealing performance metrics.

If you’re disappointed by the performance of your retention plan, consider this three-point strategy for reversing your fortunes.

Market

There is good reason to sell retention programs that offer customers assistance with their future vehicle service needs. Most consumers just can’t cash flow even a $500 emergency, notes Bankrate.com. So, retention programs, like prepaid maintenance plans that offer discounted prices on maintenance basics, provide real value.

If your vendor provides customer-facing marketing materials, use them. Familiarize customer-facing staff with this promotion literature, so they present it knowledgeably and convincingly. Promote its availability and how it benefits customers by marketing it on the dealership website, in the F&I office, in the service drive, at the parts counter, in the accessories department – anywhere opportunity is presented to explain how the plan benefits them.

Assign an individual to champion the program, internally and externally. Charge this person with getting performance and ROI reports to key managers. Make sure staff knows about the program and can explain it, and are discussing it with customers at every point. If you spiff the plan, promote that fact internally.

Promote Value

Plans the dealer can customize for the local market will have more value to customers, so be sure the plan you opt for allows you this flexibility.

Additional questions you need to ask when looking at a plan:

A best practice many dealers choose is a preloaded maintenance plan that is offered free to vehicle purchasers. The incentives tie the buyer to that all-important first service visit. NADA has noted that 75% of new customers who have regular maintenance performed at their dealership become repeat purchasers/customers.

Preload 1- or 2-year programs on all new and used car purchases, and offer a multi-year upsell option through your F&I department for longer term retention. Offer the plan to every buyer. The used car purchaser is the most likely customer to defect after purchase, so be sure to connect them to a dealer-branded PPM that is redeemable only at your dealership.

When selling PPMs in F&I, enjoy a reasonable markup but realize the goal here is product penetration. Penetration or volume equates to additional revenue that flows from service when plans are redeemed, from the cash flow advantage when the plan allows you to hold your own reserves.

Do Metrics

You should know if the plan is driving customers to the service lane. You should know what plan holder upsell dollars are per visit. And finally, you need to know how the program is strengthening customer retention and the value of that retention over several years.

There you have it, a comprehensive 3-point plan for reversing poor retention plan performance.

Ryan Williams is president of Fidelis PPM, and is a 20-plus year veteran of the auto industry, having served in multiple dealerships as sales manager, F&I manager, and GM. You can reach him at [email protected].