Skill, Strategy Needed for Dealerships to Sell Service Contracts on Second Round

People deserve a second chance, including auto dealers who initially failed to convince hold-out customers to buy extended-service agreements for their newly purchased vehicles. 

Pursuing them eventually can lead to a late F&I product sale. But it takes skill and strategy.

Tony Rhoades, vice president-product for data-mining company AutoAlert, cites potential reasons customers didn’t buy in the first place at the dealership.

“Lack of a menu system is one reason,” he says. “Others are the F&I manager is distracted during the sale, off his or her game or the customer reaches their end-point and will hear no more.”

Every F&I customer deserves a full extended-service presentation “but we don’t do that, fearing risk to CSI scores if we keep the customer too long,” Rhoades says. “So, instead we take just one shot at selling what is by far the most profitable opportunity in F&I.”

Dealers most successful with second shots typically assign follow-up calls to a business development center or employees with strong phone skills and service-contract knowledge, Rhoades says. “At the very least, the customer is likely to be in a different state of mind to reconsider the purchase.”

Marketing service contracts after the customer has taken delivery of a car may seem simple, but it can be more complicated than expected, says trainer Pat Becker, owner of Dealership Development, who offers suggestions to interested dealers.

With a proper process and knowledgeable caller, a dealership can expect to average a 15% closing ratio, Becker says.

He also recommends perseverance and monitoring progress. “Most dealers at one time or another seem to have tried this, however our findings are the program rarely stays around very long.

“The main reason is this process is like most processes in a dealership; you don’t get what you expect unless you inspect.”

Another reason for failure is that a caller can lack sufficient F&I and service- contract knowledge to close a sale, Becker says, adding that training can help there.