Article

F&I and Service Can Work Together

June 2009, Auto Dealer Today - WebXclusive

by Kirk Manzo - Also by this author

How to Cross-Sell Your Dealership

In today’s unpredictable market, one thing is certain, vehicle service contracts (VSC) make for happier customers. Realizing that the economics of the current conditions are daunting for many consumers, the VSC is a true value not only at the time of purchase, but also after the sale.

Many people are opting to keep their cars longer than anticipated—making now the ideal time to remarket to customers in your database with an offer for a vehicle service contract. Just as buy-back offers are effective for sales departments to stimulate unit sales, an offer for a VSC after the sale can also provide incremental revenue at a time when every little bit counts.

Assistance from your DMS provider or a CRM product may be necessary to harvest the records you will need to generate a highly targeted list. You should identify people who purchased their vehicles from your company as well as those who only service their cars with you but purchased elsewhere.

If you choose to use a letter to present your offer, make sure to use a window envelope for the mailing. An envelope with the dealership’s logo and a window showing the correct name and address of the customer will increase the likelihood they will open the envelope. Why? Because it looks like a bill or something related to their vehicle ownership. A regular envelope with a label looks like a mass mail solicitation. Take the extra step to have the letters personally addressed using Microsoft Word’s mail merge function instead of printing “Dear Customer,” on every one.

There is some advantage to using a postcard instead of a letter to convey your VSC offer. The message is more likely to be viewed, since there is no envelope to open. Keep in mind, postage is only $0.27 per postcard versus $0.43 for a letter. A full-color postcard is much more visually appealing than a plain envelope and letter. My suggestion would be to check out suppliers online for the postcards. Vistaprints.com is an excellent Web site with many ready-to-use templates available. You can upload your company’s logo easily and lay out the text in just a few minutes. You can also upload your mailing list and have the customer information preprinted on the cards, eliminating the time and cost of using labels.

Another strategy to increase VSC sales is to identify opportunities in the service drive and/or the customer lounge area. While every service department in the country is trying to help add dollars to the bottom line by generating higher-value repair orders, the immediate profit of selling a VSC ($500 to $1,000) is an important part of any profit-building strategy.

Obviously, this will need to be coordinated with your service team. A little grease on the wheels will help make this program a success. Offer some financial incentive for both the service writers as well as the service manager to help gain their support. Additionally, to assist the service deparment create a pre-paid maintenance (PPM) program that you can offer on your F&I menu to help your service department increase their chances to upsell customer pay opportunities.

The figures regarding customer retention as it relates to routine maintenance are very compelling. The habits your customers develop during the first 18 to 24 months of ownership will stay with them for the balance of the ownership period. Since customers who use your service department regularly are much more likely to purchase their next vehicle from your dealership. This gives you a chance to sell your full complement of products and services when they replace their car. For this reason, designing shorter-term PPM packages can be very effective due to the lower cost (fewer visits.

Today’s most consistent F&I managers are team players. They understand long term success is best achieved by securing product sales both now and in the future.

Vol. 6, Issue 4

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