In the past few years, the Service Department has become a way to not only drive retention but also capture the most coveted prize in any business: customer loyalty. In good times, and in bad, the profit margin from new-car sales is likely overshadowed by that of service and parts. So the question dealers are asking is: What can we do to promote Service business? The answer could well like in promoting “captive service” at your dealership!
Auto dealerships are always looking for ways to bring their customers into the service lanes, typically the bread-and-butter of dealerships, but they have felt the squeeze from a reduction in warranty and recall work as cars have become more reliable. Competition from independent service providers such as quick-lub shops and tire outlets has also hurt. So the key has become wrapped around creating “captive service” around what is termed “dealer-centric” pre-paid service plans.
OEM Maintenance Plans versus Dealer-Centric Pre-Paid Plans
- Critical to a pre-paid plan for your dealership is “captive service”.
- OEM plans work fine for the automaker, but they are not captive for the dealer.
- Dealership are now choosing to offer dealer-centric PPM products offered through numerous companies – seeing an expansion nationwide.
- Prepaid maintenance (PPM) plans and courtesy service packages have started to blossom as customer retention tools for automakers and individual dealerships.
- Regardless of the name behind the PPM, tailor-made programs now allow the service manager to be a key player in dealer pricing.
- As a result, Pre-paid maintenance plans and courtesy service packages have started to blossom as customer retention tools for automakers and individual dealerships.
What Your Dealer Manager Needs to Know Today:
- Retention often begins with a simple invitation to visit your service drive every 5,000 miles or so. And who knows, it might even be the start of a long-lasting relationship.
- Traditional service department loyalists tend to be 45 or older.
- Retaining “dealer-averse” drivers aged 35 and under, or millennials, is key to the success of PPM plans.
- A recent study of vehicle owners who had their car serviced at the dealership over the course of the previous 12 months, found that 56 percent of those are likely to return to the dealership for service after their package expires.
- That figure climbs to 62 percent for those who used their plans for all maintenance during the term of the contract.
- While prepaid and complimentary maintenance programs have proven effective at keeping customers coming back to the service lane, 86 percent of drivers who return for regular maintenance are also more likely to purchase their next vehicle from the same dealership.
Daryl K. Tabor, writer of the article, emphasizes that it is important to find the right prepaid maintenance program for your dealership among the newer plans that offer so much more than older limited plans available to auto dealerships – and allowing you to set service intervals, establish time and mileage parameters and offer virtually any amenity as part of the package. Read the full article here.