Making Up Lost Dealership Income with Vehicle Service Contracts

Consumers live in a data-driven world that remembers everything we do online. From search engines to social media, systems are in place to learn about customer preferences, wants, and needs. While this information is useful to any marketer, it’s particularly useful for automotive, powersports, and RV dealerships in generating revenue. Using learned behaviors from data to market and sell VSC’s is a great way to make up lost dealership income.

Around 55% to 65% of customer don’t buy a Vehicle Service Contract during their initial dealership purchase. This is an opportunity for F&I departments to market these contracts to customers later on.

Vehicle Service Contracts are a great tool for retaining customers at your dealership and service drive but can be a difficult sell. Many customers are responsive to purchasing a VSC once their factory warranty has expired, or as their car gets older and issues arise.

Use Marketing to Take Back Dealership Income

Use the data the dealership has collected for customers to stay in touch and market VSC’s after a sale. A customer’s mail, email, and even texts are great places to start. Let customers know that they are being marketed to specifically, with customized marketing collateral and specialized offers. By doing this, dealerships can tap into their existing customer base to boost post-sale VSC sales and enhance overall profitability.

Educate Customers about the Cost of Not Having a VSC

Drivers are keeping their vehicles longer – the average vehicle age is at a record high of 12.6 years. This trend stresses an unavoidable reality: maintaining a vehicle’s health to ensure reliable transportation is more important than ever.

Keeping an older vehicle running smoothly is sometimes challenging, and the older the vehicle gets, the more chance there is of a mechanical breakdown. That’s why having a vehicle service contract is important. Talk to your customers about the cost of parts, labor, and how with inflation, those costs are generally higher than what most can afford out of pocket.

Be Clear About Why VSC’s Should be Purchased through Your Dealership

The best place to purchase a vehicle service contract from is the dealership the vehicle came from. When a customer needs a repair under their vehicle service contract, they can return to the dealership they bought the contract from for service. Dealers benefit from being able to track repairs and needs for better customer service.

It’s also important for dealerships to educate their customers about their coverage options so these customers aren’t lured away by third-party marketers. Many consumers receive robocalls and text messages about vehicle service contracts from third parties after purchasing a vehicle. The companies behind the messages may give the impression they represent a dealership or manufacturer – but have no association whatsoever. They use phrases like “Motor Vehicle Notification,” “Final Warranty Notice,” or “Notice of Interruption” to make the offer seem urgent — and to get consumers to respond.

These third-party companies:

Aren’t working with your vehicle dealer or manufacturer and likely purchased your data from a credit reporting bureau
Pressure customers to provide personal financial information and a down payment right away
May not be in business when a customer needs to use their contract – it’s a high turnover business and not reliable
Limit which repairs are covered, and who can provide the repairs, which can make the contract worthless

While the ideal scenario is to close the sale of a VSC at the time of delivery, stores can still capitalize on post-delivery opportunities to increase dealership income. By providing a compelling offer that addresses price concerns and offers flexible payment options, dealerships not only enhance the attractiveness of the VSC but also reinforce their commitment to customer satisfaction. This approach can lead to increased sales, improved customer loyalty, and a stronger overall reputation for the dealership.

Contact Us Today

"*" indicates required fields

The Impact of Extended Coverage in the Electric Vehicle Market

Consumer, Customer Loyalty, Dealership, Electric Vehicles

Did you know that more than 10 million electric vehicles are on the road worldwide today? To put this into perspective, that figure was only 53,000 in 2012, representing a massive 18,000% growth in the EV market. As the EV market continues to thrive, exploring the benefits of vehicle service contract coverage, the costs associated with electric vehicle repairs, and the unique technical requirements of these environmentally friendly vehicles is essential.