How Third-Party Marketers are Harmful to Dealerships

In 2023, the total value of the US car and automotive market stood at over a trillion dollars, and it’s still growing. From manufacturers to dealerships to parts, there are many types of companies that fall under the umbrella of automotive, all providing different services.

Some of those automotive businesses are beneficial to both drivers and dealership. Tire shops, auto body shops, and even junkyards serve an important part in the vehicular ecosystem. However, some businesses on the fringes of the automotive world provide poor experiences to customers and dealerships like.

Third-party marketers are among those parasite businesses that are harmful not just to the vehicle owners they target, but also to dealerships by causing harm directly to the automotive industry.

What is a Third-Party Marketer?

A third-party marketer in the automotive industry uses a combination of telemarketer tactics and websites to sell vehicle service contracts, commonly called extended warranties, outside the established and regulated dealership infrastructure. Where dealerships offer stability, support, and long-term vehicle service contracts, third-party marketers are just trying to move contracts through quickly without providing any value to the customer. These third-party businesses also go out of business relatively quickly, leaving customers with no recourse.

Why Third-Party Marketers are Harmful to Dealerships

Dealerships partner with customers from the initial purchase of a vehicle throughout the vehicle lifecycle until they are ready to purchase another. Dealers also value customer service and retention, working diligently to give customers the best experience possible. However, third party marketers are a different story. There are four important reasons why third-party marketers are harmful to auto dealerships.

  • Customers are Stolen from Dealerships – First, these marketers often use robo-calling to steal business from a dealership. Vehicle buyers often find themselves bombarded with calls as soon as their recent purchase history crosses the awareness of local third-party marketers. In 2022 alone, Americans received 70 billion robocalls. The goal of these robocalls is to steal customers from the dealership without offering the same quality, safety, and service that a dealership provides.
  • Third-Party Marketers Impersonate Dealerships – Many third-party marketers misrepresent themselves to customers. They may claim to be a dealership or be associated with a dealership when they are not. They are trying to take advantage of a dealership’s good reputation without providing the value and protection that a dealership grants each and every customer.
  • They Give the Auto Industry a Bad Name – Third-party marketers ultimately give the auto industry a bad name as thousands of customers receive poor experiences from robocallers, letters, and websites that claim to offer quality coverage when they do not

Why Third-Party Marketers are Harmful to Customers

Dealerships should be concerned with the harm that third-party marketers are doing to their customers. Auto dealerships are dedicated to customer service, and employees in every department are trained to assist customers. This allows dealerships to protect their customers, help them make smart purchasing decisions, and set them up for safe driving for years after each purchase.

Third-party marketers, however, sidestep these protections and services which can cause potential harm to those customers who would have been lured away from a dealership.

  • Their Warranties Offer No Protection – Because third-party marketers are not dealerships capable of backing warranty terms, they often offer warranties that have more legalese than protections. This leaves car buyers unprotected – and unaware.
  • They Employ Unlicensed Sales People – Third-party marketers often employ unlicensed sales people, which can result in poorly guided and uninformed purchases and zero consideration for the actual needs of the customer. Many times, customers can’t even use the coverage provided by these telemarketers.
  • They Often Go Out of Business Quickly – When these third-party marketers go out of business, the customer is usually left with a vehicle service contract they have paid on but can’t use. Most employees at these centers only work there for 18 – 36 months, so there are no seasoned or tenured employees who are invested in long term success.

Signs that a Seller is a Third-Party Marketer

How can you identify a third-party marketer vs a legitimate dealership offering?

There are several clear signs, from the brand’s behavior and presentation to its verified business history.

  • Telemarketer Tactics
  • Poor BBB Ratings with No Follow-Up
  • Negative Consumer Reviews
  • Coverage Offered is Poor/Not Appropriate
  • Offices Open and Close Suddenly

Dealerships can protect customers from these third-party marketers by utilizing their own post-sale vehicle service contract program.  Post-sale marketing vehicle service contracts to customers helps dealerships build lasting relationships with them and keep these customers from buying subpar third-party vehicle service contracts. Learning how to effectively educate customers leads not only to better customer loyalty, but other benefits such as increased revenue, higher reinsurance reserves, and more vehicle sales.

At Automotive Product Consultants, we offer post-sale vehicle service contract marketing programs at no-cost to dealerships. These programs market to dealership customers and educate them about the benefits of buying additional coverage from the dealership.

We encourage dealers and agents to contact us to learn how Automotive Product Consultants can power a post-sale vehicle service contract marketing program that will drive sales and revenue for your dealership. Reach out to us today for a free program demo.

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APC, the leading database marketer for Vehicle Services Contracts (VSC) in the Automotive Industry announced it has achieved SOC 2 Type II certification, the gold standard for data security and compliance.