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 harmful to the vehicle owners they target, plus dealerships by causing harm directly to the automotive industry.
What is a Third-Party Marketer?
A third-party marketer 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 support, and long-term vehicle service contracts, third-party marketers are just trying to move contracts quickly without providing value to the customer. These third-party businesses also go out of business quickly, leaving customers with no recourse.
Why Third-Party Marketers are Harmful to Dealerships
Dealerships partner with customers from the purchase of a vehicle throughout 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 use robo-calling to steal business from dealerships. Vehicle buyers find themselves bombarded with calls as soon as third-party marketers are aware of their purchase. In 2022 alone, Americans received 70 billion robocalls. The goal of these robocalls is to steal customers 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, but aren’t. They 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 give the auto industry a bad name, since thousands of customers receive poor experiences from robocalls websites that claim to offer quality coverage when they do not
Why Third-Party Marketers are Harmful to Customers
Dealerships should be concerned about the harm that third-party marketers are doing to their customers. Dealerships dedicate resources to customer service, and employees in every department assist customers. This allows dealerships to protect customers, help them make smart purchasing decisions, and set them up for safe driving after each purchase.
Third-party marketers, however, sidestep these protections and services. This can cause potential harm to customers who have been lured away from a dealership.
- Their Warranties Offer No Protection – Since third-party marketers are not dealerships capable of backing 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 salespeople, resulting in poor guidance, uninformed purchases, and zero consideration for the 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 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 post-sale vehicle service contract programs. Post-sale marketing vehicle service contracts dealerships build lasting customer relationships keep them from buying subpar third-party vehicle service contracts. Learning how to educate customers leads to better customer loyalty, plus other benefits such as increased revenue, higher reinsurance reserves, and more vehicle sales.
At APC, 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 APC 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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