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Consider Pumping Up Your Service Menu

Consider Pumping Up Your Service Menu

Searching for revenue to keep the bottom line healthy, a number of dealerships have added F&I products to their service offerings. A possible influx of longer-term customers at your store can make it worthwhile to consider selling service contracts and related products in the service lane.

Timing Is Everything

Dealerships are finding that it’s easier to sell F&I products at the time of a costly repair, or when the customers’ warranties are about to expire, than it was at the sales closing. As a result, more service writers are being trained to talk about the value of service contracts and prepaid maintenance plans and how to close them.

Consideration: If your service area sells three service contracts per week for the next year, that would be more than 150 additional customers a year who would be tied to your dealership for the next three or four years. And keep in mind that the first 180 days after new or used-car delivery is generally considered the most critical time for a service area to establish a relationship with customers.

Sales Techniques that Work

Let’s look at an example of a customer with a recent-model SUV. The service writer, armed with the customer’s information, asks him if he knows that his warranty is going to expire in a month. The customer becomes more interested in purchasing a service contract than he was when he first bought his vehicle.

Or using a different technique, the service writer asks the customer to figure out when his 24-month warranty will end. Getting customers to realize on their own what they’ll be paying for service can be a powerful tool. This is also a good time to point out that many auto parts aren’t repairable today. Then, provide some pricing examples for replacement parts. The customer will be more likely to see the wisdom of a service contract.

Another example: Let’s say another customer wasn’t interested in a prepaid maintenance plan when she bought her three-year-old vehicle from you. But she’s changed her mind now that she’s paying for her first front brakes replacement. Prepaid maintenance plans and service contracts are among the best selling F&I products, along with tire and wheel protection, guaranteed asset protection, insurance and security products, according to AutoNation, one of the country’s largest dealership groups.

Be Ready

The service writer can use the dealership’s customer relationship management (CRM) software to find out when customers’ warranties are up and to send an e-mail notice before the customer’s next visit. Make sure that your service area has up-to-date brochures on the F&I products you’re promoting when customers come in for their appointments.

Years ago, when selling these products in the service lane was new, the service writer would get the customer interested in the product and then walk him or her to the F&I department. There, an F&I person would close the sale. But these days, well-trained service writers usually handle the promotion and sale in the service area, either in the customers’ waiting room or by the service writer’s station. This speeds up the process for the time-conscious customer. Another plus: Since the sale will be recorded to the service area, service managers will be more motivated to sell.

The service manager should coordinate training, typically by the store’s F&I manager, a contract provider or another vendor. The service manager also should set sales goals and evaluate individual performance.

Get Professional Projections

Adding F&I products to your service lane can boost your dealership’s profits. Your CPA can crunch the numbers to determine if it’s likely to be a profitable endeavor for your store.

Please contact John Comunale via our online contact form for more information.

Councilor, Buchanan & Mitchell (CBM) is a professional services firm delivering tax, accounting and business advisory expertise throughout the Mid-Atlantic region from offices in Bethesda, MD and Washington, DC.  

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