Vehicle Service Contract (VSC) sales can happen in the service lane, unfortunately most dealers don’t take the time to tap into this potential, says Jim Fisher, assistant vice president of Dealer Programs for American Guardian Warranty Services (AGWS).
“Most people in the service department are service writers, not salespeople. If they are selling to people, they focus on selling service versus service contracts,” he adds.
When dealerships do sell service lane VSCs, they are often priced too high and end up being cancelled later, he stresses.
“The process in most dealerships [for service lane VSC sales] has never been good,” he says.
But dealers who ignore its potential are losing out on profits. Fisher explains dealers can reach the low-hanging fruit for VSCs in the service lane. This includes customers who got hit with a major repair bill and never want that feeling again; those who did not have a VSC to begin with, then had to pay for vehicle repairs; and those who bought their car from a private party and could not buy a VSC.
Over the 20 years he spent as an auto dealer, Fisher developed a successful strategy for selling VSCs in the service lane. While he says he pushed his service writers to sell service lane VSCs, he also developed a process for them to follow. The process worked well, he adds; service employees made money, which drove them to make more sales.
AGWS asked Fisher to take the knowledge he acquired over his career and create a service lane program that works for AGWS, the provider of administration services for agents and dealers that offer VSCs, vehicle protection products and a variety of environmental and aftermarket products across the United States.
Fisher took on the challenge and AGWS recently launched Your Plan, a service lane sale solution designed by a dealer for dealers. The new program facilitates service lane sales of VSCs, making it simple and easy for service employees to sell these contracts without time-consuming pitches and paperwork.
There’s an App for That
Your Plan is an app dealers can download from the Apple App Store or Google Play. The Android or IOS app helps service employees generate a personalized VSC quote in less than a minute. They can then email that quote to customers for review and completion from their phone or computer.
While customers can finish the VSC application on their computer or phone, Fisher says most prefer to get help at the dealership. “Most people won’t do it on their own. They are afraid of making a mistake,” he explains. “They normally contact the dealer for help.”
But even if dealers must walk customers through the process, all steps can be completed within the app. There is no paperwork or dealership processing. The office manager simply puts the profit on the financial statement, sets up commissions and sales tax, and it’s done.
“Budco, Ford’s ISP manages the financial details of the consumer’s payments to AGWS and any cancellations,” he says. “We make this process easy for everyone.”
The program clears a big barrier in the way of service lane sales. “Employees will sabotage anything that takes them outside their comfort zone. The easy-to-use app allows service employees to do as much or as little as they want to sell service lane VSCs,” he says.
Your Plan Pursuit, an option to the Your Plan program, is a joint project with APC, a leader in service contract database marketing. This option builds flexibility into the Your Plan offering. For instance, with Your Plan Pursuit, a service employee can quote the customer, complete the sale, and collect the commission. Or they can provide a quote to the customer and leave it alone, and after five days, APC will follow up and hopefully land a sale.
APC also emails a personalized quote to service customers who did not receive a dealership quote the previous day. The company then follows up and attempts to close a sale. To encourage sales, APC also contacts customers who recently paid repair bills, had a scare, or bought their vehicles from private parties.
“I put together a program so that if they have someone who wants to sell in the service lane, the app helps them do it,” he says. “If they don’t want to sell, we market to their previous day's service customers who didn’t buy in the service lane.”
Getting People to Sell
Though the app can do it for them, Fisher encourages dealers to have employees sell VSCs in the service lane and suggests hiring someone specifically for the job.
“Hire someone and get them quoting customers because service writers don’t always have time to do this,” he says. “Unfortunately, dealers often won’t hire someone unless they know it will guarantee them a profit.”
He adds, “That’s what the follow-up part of our program does. It shows them the sales they are missing. They will see that they sold three contracts last month but lost out on six more contracts that were sold by APC. When they see how much money they are losing, they’ll hire someone to do it. They only need a part-time person to oversee the morning service rush.”
If dealerships won’t hire someone for this work, Fisher encourages them to task existing service employees with providing a minimum of five quotes a week. “Normally after they reach 15 quotes, they will sell a contract,” he says. “Once they get used to selling them and getting a commission, things get easier.”
Fisher laments there is a false notion that only some dealers can sell service lane contracts. He says that simply isn’t true. “Successful dealers have someone in charge of the program,” he says. “And the program succeeds because they have someone in charge.”
The app simply moves the process along, he stresses, because it makes it a straightforward method to quickly provide customers quotes.
“If you hire someone to provide quotes, all they have to do is email the customer, add their phone number, and APC follows up,” he says. “We designed the app to simplify the effort.”
Training is also key, he says. AGWS delivers training to all Your Plan dealerships and provides a comprehensive guide that walks them through the process.
“Our agents and I host meetings at the dealership, too, to help service writers learn the process,” he adds.
Fisher provides their agents with weekly reports, showing how many quotes the dealership made and how many contracts they sold. The analysis breaks down data by individuals to show who is quoting—and who is not.
“I provide the reports to agents weekly and their job is to provide it to the dealers,” he says. “If you don’t make people accountable, they will just give you excuses.”
“You Have to follow-up,” he adds.
AGWS sets contract costs at reasonable levels, removing another barrier to service contract sales, Fisher adds.
“Most dealers and agents shoot themselves in the foot by setting contract prices too high,” he says. “They set them at $3,000 to $4,000 and the customer cannot afford the monthly payments. So, even if they buy the contract, they end up cancelling later. Consumers eliminate any payment over $100 as soon as they have financial problems.”
Most monthly payments are below $100 a month to keep consumers in the game and avoid cancellations.
Fisher also recommends dealerships pay commission on contract sales. Dealers average $650 per contract, so he recommends at least a $50 commission for the sellers. “Normally I would recommend a bonus based on a certain volume,” he says. “Maybe if APC sells their quote, service writers get $50, but if they sell it, they receive $100 commission. Because it’s a hybrid program, dealers can decide what they want to do.”