Determining the Need

This month, I’m tackling an objection I’ve addressed before: the “I’ve never had any issues” response to a service-contract presentation.

This objection was posed by an F&I manager who recently joined an Acura store in South Burlington, Vt. Apparently, the dealership’s longtime customers have been ­lobbing that objection quite often, and he asked for a few effective ­responses.

My initial response to his request is maybe we need to stop selling something customers say they don’t need. Let me explain.

Name: Kyle Adams

Dealership: Shearer Acura

Objection: I don’t need a service contract. Other than maintenance work, I’ve never needed something repaired.

Tony’s Take: This is an objection we F&I pros face often, regardless of the brand you represent. The first thing that comes to mind is this: If customers say they don’t need a service contract, then maybe we shouldn’t sell it.

No, I haven’t gone mad. What I mean by that statement is maybe we need to find out whether the customer would actually benefit. See, I’m a big proponent of not trying to sell a product the customer doesn’t need. Yes, you are still obligated  to offer all products, but we don’t always have to try to sell each one. So how do we determine if the customer needs a service contract?

Needs Discovery: You can definitely ask your next customer how many miles she plans to drive per year. You can even ask her how many years she plans to own the vehicle. Her answers will definitely indicate her level of need for your service contract, but don’t car buyers expect us to ask those types of questions?

My suggestion is not to ask either one. Figure it out for yourself and tell her. Her trade-in will provide all the information you need. Just take a look at the motor vehicle records to find out how many miles were on the vehicle when the customer purchased it. Subtract that from what’s showing on the odometer and you have your answer.

Be Specific: Finding out how long customers plan to keep their vehicle is a little trickier. See, if you ask the customer how long she expects to keep the vehicle, you’ll probably get an “I don’t know” response. So how do we extract this powerful information?

You have to ask a more specific question, such as: “Do you plan on returning to the dealership in three or four years to purchase another vehicle?” Note that I’ve based my question on the term of the basic limited factory warranty. And as you know, Kyle, for Acura, it’s four years.

Making the Pitch: If a customer tells you he doesn’t plan to keep the vehicle for four years and you’ve figured out that he drives 12,000 miles per year, then the customer really doesn’t need a service contract. He should lease the vehicle.  Remember, we are still obligated to offer products, so be sure to explain the benefits.

Now, if the customer indicates that he does plan to keep the vehicle beyond the basic limited factory warranty, or you determine the customer’s warranty will expire prematurely due to his or her driving habits, then you have all the justification you need to go forward with your presentation.

Sell to the Need: There’s an even more obvious justification for presenting a service contract: If customers say they’ve only needed maintenance work, then explain to them the difference between maintainable and non-maintainable components on the vehicle.

Any driver can maintain the motor and the transmission and save themselves from a catastrophic failure. However, simply looking at factory warranty and service-contract claims — as well as customer pay repairs — tells us that a majority of repairs on today’s modern vehicles are for non-maintainable items, such as wiring, sensors, steering-wheel controls, heated and cooled power seats, back-up cameras, and power running boards and liftgates.

Ultimately, that is why a service contract remains a critical element in nearly every transaction. Modern vehicles are high-tech electromechanical and computerized machines. And what do machines do? They break. One way to illustrate this is to compare the technology embedded in the mobile phone and the stapler sitting on your desk. Which is more likely to work the exact same way in four years?  

Tony Dupaquier ([email protected]) is director of training for F&I University, a division of American Financial and Automotive Services Inc.