Our question this month comes from Todd in La Crescenta, Calif., known as “The Balcony of Southern California” — something the locals are very proud of. Todd says, “I recently had a customer who has owned multiple Landcruisers. His last one had over 300,000 miles on it, and he never had a problem. When he came to my dealership, he was buying a 2006 Landcruiser with 83,000 miles on it. The amount of service-contract coverage we can offer is very limited, and he turned me down flat. What could I have done to justify the expense of purchasing a service contract with limited coverage for a vehicle he’s never had a problem with?”
Todd, this is going to be a difficult sale because of the limited coverage you’re able to offer on a nine-year-old vehicle, and because of the cost of the service agreement on a vehicle that old. You’re also dealing with a customer who has had a good experience with previous Landcruisers he has owned. Unfortunately, if you continue to push a product he’s not interested in, all you’re going to do is tick him off. And when that happens, you’ve eliminated any chance you had of selling the customer other products that might be of benefit to him.
That doesn’t mean we give up on selling the service contract. However, it does mean we need to back off momentarily and move on to another product the customer may perceive as having more value.
Todd, I have two recommendations for you: First, acknowledge the customer’s concern, demonstrate empathy and then move on to another product that has more perceived value so the customer feels like he has won. Second, before you come back to the service contract — and you will — you have to create interest. Otherwise, all you’re going to do is antagonize the customer. So your response might look something like this:
Customer: I’ve owned several Landcruisers, and I’ve never had a problem with any of them.
F&I manager: Wow, that’s fantastic! I can certainly understand why you wouldn’t think you need the additional coverage. If I were in your shoes, I think I’d feel the same way. That’s why you keep buying Landcruisers, because if you take good care of them, they last a long time, right?
F&I manager: Well, it’s just an option. I wouldn’t expect you to take advantage of anything you don’t see value in. Although, since you tend to keep your vehicles a long time, a couple of these other options might be especially important.
Customer: Why is that?
Now you can discuss the importance of road hazard protection or whatever product you feel would most benefit this customer based on what you’ve learned about him. After you’ve discussed (and hopefully sold!) another product or two to the customer, you can then come back to the service contract by saying something like this:
F&I manager: I know you said earlier you were not interested in the vehicle service agreement because you’ve had such good luck with all the other Landcruisers you’ve owned. However, I do find that a little troubling, especially since this one is nine years old, and it’s also five years newer than your last one.
Customer: What’s that got to do with anything?
Once you have the customer’s interest, you can talk to him about the fact that the Landcruiser he is buying is already nine years old, and that there is no way to know if it was properly maintained. Plus, with the use of component parts, even a minor problem can now be extraordinarily expensive to fix — unlike in some of the previous models he owned. And that’s why, in his case, the vehicle service agreement is so important. He certainly doesn’t want to be surprised with a major repair on a vehicle he just bought and plans on keeping for many years, right?
Check out my video response to this and other questions at www.fi-magazine.com. And if you have a question or even a troublesome objection you’d like me to address, submit your video today. I’d be glad to help. Until next month, remember, it’s a beautiful day to help a customer!
Ron Reahard is president of Reahard & Associates Inc., a training company providing F&I classes, workshops, in-dealership and online training. Got a question or objection for Ron? Use your mobile phone to record a brief video (shot landscape style!) of your question and upload it to www.hightail.com/u/REAHARD.
President of Reahard & Associates