The model of selling vehicles alone is not enough to grow and drive profits for a dealership - IMAGE: KZenon via

The model of selling vehicles alone is not enough to grow and drive profits for a dealership

IMAGE: KZenon via

The automotive sales industry is changing and evolving on a consistent basis. It’s adjusting and reinventing itself out of a necessity to meet the standards of a new normal. Automotive manufacturers continue to boost incentive pressures to drive sales, however, these often further minimize dealer margins. Digital vehicle purchases on websites (like Autotrader,, Carvana) have increased transparency and created pricing competition wars. In today’s market, the average dealership per unit profits have dropped significantly as a result.

The model of selling vehicles alone is not enough to grow and drive profits for a dealership.

The model of selling vehicles alone is not enough to grow and drive profits for a dealership. The effort required to sell more vehicles to move the needle would be a sizeable undertaking. Dealers rely on F&I products to successfully offset profit margin pressures. They also rely on their parts and service drive to bring in ancillary income. Still the need to increase profitability remains. How can a dealership look to grow their profits beyond the status quo and complement their existing revenue streams?

Top 5 Reasons Why Post-Sale Service Contract Marketing Matters for Dealers

  1. Disruptions have affected traditional dealer profit models and selling vehicles just isn’t enough anymore.
  2. F&I products offset profit margin pressures as well as drive business to parts and service departments, but dealerships still need to grow their profits beyond current efforts to be successful.
  3. Revenue is being lost to third-party marketers that are selling their inferior vehicle service contracts to yourcustomers. Combat the weekly letters and those annoying robo-calls that your customers are being plagued by and pick up this revenue instead. 
  4. An effective post-sale marketing partner can give you the tools to sell your vehicle service contract post sale,providing you additional customer loyalty and incremental F&I revenue you don’t have today. 
  5. You can save thousands of dollars in advertising and marketing that drives brand awareness for your dealership by using a zero-risk, no-cost program. An ideal program will market the top-quality product that you trust for your dealership and incorporate your dealership name, brand, logo, colors, and your signature. 

Increase Revenue and Customer Loyalty, and Drive Traffic to Your Dealership

The average length of vehicle loans is longer than ever before. This has resulted in more consumers worrying about mechanical repair protection after their basic factory warranty expires, which is what is driving this growing consumer base to purchase coverage post sale. We know that for consumers, specifically your customers, having a good, sound vehicle service contract helps to provide them with peace of mind knowing that future, unexpected vehicle repair costs will be covered. Today, vehicle components are more complex and expensive to repair when a mechanical breakdown occurs. Consumers want to know that they have solid protection that will cover them before and after their original warranty expires. Dealers can keep their customers covered with top quality A-Rated service contract products, maintain their loyalty, and ensure a great customer experience, by providing these repairs through their own parts and service department. Realizing the entirety of the customer experience is an essential component of providing exceptional customer service and fully monetizing a dealer’s relationships. 

The inferior sales contracts that are being sold by third-party marketers could — and do — appear to be endorsed by a dealership even when they are not. Although they often do not represent top tier A-rated vehicle service contracts, your customers who purchase these products are coming to you for service and expecting full coverage. What these unsuspecting consumers unfortunately come to find is that repairs are often not covered, and they will be left with a lasting impression of an inferior customer experience. Regrettably, this may reflect upon your dealership with a negative image and a poor review — and loss of customers. 

The good news is that you can provide exceptional customer service and avoid the third-party vendor trap by offering your customers the same quality A-rated products post-sale that you recommend and sell at the time of vehicle purchase. A product that is covered by your parts and service drive, where you can be rest assured your customers will be well taken care of, is the one that returns the most revenue to your dealership. A product your customers can value and trust is also what builds a foundation for a great customer experience, lasting relationship, and repeat business. 

Make Your Marketing Matter

You are the trusted automotive advisor for your customers. Your customers, many of whom are savvy, are buying vehicle service contracts post-sale and you should be capturing that business. Give these customers the opportunity to tell robo-callers to put them on the “Do Not Call List” because they are already well-protected by you. The addition of post-sale vehicle service contract revenue can be the trigger that helps you grow your business and your customer relationships.  

Some dealers have tried marketing service contracts to their customers on their own but found the few sales they pick up wasn’t worth the expense or effort. You will want to be sure to look for a turnkey program and a reputable company that is powered by an intelligent marketing engine, that goes well beyond just an average CRM driven campaign. A program that carefully targets your customers, at strategic moments throughout the lifecycle of their vehicle, will bring you the best results. You also want to make sure they have full data security and compliance protection. Remember this is your program, your brand, and your signature. And although the digital audience is growing, post-sale marketing results are still largely driven from good old fashion mail. Accordingly, you want a multi-channel marketing campaign that uses both digital and traditional methods of engagement.  

David Diem is a partner at APC Integrated Services Group.

Originally posted on Auto Dealer Today