No one disputed the black eye the direct-to-consumer movement left on the vehicle service contract industry, but there was some debate as to whether that business model has a place in the retail world. Moderated by VisionMenu’s Ron Martin, the panel, held on Day 1 of the F&I Conference and Expo, included Ristken’s Patrick DeMarco, APCO’s Larry Dorfman, CNA’s Jay Sharpnack, the AFIP’s David Robertson and NAC’s Pete Biscardi. Here’s what the panel said needs to happen to make direct-to-consumer marketing work in a dealership’s favor.

DeMarco: I think providers have an obligation to mitigate some of the stuff we’re seeing in the marketplace. I don’t know how many dealers are taking advantage of social networking, but there are some real opportunities there. I’ve seen dealerships that are doing an excellent job of not only taking a second shot at selling service contracts, but ancillary products as well.

Dorfman: For years, we’ve been staying out of the game, putting our head in the sand and acting like the elephant wasn’t in the corner of the room. We have to get engaged in it. I strongly urge you to utilize the kind of technology you need to sell out of the service drive, to offer it to your [customer] database, to use that database to inform your customers when the termination of their contract is coming up.

Sharpnack: How the dealer gets in the game is really key. Managing the process, I think, can be broken up in a lot of different ways, but for simplicity, I think there are three points that need to be stressed. One is the data. How is the data generated? Is it gained properly? And how do we get the information out to the consumers with some sort of piece that drives them back? The second piece is the sales process. If the customer calls in, what happens next? The last piece is the product. Is it backed by the right type of company?

Biscardi: We work with a lot of service providers, and I believe their core focus is to service dealers. With that being said, there’s an elephant in the room, as Larry said, and if we pretend it’s not there, there are going to [be] more companies like US Fidelis popping up. And again, service providers would be remiss if they weren’t doing something to grow their business. They have a fiduciary responsibility to do so. How they balance that, what their strategies are and how they bring it to market, I don’t know.

Robertson: If a dealer is going to market a follow-up program, then it has to be apparent to the customer when the mailing [reaches them] that it’s from the dealer. You also want to make sure the customer is clued into the fact that you may be contacting them. Dealers also need to have a firm understanding within their market of the types of products you sell, your pricing, the economy and what the maximum amount of service contract sales will be over the long run — both upfront and direct.