Fresh Ideas for Service Department: Prepaid Maintenance Program Aids Customer RetentionWard's Dealer Business – February 2011 – Car dealers are trying new ways to retain service-department customers.
Pete Harvey is the general manager at Gillman Nissan, south of Houston. The dealership has sold several vehicles outside its primary market, and those buyers don't always return to Gillman for their maintenance needs.
To encourage them to stay on as service customers, Harvey has installed an automated prepaid preventive-maintenance program offering regular oil changes, fluid refills, inspections and such.
"My expectation is a boost in retention to 40% from our current 20%," he says. "We feel this program will help lock customers into our store when we sell the plans through the finance and insurance office and the service-drive lanes."
Service departments can expect to add an average of #127 in up-sell revenue per repair order every time a customer returns for service under the plan benefits, says Mike Gorun, president of Performance Loyalty Group, a loyalty marketing company.
Unlike many coupon-based prepaid plans, those using internet marketing regularly stay in touch with participants to get them into the shop.
"This program benefits us in three ways," Harvey says. "The sale of the prepaid services upfront at discount helps us retain customers while presenting opportunity to upsell those customers during the lifetime of their plans.
"We also benefit by capturing forfeiture funds we retain when customers, for whatever reason, don't return to us for those services or when they use only a portion of the plan."
When the plans are presented in the F&I office, average penetration is about 35% for new vehicles and 25% for used cars, Gorun says.
Used-vehicle penetration is generally less because dealers don't usually offer it to every pre-owned buyer, he says.
In another customer-retention effort, Randy Bennett, service manager for Courtesy Acura, Littleton, CO, advocates interactive online menus to pre-sell services and lock-in appointments.
He proactively emails customers interactive service menus known as S.M.A.R.T. (Scheduled Maintenance at Regular Times). The email menu includes a brief video explaining the value of the customer getting recommended services performed at his dealership.
Each menu and its respective service pricing are customized to the customer's make, model, mileage and year.
The customer can click items on the recommendation menu to delete or add services, which adjusts the price. The customer can then lock in this service and an appointment at Courtesy Acura.
"Our repair-order times have increased seven-tenths of an hour since we started using this tool" through the dealership's customer-relationship management software, Bennett says.
"No matter what product you use to drive service business, that product has to build value," he says. "Menus let us do that by helping customers understand why certain service recommendations are made and then by giving them options to select those recommendations or not."
– By Jim Leman
Headquartered in San Ramon, California, Performance Loyalty Group is a leading marketing technology company providing customized loyalty rewards, customer retention, prepaid maintenance and media tracking programs for the automotive industry.
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