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Overcoming the metaphorical financial ‘hangover’

As every dealer knows, full service bays are more effective than anything else at swelling the coffers, but persuading car owners to stick to maintenance schedules at this time of year is an unenviable task.

Most consumers are still suffering from a metaphorical financial ‘hangover’ following their Christmas spending spree.  Those that aren’t have probably been too busy hitting the sales to think about servicing their current car.  For the price of a full service they could, for example, acquire the latest must-have tablet device – a no brainer for a growing number of Brits already intent on reducing car-related spending.

An additional factor for franchised dealers is the increasing competition within the aftersales market from independents and fast-fits, which are continuing to make year-on-year gains in their share of servicing, maintenance and repair work.  The latest Castrol Professional Car Servicing & Repair Trend Tracker report indicates that independents and fast-fits captured 48% of servicing jobs in the first half of 2012, up from 45% in 2011 and 32% a decade ago.  By contrast, franchised dealerships carried out just 25% of servicing work during the first eight months of 2012, a 1% decline on 2011’s full-year figures.

An effective way of combating this decline in aftersales retention is through Service Plans, such as the GForces NetDirector Service Plans system.  Offered at the point of sale, the plans guarantee repeat custom for the dealer, and spread the cost of servicing for the consumer while guaranteeing their car is properly maintained.  While service plans help improve customer satisfaction and provide a long-term customer relationship, a recent survey also revealed that over 80% of dealers offering service plans found that they were profitable.  With aftersales accounting for a large percentage of dealers’ income, this is something that certainly can’t be ignored in the current economic state.

When it comes to used vehicles, the NetDirector system can be tailored to offer simple and transparent ‘fixed price’ plans.  Some dealers using Service Plans have found used car customer conversion rates of 60% – some 36% above typical rates.

For the dealer there are a whole range of benefits.  First and foremost is guaranteed business and cash flow.  Dealers will know in advance how many service bookings and the type of work they will have on their books.  As NetDirector Service Plans is paid for by the dealer through a licence fee rather than a cost-per-plan basis, all monies for the service bookings themselves are paid by the consumer to the dealer by BACS, offering a predictable cash-flow advantage.

Another important factor is that service plans can be tailored.  For example, many dealers using Service Plans have reported better plan sales by offering easy to understand ‘fixed price’ plans for used cars.  Some manufacturer schedules were difficult to convey to customers and worked out to be prohibitively expensive, resulting in lower sales.   A simple ‘Gold, Silver and Bronze’ system – with the potential to sell ‘add-ons’ like air-con recharge or brake fluid change – has now been adopted by many.  Furthermore, the ability to add MOTs into the price makes the system even more attractive to customers who can, effectively, pay for several years of vehicle maintenance in monthly instalments.

Clearly there is also an education job to be done.  Too few consumers understand the broader benefits of adhering to the manufacturer schedule and accessing the brand-specific know-how only a main dealer can provide.  For example, a franchised dealer will have all the correct diagnostic equipment on-site, with the latest software updates ready to be applied as required.  Parts and fluids will also be to manufacturer specification and technicians will be accredited by automotive brands.

By explaining these benefits from the point of sale, as well as offering an easy solution to maintaining their car at a main dealership, dealers offering service plans have the opportunity to build a trusting relationship with their customers.

Having spread the costs for maintaining their car, service plans are a welcome relief for customers during the months following Christmas with no surprise costs to deal with.  Service plans aren’t a panacea to lacklustre new car sales at this time of year, but dealers can certainly experience a little financial sunshine during the inclement winter months by maximising opportunities for guaranteed income.

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