The Great Recession led people in the U.S. to hold on to their cars and trucks longer.
If the early economic impacts of the coronavirus are any indication, with tens of millions of Americans out of work, that phenomenon could soon take hold again — if it hasn’t already.
Nestor Alvarez, service director at Infiniti of Coral Gables, in Florida, said as overall business dropped in his service lane, the rate of customers getting quotes for service contracts has seemed to rise since the onset of the coronavirus pandemic.
“Lately I’ve quoted more because people, I think, are deciding to keep their cars” instead of trading them in, he said.
If that’s the case, Alvarez is in a good position to capitalize. For years, he’s embraced selling finance and insurance products, including extended service contracts, out of the service lane. The main reason is to retain customers, he said. But it also drives additional gross profit to the dealership.
Why more stores don’t do it could be because it’s not seen as the service lane’s place to sell F&I products.
Jim Maxim Jr., CEO of DealerMax, said the process for selling F&I products in the service lane needs to be clear for dealership employees — and there needs to be an incentive.
“It has to be turnkey,” he said. “If you’re asking a service adviser to sell a product and then walk somebody up to the F&I office to transact the paperwork, it’s not going to happen.”
Rick McCormick, a national account development manager at Reahard & Associates, an F&I training company, agreed that taking customers out of the service drive to show them a financial product turns them off to the process. He said it is similar to when a salesperson says they need to leave the selling table to speak with a manager.
And there is an inherent trust in having service advisers tell customers about the products.
“Most customers that are coming and getting an oil change at the dealership, they trust the service adviser better than anybody in the dealership because they’re the ones that always help them get back on the road at a time that many of them have had a repair or a breakdown,” McCormick said.
But it has to be done right. McCormick said service advisers should tell customers about available F&I products as soon as possible in the process.
“The average customer is going to sit there and play on their phone for 30 minutes to two hours,” he said, adding they’ll have time to think over their options and research them.
Available products also have to be visible to the customers in a way that’s easy to digest, such as a printable PDF.
McCormick said he’s been in dealerships that had placards on the walls advertising items such as extended service contracts. Those signs probably got little attention from customers.
“What we try to tell dealers is get the offers off the wall, put them in the customers’ hands,” he said.
At Infiniti of Coral Gables, service advisers can see which programs customers qualify for by typing their VIN and mileage into a computer program. The advisers can print out the sheet and hand it to them.
The dealership also gives $100 spiffs to any employee who sells service contracts. It also gives $200 incentives to independent shops for referrals.
Once it’s set up, Alvarez said the process of selling F&I products in the service lane is a quick and easy way to build relationships with customers while adding thousands of dollars in additional gross profit per month.
“It’s plug and play,” he said. “You plug in the numbers and buy the policy. It’s that simple. It’s a 10-minute process.”