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Service plan sales grow rapidly

Service plan sales by dealers rose more than 250% in 2009.

According to The Warranty Group, service plans are rapidly gaining momentum and that a similar increase is possible in 2010.

Ian Simpson, sales and marketing director, explained: “Our view is that 2010 could be the year of the service plan. Dealers that have paid little attention to service plans as a product in the past are starting to put measures in place to ensure that they are offering the right products and that staff have the skills needed to sell them.


“The increase in sales that we saw in 2009 is an indication of the potential of service plans as a source of profit for dealers and we expect this realisation to continue to spread through the dealer community.”


The Warranty Group had been gearing up to help dealers make the most of the potential of service plans by training more than 400 product “champions” during 2009.


The champion concept is being heavily promoted following trials that saw a sales increase of around 400% in the dealerships where it was tried.

Each champion is a specialist who has responsibility for promoting service plans within their dealership.


Simpson continued: “One of the past issues with service plans is that they do not always fit easily into the process that a dealer sales person takes each customer through.


“By creating a service plan champion in a dealership from among existing staff, we are creating the opportunity to talk to customers about service and maintenance as a separate subject.


“Where champions are in place, we are seeing penetration into used car buyers of up to 80% and, even where figures this high are not being achieved, the results are still very worthwhile for dealers.”


Simpson added that, like warranties, service plans were a product that had a high degree of appeal to customers during tough economic times.


He said: “The mood of the moment among motorists is that they want to avoid unexpected costs, something that has been very much part of the boost in warranty sales that has occurred during the recession.


“Service plans have a similar kind of appeal. They enable customers to plan their motoring expenditure with a very high degree of certainty.”

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