By Richard Yarrow
Selling the physical car, new or used, is obviously an important revenue stream, but with a raft of add-on products to entice the buyer, it need only be the start. Everything from GAP insurance and warranty cover to service packages and paint protection can be valuable sources of income for the business if you can get the customer to say yes. What’s best practice to do that? We speak to the experts to find their secrets to success.
1: Service plans
Vantage Motor Group has 19 centres, 11 of which have been acquired in the past 18 months. Covering six brands, Toyota is its core business and two-thirds of customers buying a car take a service plan, with an average duration of four years.
Andrew Hunt, group aftersales manager, said the business moved to an E-dynamix system in November 2011. “It’s easy to use and customer-focused,” he said. “Take the options; we can build in anything we want, make it bespoke for different models and discount items in a very dynamic way, including by the age of the vehicle.”
In the early days of service plans they were sold at the combined retail price of each element, but admin charges meant customers were actually paying more. Now everything is discounted, so from a cost of ownership perspective it’s cheaper and more appealing.
Success for Vantage has come by communicating that, so each quote clearly states ‘you’re going to save £x’ by signing up. On occasions, Hunt said customers actually take the computer over from the salesman and start building the package themselves by picking what they want.
Secondly, there are no hidden charges. Almost all customers pay monthly, but if they don’t have a service they get all their money back.
Sales are incentivised and Hunt said sales growth has also come because Vantage staff believe in the product – so much so that several are actually using it themselves.
Service plans are now available across the group, with quantifiable results.
Retention is up and workshops have seen an increase in business from customers in ownership years four and five.
“The average plan value has shot up because we’re in the driving seat,” said Hunt. The average value is £231 per service, but if you take out the options – air-con service, etc. – the service value is £156. Options give us another £75 per service. That’s crucial.”
2: Paint protection
A product that’s tangible but invisible to the customer can be a tricky sell. Eastern Western Motor Group in Scotland has been with Supagard for 25 years, with 40% penetration across the group’s 25 sites.
“It used to be introduced to customers in a very soft way with no targeting, so we changed that,” said Sandy Risk, general manager for business development.
“We took time to understand the value to the customer, and now we communicate that much more strongly.”
Dealers set up a sales process, making sure the product was mentioned to every retail customer, new and used, with commission paid for success.
Supagard is introduced right at the beginning of the sales process, when the part-exchange is being appraised, by asking the customer if they know if it has had Supagard applied. Whatever the answer, the sales staff say they will be talking about it again later.
“That’s signposting it from the off and then we bring it up again, asking if they want it,” said Risk.
“That prompts them to ask about the benefits. With around 15,000 retail cars sold every year, it’s adding significant value to the business.”
3: Extended warranties
Quality of staff and process are the two key elements to success in selling extended warranties, says Nick Plevey, managing director of Skurrays, which has Vauxhall dealerships in Swindon, Oxford and Marlborough.
With the company also operating as a Network Q centre and some models covered by Vauxhall’s lifetime warranty, only selected used cars represent a sales opportunity. Those come with six-month cover from WMS Group as standard, with the choice to upgrade to Skurrays’ Ultimate Warranty for 12, 24 or 36 months. This is also a WMS product.
Plevey said 44% of customers who could buy, do. “The sales executive is responsible for building the relationship with the customer – including qualification and test drive – and the sales controller will put together the deal on an offer sheet. It will include GAP, paint protection and a warranty if it’s appropriate, and that becomes the point of negotiation.”
He added that staff won’t substantially discount the warranty, because if there’s not a reasonable level of profitability in it they won’t get commission.
Plevey is also a firm believer in honesty and integrity. “We
don’t try to sell something to someone where it’s not appropriate,” he said.
“We deliver good results on the products we sell because we do it the right way and don’t charge silly prices.”
He added: “It’s also about the quality of process and I’d say the key element is qualification. ‘How long are you planning on keeping the car? Three years? Okay, so you’ve got two years of manufacturer warranty left, so you can fill the gap with a 12-month warranty.’ We wouldn’t try to sell a 24-month one.”
As to growing the success percentage, Plevey said there was no magic answer but that 50% was achievable. “It’s just more of the same – culture, training, regular reviews, measurement of performance and relevance of the product.”
4: Vehicle tracking devices
Personal experience can often be a valuable tool in selling a product, and that certainly helps Ian Straw, aftersales manager at Mercedes-Benz Brooklands, with persuading customers to fit a tracking device to their cars. Straw had a vehicle stolen and believes real-world experience is something people can relate to and find persuasive.
Tracking devices are fitted either because specific insurers stipulate it as part of the conditions of cover, or because the customer is convinced to buy it.
“It’s about trying not to terrify the customer, but selling peace of mind,” said Straw. “We’re promoting the benefit, so it’s similar to selling a home burglar alarm or life insurance. The argument is that you need to make every effort to protect your car even if your insurer isn’t stipulating it.”
Straw said his sales team has access to strong marketing material, talking about speed of recovery and how the tracking technology works with the police. However, he said care needs to be taken over how to position the device in the sales pitch when a salesman is also talking about GAP insurance.
Some add-ons are more tangible than insurance policies and service plans, but still represent an upselling opportunity.
Firs Garage is a Mitsubishi and SsangYong specialist based in North Oxfordshire and caters for drivers with specialist ‘rural’ needs including towbars, truck canopies, dog cages and secure gun cabinets.
Andrew Davis, business and operations manager, said which accessories were desired was a lifestyle-based decision, but there were different varieties and grades for his staff to sell.
“Best practice is knowing what the customer wants to use the vehicle for, so it’s listening to them and qualification,” he said.
“The key is having plenty of accessories on the vehicles we have in stock, so we can show them and demonstrate. ‘Touch and feel’ is a big thing for us, and showing pictures of the work we’ve done for other people.”
From April 1 this year, the Financial Conduct Authority (FCA) took responsibility for regulating the UK’s £200 billion consumer credit market.
Following a six-month transition period, dealers will have to comply with the FCA’s ‘principles for business’, such as ‘treating customers fairly’. The FCA has put insurance add-ons under its spotlight and the dealers contacted for this feature to talk about selling GAP were concerned about speaking on the record.
As with all aspects of selling showroom add-ons, the right process and sticking to it consistently is key.