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Eighty-five percent of motorists who acquire service contracts through a repair facility will typically return to the same shop for claim repairs,” says Rick Bale, managing director for Century Warranty Services, Inc.
That being the case, shouldn’t all shops offer service contracts to their customers?
“Absolutely,” says Bale. “Connecting the customers with high quality coverage is good for the shop and for the customer.”
Some shops have dabbled in selling service contracts but most shop owners have overlooked service contracts not realizing that they are a key tool for retaining customers. They give shops the opportunity to build long-term relationships with their customers who prefer to have their service work performed by the very businesses that helped them protect their vehicles from costly repairs.
Having this connection with customers also creates opportunities that make it easier for shops to recommend other necessary services such as regular maintenance during visits when repair claims are made. The opportunity to add parts and service revenue over the life of the contracts from both repair claims and customer pay maintenance is clearly present because the customers’ perspective is that they’ve bought one stop peace of mind from someone they trust for the protection and care of their vehicle.
“From the shop owner’s perspective, offering service contracts aligns with a shop’s core business of maintaining and repairing vehicles versus other prospective profit centers”, says Bale. “It’s wonderful if some shops can afford to start other retention businesses such as a car detailing operation, but the required investment in a new enterprise can be challenging or even crippling to them. Yet it doesn’t cost anything to offer service contracts.”
Protection against mechanical breakdowns are foremost on customers mind during a customer pay service visit. However, many customers are likely unaware that they are still eligible for coverage outside their factory warranty. This creates the perfect opportunity to raise the issue and offer valuable protection to shop customers. Who better to offer these contracts than the people they truly entrust to keep their vehicles running at peak efficiency?” Once they are informed that they are eligible, they are primed to learn about how they can protect their vehicles. “The key to selling service contracts is to assist customers by making the best coverage options available that specifically matches their vehicle, driving habits and needs”, Bale says. “Customers want professional consultation when considering a service contract, not a hard line sales approach. After all, that’s what they want from service advisers when discussing maintenance and repair options for their vehicles.”
“Typically, with service advisers concentrating on the daily tasks of writing up vehicle repairs, they are not prepared to offer advice or to sell service contracts”, says Bale. “Selling service contracts involves training service advisers or having a third party specialty firm standing by to handle it for them.” He adds, “Both options are possible depending on a shop’s particular needs.”
Because service contracts help achieve the ultimate goal of taking care of a vehicle, offering them should be viewed as a customer service that is easily incorporated into an adviser/customer exchange. For example, Bale says that, “a good time to bring up the subject is when a service adviser reviews the results of a multi-point inspection on the customer’s vehicle or when the customer is picking up their vehicle”.
Summing up, Bale says, “Offering service contracts is a practical and effective way to exceed the customer’s expectations, which also happens to be beneficial to shops.”