Wednesday 01/23/2019

Creating Value with a Lifetime Warranty

Creating Value with a Lifetime Warranty

by Chuck Chase and Matt Maish

Lifetime warranty programs are an ever-popular offering in the automotive industry. As the industry continues to change, dealers are looking for an edge to differentiate themselves within their market. Current market statistics show that 54% of customers come to a dealership intending to buy but never do, advertising cost per new car is up to $629 and climbing, retail net profit per new vehicle sold in 2017 was $421 and finally, only 30% of vehicles are serviced at an auto dealership today.  

Warranty Forever® is a market differentiating, lifetime warranty program that allows dealers to build value and retain customers with the following advantages:  

Creates Value with a Lifetime Brand:

Consumers will pay for what makes you different or better. The exclusive territories included with Warranty Forever® create a distinct market advantage. This exclusivity allows dealers to build equity through consistent lifetime warranty branding utilized throughout the sales process. In other words, it’s something designed to enhance rather than compete with everything currently in place.

Steps to creating value with a lifetime brand:

  1. Partner with a lifetime brand that provides an exclusive territory preventing competing stores from selling the same value.
  2. Use the lifetime brand in all dealership advertising campaigns to build brand equity.
  3. Leverage the power of social media to interact and draw customers to the dealership through use of the lifetime brand.
  4. Create a program that doesn’t disrupt the environment currently in place inside a prospective new dealership. In other words, create something that isn’t designed to compete with what is in place, but rather, to enhance it.
Creates a Unique Customer Experience:

How do you create a unique customer experience using a lifetime warranty brand? Don’t take our word for it, “Today more than ever the customer experience matters,” says Jim Roche Sr. VP Cox Automotive. “Uber. Amazon. Dollar Shave Club. Open Table. All of these fantastic experiences we have as consumers shape what we expect to happen inside of automotive dealerships.” With such a competitive landscape, it’s important that dealerships differentiate themselves in order to break the tie between themselves and their competition.

Steps to creating a unique customer experience:

  1. Interact with customers by leveraging the lifetime brand from the moment they reach out to you digitally or in person.
  2. Put yourself in the customer’s shoes. With such a competitive landscape, what do you currently have in place to break the tie between yourself and your competition? If all things are equal, but one dealer provides the customer with the peace of mind of knowing their most expensive components will be covered for as long as they own the vehicle, and at no cost to the customer no less, which vehicle would you buy?
  3. Teach, implement and monitor a sales process within the service department. The key is holding the team accountable to utilizing it. Remember 85% of new car buyers state their experience with the service department has influenced their likelihood of purchasing another vehicle from that dealership.
  4. Make it fun. People want to be part of the success. Share your dealership successes with customers. For instance: a Warranty Forever® dealership celebrates a customer’s fifth service visit by ringing a large bell and the entire dealership would stop what they were doing, stand up, and start clapping! All of them!
Builds Future Sales Pipeline by focusing on Service Retention:

85% of new car buyers state their experience with the service department has influenced their likelihood of purchasing another vehicle from that dealership. NADA reports customers are 76% more likely to purchase another vehicle from their original selling dealer if they utilize that dealer’s service department for ALL their recommended maintenance. Warranty Forever® is a lifetime program designed to drive the customer back to their selling dealer for all service and maintenance work. Any work performed outside of the selling dealer must be pre-authorized by contacting the program administrator prior to the work being performed. When customers communicate their intent to service their vehicle outside of the selling dealership, our pre-authorization team converts 40% of those customers back to the selling dealer. What would each of those customers be worth over their lifetime if the average bill per service visit was $178? On average, Auto Warranty Forever® dealerships have seen a 70% increase in customer pay repair orders, a 40% increase in warranty pay repair orders and a net return of $1,675 per unit sold. But that’s just the start…

Steps for focusing on Service Retention:

  1. Create a 1st service appointment process, which allows you to spend time and effort with each new customer immediately after they purchase a vehicle. This will show them where to park, what door to walk in, and to whom they should give their keys.
  2. Incentivize your customer to return to your dealership to service with your facility. Price match, provide a free car wash, provide loaners…but whatever you do, make sure the customer knows what you do differently from the quick lube shop down the street.
  3. Make sure you can control the claims if the customer is in your area, so we don’t lose the brand equity and customer experience perception created before the claim.

The industry remains focused on front end sales, but consider this:  If there are 17 million new cars being sold in the United States over the course of a year, but 320 million service tickets being written, where is the real opportunity?  Warranty Forever® is a program that impacts the entire dealership, from sales, through F&I and then ultimately service. This process is bolstered through account management and training by Warranty Forever® Program Managers. These industry professionals ensure that dealership personnel are proficient in the sales processes and best practices required to make the program a success.

Learn more about Warranty Forever® by visiting the official website.