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Drive profits up and keep customers happy at the same time
Tim Heavisides, Chief Executive Officer of Car Care Plan, writes:
New and used car sales are back above pre-recession levels – reported in our recent blog – and dealers with a diversified business and processes to turn enquiries into leads are coming out on top. If we’ve learned anything in the past few years, it’s that a healthy balance sheet is driven by a proactive business model that makes the most of every sale and ensures customers are getting the service they expect.
Car sales are obviously where most of the emphasis is placed and retailers who support that with a wider proposition have been able to make further gains over those who “just” sell cars. Another key driver of improving profits has been the way in which dealers have adapted their business processes to make the most of enquiries by turning them into leads. There are still plenty of opportunities for forward-thinking, enterprising dealers.
How to make the most of revitalised car sales?
Not only are new and used car sales increasing but retailers are able to make more margin from the deals they complete. How? I’d like to think add-on products are helping to increase those profits and returns. With more sales come more opportunities to offer finance, extended warranty, cosmetic repair insurance and service plans. It’s not just about selling the car; it’s about helping customers with a complete motoring solution.
Most add-on products support profitability through retained commission but products that bring customers back to the dealership for service or repair work help deliver margin well beyond the initial purchase. When those products are aligned with sales and pay plans, they can play a powerful role in a dealership’s health-check.
Customer retention is vital to the ongoing health of your business and add-on products are essential. Indeed, warranty has proven 10x more likely to ensure customers return to a franchised dealership for servicing work than service plans. You can read more about that here.
If you’d like to learn more about vehicle warranty, it’s benefits for customers and dealers, and how to boost sales, download our free eBook: Complete guide to Warranty.
Why should you diversify your business processes?
In a nutshell, diversification will help your margin per sale rise, it will boost customer retention and increase satisfaction ratings. Every customer likes to be taken care of and providing a wide-range of add-on products to keep their investment safe is a great way to keep them happy.
This starts with turning enquiries into leads and then using the resulting sales to upsell additional products to more vehicle buyers. It’s a change in practice that Car Care Plan has been developing with dealers for a number of years and, as volumes increase, it brings yet further profit opportunity.
Of course, there is a limit to the upsell opportunity within any given vehicle sale and it’s important to understand the customer’s budget and priorities before presenting them with information on the products available.. However, most buyers are receptive to products that are appropriate to their needs and will enhance their ownership experience.
In turn, this appropriateness drives the products that are offered. For example, assuming most customers express an intent to keep their used car for two years or longer, use the opportunity to make sure the warranty offered on the car matches the likely ownership experience.
To learn more about the benefits of providing extended warranty to your customers, click here.