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Helping customers find the right financial add-on products

When a customer comes to your dealership to buy a car, they may not be aware of what financial add-on products are available to help protect their investment. A good quality warranty will help cover the cost of most replacement parts and labour should a mechanical or electrical fault occur. And GAP insurance can protect their investment by covering the difference between the diminishing market value of their vehicle and what they paid for it in the first place.

Discussing customers’ needs at the point of sale can help identify which products may be beneficial to them and help them to make an informed purchasing decision. There are rules around the sale of some products, such as GAP insurance, which means the sale cannot be concluded immediately. But that gives dealerships a great opportunity to discuss the product and provide information about its benefits – as should be the case with all add-on products.

Conversation is key to financial add-on sales

Discussing a customer’s individual concerns and needs is the first step to providing effective advice on which financial add-on products may benefit them. Many will not have factored the price of GAP insurance into their budget, for example, but neither will they have thought about the vehicle being written off and their insurance company only covering a proportion of their finance deal. What may seem like a small additional monthly payment could save them thousands in the long run.

Warranty also provides peace of mind and has proven effective at boosting customer retention, as many are willing to return to the dealer they purchased the vehicle from for repairs. Service Plans and MOT Test Insurance can significantly reduce the annual cost of keeping their vehicle on the road and issue free. And Cosmetic Repair, Tyre and Alloy Insurance are great products for those keen to keep their vehicle looking showroom fresh.

Not all of the above products will suit every customer, however, and that is why it is essential to have the conversation about each to find what appeals.

How GAP insurance differs from other financial add-on products

The Financial Conduct Authority (FCA) overhauled the way GAP insurance can be sold to customers in 2015, following a market study the previous year. This included the provision of mandatory information to customers and a sale deferral period of two clear days. In July 2018, the FCA published an evaluation of this intervention, to gauge the impact of the changes to GAP sales procedure. They concluded: “After our intervention, consumers are more engaged decision-makers and shopping around has more than doubled.”

The new GAP sales rules have ensured customers are receiving the information they need to buy the right product. It is also ensuring they have time to compare the product they were provided at point of sale of their vehicle with others before deciding on which to go with. The FCA found that there was a 2% increase in standalone sales because of this.

 

 

To learn more about the FCA regulation changes and how they affected GAP sales, download our free eBook.

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