It’s the catch phrase for how a company or individual can profit even when the economy is down-turning or sales are weak. It’s the sign of an entrepreneur that understands they not only protect your business, but provide opportunities to meet more of your customer’s needs and develop a long-term relationship. A prepaid maintenance plan (PPM) offers both of these solutions--additional income through your service department and customer retention and loyalty, and yet, recent research shows that 65 percent of dealers are not providing PPMs and in so doing they are leaving millions of dollars on the service floor.
Customer Retention and Loyalty
Surveys show that service retention rates from customers who purchase PPMs are more than 80 percent. Yet dealer’s service retention numbers are anywhere from 30 to 60 percent. Why? Because only about 35 percent of franchised dealers are offering a service drive PPM.
Prepaid maintenance plans differ from OEM-branded maintenance plans in that dealer-branded PPMs can only be redeemed from the dealership. In addition, these plans can be offered for pre-owned vehicles with high-mileage. As a dealer, you can tailor the plan and pricing to suit the needs of your customers and your dealership. The results: captive service revenue. The bottom line: retaining customers is less-expensive than finding new ones.
A Good PPM
There are certain services that should be included in your PPM plan. These include a multipoint vehicle inspection; a lube, oil and filter change; and a tire rotation, pressure and alignment check. Additional services that should be considered are wiper-blade replacement; fluid top-offs; nitrogen-filled tires; dent-and-ding body repairs; cleaning and detailing; discounts on parts, service and accessories; system flushes and air and cabin filter replacements. Depending on your locations, other options may be snow tire change and storage.
Statistics Don’t Lie
F&I Showroom featured an article by Michael Gorun who shared statistics from NADA 2015 data. These illustrated the data leading to the million mark. In summary and on average: Annually, there were 1800 plans purchased which generated an income of $538,200. This results in 7,200 service visits and $1,980,000 in revenue when considering $265 per visit.
How to Implement
The only question now is why aren’t dealers implementing this great revenue opportunity? Many suggest their service departments are too busy or, more often, they just don’t want to take the time to implement. With the increasing technological advances, PPMs can be integrated right into the dealer's management system.
Let us help you create an additional stream of revenue while at the same time providing an incentive for customer retention and loyalty. Your customized maintenance plan is built at no charge to you. We benefit when you benefit—when the customer buys your program.