Is Your Maintenance Program Working as a Customer Retention Program?

Over the course of this series onService Department Pay Plans,we’ve discussed how a Complimentary Maintenance Program is not compatible with old legacy pay plan structures. Plus,we’ve shared how to create a Customer-Centric Pay Plan that supports customer retention and provides a win-win solution for both customers andservice department staff.

But do you understand how Complimentary Maintenance works as a customer retention strategy togrow dealership business organically without relying on conquest advertising campaigns to fill the sales pipeline?

That’s what you’ll learn in this article as we discuss the differences between Prepaid Maintenance and Complimentary Maintenance Programs and how, contrary to popular belief, it does matter who pays for the oil changes.

Complimentary Vs. Prepaid Maintenance

The third most common misconception we hear from auto dealers in regards to implementing a Complimentary Maintenance Program is that,“It doesn’t matter who pays for oil changes, the dealer or the customer”.

But those dealers couldn’t be morewrong.Complimentary Maintenance is complimentary for a reason.

Selling Maintenance in Service Drive

A lot of dealers attempt to sell maintenance in the finance or service department and will even go as far as calling it a customer retention plan, but it’s not. On average, only 10% of customers who purchase a vehicle will purchase the additional maintenance coverage, and if only 10% of customers are affected it’s not a true retention program.

We have competitors who go out and promote the ease of selling maintenance versus including it by saying, “Don’t change any of your pay plans, don’t upset your service department, just sell the product in your finance department.” Although this approach sounds appealing, it’s not effective. When service is sold to customers rather than given away as a promotional item it’s not working as a customer retention strategy. Maintenance plans that are sold to customers arePrepaid Maintenance Plans.

That’snot what we sell or promote.

So what’s the difference? The biggest difference is how the product is delivered and who the product is delivered to. It comes down to strategy.

The strategy behind a Prepaid Maintenance Plan is to make money upfront for service that will be performed in the future. It sounds like a good idea (and maybe for your dealership it works just fine),but for dealers looking for a customer retention strategy to decreaseconquest marketing, Prepaid Maintenanceisn’t the solution.

The Complimentary MaintenanceDifference

Complimentary Maintenance, on the other hand, is when the dealership provides maintenance as a complimentary offering with each vehicle purchase,so the customer doesn’t pay out of pocket for routine maintenance visits. A Complimentary Maintenance approach works as a true retention strategyfor tworeasons:

  1. A ComplimentaryMaintenance Plan is a complimentarygiveawayand is provided as a gift to every customer who purchases a vehicle.If a customer pays for the maintenance, it’s not the same experience as the customer receiving it as a gift. By including maintenance with the vehicle purchase you are essentially saying to your customer,“Thank you for choosing us. We appreciate your business and we want you to come back.”In today’s economy it’s not enough to make the first vehicle sale, you have togive customers a reason to return.
  2. A ComplimentaryMaintenancePlan is included on every vehicle sold, so it provides incentivefor every customer to return to the issuing dealership for service.When it comes time to measure the effectiveness of aretention program, the results would be skewed if only a small percentage of customers received the offering (remember, only about 10% of customers will buy Prepaid Maintenancein the service drive). SinceComplimentary Maintenance is includedon every car it provides incentive for every customer to return for service and allows youto look at your entire customer base as a whole when evaluating customer retention success — which is neccesaryfor accurate results.

Why Give It Away?

As we mentioned before, it all comes down to strategy. Some dealerships prefer to use the “Push It In, Pull It In, Drive It In” tent sale tactic.Thatmay work to sell thefirst car but without a product or process in place to bridge the gap between the first and second vehicle sale, you’re going to find yourself constantly running special promotions and eroding your gross because you’re selling a commodity. At any time you’re selling a commodity, the profit’s going to drop.

The reason Complimentary Maintenance works is because it doesn’t have to rely on conquest and hope marketing to attract customers back — there’s already a strategy in place before the customer drives off the sales lot.

So,”Why should it matter if the dealer, not the customer, pays for oil changes?”Becausethe only way maintenance can be utilized as a customer retention program is when it’s included onevery vehicle purchase.

What are you looking for? A short-term sale or a lifetime customer?

If you’re serious about improving customer retention and are ready to reevaluate your strategy, book time on my calendarto discuss best practices.