Dealer-branded prepaid maintenance (PPM) programs that are 100 percent funded by customers are boosting service revenue by 15 percent and customer retention to 60 percent (and even higher). These findings and other auto dealer reports are featured in a new white paper from Performance Loyalty Group.
Ancira Winton Chevrolet in San Antonio, Texas, enjoys $80 additional up-sell per repair order from customers using its plan. Approximately 96 percent of its 8,000 customers currently have a prepaid maintenance plan.
“Our plan holders have generated more than $635,000 in service up-sell revenue during their program service visits,” notes the dealership’s Parts and Service Director, Jim McAfee. “Our Ancira-branded prepaid maintenance plans have boosted service customer retention here to 50 percent.”
Dealers’ results when selling PPM plans to new- and used-car purchasers, lease customers, and service-only customers are detailed in the downloadable white paper, How Dealer-Centric Prepaid Maintenance Programs Significantly Increase Automotive Customer Retention. The study also details additional compelling third-party statistics about the power of PPM programs to brand the dealership first, while supporting OEM retention as well.
This new white paper details why dealers are attracted to prepaid maintenance programs now more than ever:
- These types of plans brand the dealership. OEM programs brand the OEM. Most dealers consider branding their dealership far more important in their local market.
- This type of program is funded 100 percent by the customer so there is no investment on the dealer’s behalf.
- They are affordable. Customers recognize their value, and will purchase with a higher frequency.
- Ninety percent or more of customers purchasing prepaid maintenance plans redeem more than 80 percent of the plan elements.
- Plans are self-managed through the DMS and administered by the dealership, thus all profit, reserve and forfeiture monies are retained and recognized by the store.
Dealers see a big advantage with lease customers as well. “Selling prepaid maintenance plans in F&I to lease customers is all about retention – keeping them returning to Honda Cars of Boston for ongoing service and their next vehicle acquisition. When presented with these benefits, 40 percent of lease customers choose to purchase a plan,” reports Dean Talley, General Manager for Honda Cars of Boston.
According to this study, more than 25 percent of the dealerships that utilize a prepaid maintenance program today are selling dealer-branded, self-administered plans that provide many tangible advantages over third-party administered or OEM-branded products.
“The average age of vehicles on the road today is nearly 11 years, and as an owner progresses through the vehicle’s lifecycle, dealership retention drops and service spend increases,” notes Jeff Shenk, Director of Operations, at Performance Loyalty Group. “As this is happening, however, standard dealership service marketing fails to attract many of these owners of older vehicles. Time erases the initial loyalty or relationship with the dealership.”
“Additionally,” he added, “many others are pulled away by force of competitors offering below-market pricing incentives. A well-implemented PPM program will not only boost customer retention, but it will also drive service revenue as a by-product of plan ownership.”
As How Dealer-Centric Prepaid Maintenance Programs Significantly Increase Automotive Customer Retention points out, customer loyalty and automotive service retention are essential today if a dealership is to be productive and profitable. Dealer-centric prepaid maintenance programs are one of the most powerful loyalty and retention tools at a dealer’s disposal.