Mastering Your Vehicle Service Contract Sales

Listen up, F&I managers: When was the last time you took a long, hard look at your service contract sales? Were you happy with the results? Do you really believe in the value of the service contract, or do you think the value may not be there? On this week’s episode of F&I Today, host and president of Chernek Consulting, Becky Chernek discusses mastering your vehicle service contract sales.

It’s a topic that deserves some good consideration on your part. What is the reason customers should take advantage of service contracts? What’s the ultimate benefit behind it? I mean if a vehicle already comes with a 3 year/36,000 mile comprehensive manufacture coverage (or in some cases as high as 6 years/75,000 miles) is service coverage really necessary? These are the questions your customers are asking themselves. In order to improve your service contract sales, you should ask the same questions and be ready with some solid answers.

Doing so will give you the ammunition to close more sales and do it upfront with confidence. If you can’t honestly address the question, or if you back away every time a customer has a question regarding why they need a service contract, it’s going to cost you big. Remember just because the customer has a question or concern doesn’t mean they’re saying no. It’s just a question: answer it!

Where customer objections are concerned, you’ve probably heard this one a million times—when the customer tells you they’re buying a dependable vehicle, and that they don’t expect it to ever break down! Cars today ARE more reliable than ever before, and consumer advocates happen to agree. Naturally, the last thing you want to tell your customer is that the car they’re buying WILL break down, or that they don’t know what they are talking about. You also don’t want to blank out like a deer in the headlights because you don’t have an answer to the question.

Sure, cars are more dependable than ever. There’s no way to deny that. But the fact remains, vehicles today are lot more complex and have a lot more technology. Five years ago, you could pop the hood and try to fix something yourself. These days, that’s near impossible.

Engine compartments often require you to go through the entire unity assembly to get to what you’re trying to fix, and just that is labor-intensive. Add to that the fact that labor costs are going through the roof and that it takes a certified technician to work on your car and you’ve already gone a long way to explaining why a service contract is so important to have.

Yes, vehicles today are more dependable than at any time in the past, but if something happens and a customer has to bring their car into the shop, it’s going to cost them big.

The idea here is to use a well-thought-out response that illustrates why the customer should take advantage of the service contract. I make it a point to offer the customer the very best service contract—the one that covers all components, similar to that of the manufacture warranty minus the wear and tear. I never pick and choose who I’m going to sell a service contract to and at what price: I ensure my pricing is consistent, and I offer it to every customer I meet with or do my best when it comes to financing.

One more thing to keep in mind that always helps sell customers on a service contract: it helps a car retain its resale value. Many customers put an average of 15,000 – 20,000 miles per year on their vehicles. This means that most drivers will burn through their manufacturer and powertrain warranties within just three to five years. For this reason, consider offering wrap coverage, which assures the customer has complete comprehensive coverage for up to 10 years! Maybe it’ll be hard for a customer to afford an extra $40.00 per month, but when you consider the potential alternatives, that might be a small price for them to pay. Ask your customer if it would be easier to pay a $2100 repair bill or a $100 deductible when they need it? We refer to this as a fixed payment vs. a variable payment. It’s always better to have a service contract and not need it than to need it and not have it.

There are many ways to address customer concerns when it comes to a service contract or any other products. To be better prepared, sit down and write out all the excuses you can think of that a customer may offer to justify why they don’t want or need a service contract. Then write up all of the reasons why they should. Be authentic with your answers. You know a service contract brings value; you’re not trying to trick someone into saying yes—you’re just trying to show them why saying yes is a smart move. If you can do this, the sky’s the limit on how many service contract sales you will sell! 

Did you enjoy this episode of F&I Today with Becky Chernek? Please share your thoughts, comments, or questions regarding this topic with host Jim Fitzpatrick at jfitzpatrick@cbtnews.com.

Car Biz Today, the official resource of the retail automotive industry.