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You can sell extended protection plans

February 10, 2003
Filed under Archives

Whether you call them Service Contracts, Extended Service Agreements, or as we will here, Extended Protection Plans, they are loaded with value for your customers and are a good source of profit for your dealership.

Customer benefits
Steve said that most business managers could sell more extended protection if they just believed that it was good for the customer. While some consumer groups say, “Don’t buy it,” we fail to fight back and communicate what’s in it for the customer.
Here are some reasons why your customers should invest in extended protection:

  • Reduces anger and stress caused by unpredictable and costly repairs.

  • Provides peace-of-mind that if something does happen, the financial burden is placed on someone else.
  • Protects a customer who has a tight financial budget.
  • Guards against inflation (increasing parts and labor costs).
  • Enhances customer trade-in value (when extended protection is transferable).
    n Safe-guards customer good credit standing if repairs became overwhelming.
    n Insures customer satisfaction by meeting expectations.

Dealership benefits
Of course, there are many benefits for you and your dealership. It’s a good deal for the customer and it is a good deal for the dealership.
Here are some reasons why your dealership is counting on you to sell extended protection:

  • Generates additional F&I profits.

  • Generates additional Service and Parts Department profits.
  • Builds customer loyalty to Service Department.
  • Reduces frustration caused by unhappy customers with unexpected repair bills.
  • Develops greater customer cooperation.
  • Creates customer satisfaction by meeting expectations.
  • Increases the chances of repeat business and referrals.

GAINING COMMITMENT
“Almost every customer I sell would take the Extended Protection Plan in a second,” Steve would tell me, “if it were free. They know that it’s a valuable thing to have, even before I explain all of its features and benefits to them.”
You know, he was right. By now, most customers are familiar with extended protection, whether it’s for a vehicle, a refrigerator, or a sewing machine. Since they already know it’s a valuable thing to have, you’re already one step ahead.
The secret is to take that acceptance on their part and convert it into a sale. You do this by using proper selling techniques and identifying the customer benefits of your particular Extended Protection Plan. Skillfully done, many of your customers will be willing to enroll (at a profitable price to you and your dealership).
TEAM SELLING
Steve felt that selling extended protection should be a team effort. Our salespeople were paid a small bonus for cooperating with the Business Office. While they were not allowed to sell extended protection, they still played an important part.
Steve said that if salespeople were to ask a customer to buy extended protection, and the customer said “no,” it would be nearly impossible to reverse this decision. Steve wanted customers who were brought into the Business Office to have an open mind about the extended protection.
However, salespeople can be very instrumental in pre-conditioning the customer to buy. For example: After salespeople meet and greet customers they begin to determine their needs. The best place to do a needs analysis is at their customers’ trade-in.
A salesperson walks around the customer’s vehicle and asks some qualifying questions (e.g., What is it you like best/least? What do you want the next vehicle to have that this doesn’t have? Who are the primary users of the vehicle?).
Eventually, the salesperson leads the customer into the following discussion:
Salesperson: Your present vehicle does have a transferable, extended protection plan, doesn’t it? (Note: Even if the customer didn’t bring the trade-in to the dealership, this question can still be asked.)
Customer: No, it sure doesn’t.
Salesperson: “I was hoping you had the added protection. Obviously no two pre-owned vehicles are exactly alike. However, if one vehicle had a transferable extended protection plan, it would be more valuable to the next Buyer than a similar vehicle without this kind of coverage. I’m sure sorry you don’t have that coverage. Meanwhile, we will still make every effort to get you a good value for your trade-in.
PUTTING YOUR MONEY
WHERE YOUR MOUTH IS
Later on during the negotiations, the customer sees the following printed right on the price worksheet:
“Add $_______ for trade-ins that have a transferable, extended protection plan.”
This is putting your money where your mouth is. It’s saying to a skeptical customer that even if they are fortunate and never have to use the extended protection, it will still enhance the trade-in value later.
BRIEFING THE BUSINESS MANAGER
When the vehicle is sold, the salesperson should brief the business manager before introducing the customer for contracting. If the customer always buys extended protection, the business manager can add the policy into the contract with confidence. If the customer never buys extended protection, Steve would get the details so he could develop a selling strategy.

Gart Sutton is president of Gart Sutton & Associates, Newport, Calif. He specializes in providing sales training to individuals in powersports and automotive companies. He’s the author of The Professional’s Guide to Selling New & Used Vehicles. For more information contact Gart Sutton at gart@gartsutton.com

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