July 23, 2007: How to increase your store’s priority maintenance penetration
July 23, 2007
Filed under Columns
“I think I understand,” said the new salesperson. “With priority maintenance, customers save time because they’re a priority customer, they are protected from future unexpected out-of-pocket expenses and on top of this they save money too.”
“That’s correct,” said the finance manager. “The cost of parts will continue to increase, as will the service department’s hourly labor rate, but the customer will be protected because they are receiving tomorrow’s servicing at today’s prices.”
Priority maintenance has many different names: prepaid maintenance, VIP maintenance, Pit Pass, Gold Customers and also has lots of different variations. For instance, some programs include an extended service agreement, although most dealerships keep it separate. Each variation of priority maintenance is beneficial to the customer because they receive priority status and save money by pre-paying for future services.
It’s beneficial to the dealership as well. When a customer invests in priority maintenance, their machine is serviced at that dealership exclusively, which increases customer loyalty. And each time the customer returns to the dealership, there’s the opportunity to sell additional labor hours, hard parts and accessories. Many customers also will bring their friends and riding buddies with them, which leads to additional business and referrals.
According to a recent RPM Group composite report, the average penetration for priority maintenance was 23 percent (penetration equals number of priority maintenance sold divided by the number of units sold), and each sold for an average of $1,264. So, for every 100 sold units, there are 23 priority maintenance sales. Twenty three multiplied by an average sales price of $1,264 equals $29,072. The 23 percent is an admittedly low number. Many dealerships have a priority maintenance penetration of 40-60 percent, which easily doubles the above sales number.
One of the keys to having a successful and profitable priority maintenance program is to change the culture within the dealership. Promote the program during department meetings and store meetings, put up internal marketing (signage) and use pins and nametags. A lot of dealerships are replacing traditional nametags with the “Pit Pass” style that’s worn around the neck and using them for marketing. One dealer created curiosity by labeling their name badges with “Are you VIP?” Changing the culture within a dealership is easier said than done, but it’s well worth the effort.
Here are a few more tips to increase priority maintenance sales and awareness:
All of these will help create the buzz that’s needed to begin changing the culture in the dealership.
About this column
Series goal: Each Profit Ability column will focus on one key measurable found in most dealer 20 Group’s composite reports and offer tips on improving those measurables.
This edition: Priority maintenance
National average for priority maintenance: 19 percent
Tory Hornsby, general manager of Dealership University, was drawn to the powersports industry more than 10 years ago when he turned his passion for motorcycles into a career. Hornsby worked in nearly every position in the dealership before becoming a general manager. He welcomes your e-mail: email@example.com.