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Hidden Profit Centers

Nothing helps retain a customer better than a strong PPM program. Why leave 80 percent of your customers out when it is a great value for them and creates a customer for life?

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When the industry slows down, we must take advantage of every avenue to maximize and create new income streams. Most business leaders already know that the service drive and your database are untapped revenue streams in need of the right program to tap into.

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The service department typically sees five to 10 times more customers monthly than sales; there is an opportunity to create new business there. Yes, we sell the service needs that our customers ask us for — but do we up-sell? When the customer says, “I would like my tires rotated and an oil change” and the advisor responds, “Great, that will take about 45 minutes,” where is the selling? Occasionally we might say, “By the way, you need tires,” or “Your 30K service is due.”

We can do better than this.

The common complaint from the advisor is, “Geez, I’m so busy — I don’t have the time” or something similar. There are products offered in finance that customers may purchase after acquiring the vehicle if someone would offer it to them. Bundling these products to create customer benefits is a better idea. The obvious is a pre-paid maintenance (PPM) program. Only about 20 percent of customers purchase PPM in finance. A combination of PPM with a few other products will make it even a better value opportunity for your customer. Nothing helps retain a customer better than a strong PPM program. Why leave 80 percent of your customers out when it is a great value for them and creates a customer for life?

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The question is, “How do we find the time to present it?” A dealer in Chicago has come up with a unique idea. He picks five of his newest sales staff and, one day a week, they focus on selling the PPM program on the service drive. They make additional income, learn how to close and pick up leads for vehicle sales. The dealer gets an extra 15 to 20 customers a month signing up for PPM for three years. It’s a win-win for everyone. There are other ways to set this up but most important, there must be 100 percent buy-in from management.

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Now, let’s look at the database. Here is the largest untapped opportunity we have. Most databases have thousands of customers — in some cases, as many as 100,000. A 1 percent sales rate gives you 1,000 new repair orders per month. The key is to have a solid plan. Lay out your campaigns months in advance. An example would be to offer monthly campaigns dealing with key fob protection, PPM, tires, batteries, bed liners…, the list is endless. Become the Amazon Prime of the car world.

This is not the easiest program to establish, but it will return great results. You may want to outsource the database marketing to a professional company. Don’t look at this as an additional cost; look at it as found money. If you set it up properly, you are going to keep your customer engaged in your business after the sale and for many years to come. All income generated is additional to your bottom line. Your customer will become accustomed to going to your online store for all their automotive needs.

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These are just two ideas to increase revenue from untapped sources in your business. To help draw attention to these marketing programs, you could tie a rewards program into both ideas and use it as an incentive to use the services. For example, purchase a PPM policy on the service drive and receive points into your members account. Send a couple for tires and offer “double points” if used within the next 30 days. Rewards programs are a great way to drive customer behavior — retail customers understand the rewards concept and appreciate that someone is saying “thank you” in a monetary way. The beauty for the service department will be that the customer must spend money to earn the rewards and we get another opportunity to sell them something when they return to redeem them.

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Hidden profits make the difference in keeping the customer engaged for the life of their automotive needs and prevents defection. It will require extra work but it will be worthwhile. It is all about finding those few extra dollars that we can throw to the bottom line.

Jack Garrity

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