Categories
Dealership Training

Don’t leave your service drive out of your sales cycle!

Contributing Author: Steve Roennau Vice President Compliance EFG Companies
Contributing Author:
Steve Roennau
Vice President
Compliance
EFG Companies

What is synonymous with General Motors and Toyota? Recall, right?

Four years ago, Toyota underwent a recall crisis on par with General Motors today. Now, Chrysler is also under investigation for faulty ignition switches. Are these the only car manufacturers who’ve felt the strain of a recall crisis? No.

In the 70s, Ford issued a staggering 21 million vehicle recall for its infamous “park-to-reverse” automatic transmission defect. In the 80s, Audi dealt with its own unintended acceleration defect with a series of car recalls for its 5000 model that nearly drove it out of the American market.

Do consumers still buy these cars? Yes.

In fact, according to General Motors, the ignition switch recalls have had no significant impact on new model sales. What does this mean for dealerships? Opportunity!

No matter their reason for visiting the service drive, when consumers bring their vehicles back to the dealership, there is an opportunity to convert those customers to a new car buyer. In fact, the more times a customer returns to a dealership for service, the more likely they are to make their next vehicle purchase with that dealership. Between 2010 and 2012, the percent of customers who were converted from used cars to new cars increased from 17 percent to 19.3 percent. As consumer income continues to increase, this rising trend can also be expected to increase.

In order to truly maximize this opportunity, dealerships can make small adjustments that create a big difference in capturing a greater share of wallet from this lucrative audience:

  • First, address your waiting area to ensure cleanliness and its appeal to both men and women. Remember that at least 50 percent of your service drive business is women, so double-check to ensure that available amenities are appealing to both audiences. In addition, outfit the waiting area with information on F&I products and monitors tuned to dealership and OEM videos.
  • Focus on making a good and lasting impression on new service drive customers by ensuring the service managers are adequately trained. Do they have a courteous and professional demeanor while providing efficient service?
  • Keep returning customers coming back by focusing on providing a positive experience each time they return to fortify the relationship.
  • Lastly, keep customer records accurate and up-to-date. Either the service manager can verify the information when first approaching customers, or the receptionist can when processing payments.

It’s that simple. Yet, many dealerships overlook this significant opportunity. With OEMs focusing on customer retention, dealerships need to fortify their service strategies both in sales and in their service drive. But, the customer experience doesn’t have to end when they leave. With accurate information in their CRM, dealerships can establish a contact campaign based on several different criteria including:

  • whether the customer is a recall customer or a regular service customer;
  • whether the customer is new to the dealership or returning; and,
  • if returning, how often they return and the age of their vehicle.

Rather than relying solely on the sales force approaching customers waiting for service, dealers can capitalize on customer retention by focusing on customer service and implementing a communication campaign designed to turn service drive customers into sales prospects.

In today’s market, the road to the sale is rarely a straight line. With almost 40 years of insight into the consumer mindset, EFG Companies knows how to turn your team into Top Performers. Along with our intense training curriculum and client engagement, our expert trainers can provide a full service-drive analysis, focusing on the efficiency of the department and their sales volume. EFG’s consultative approach to marketing equips dealerships with the consumer insights and marketing tools needed to increase store traffic, drive customer loyalty, and differentiate their business. Contact EFG to get started today.

Categories
EFG Companies Featured

National ASE Institute Awards EFG Companies Blue Seal of Excellence

– EFG Claims Professionals Meet Recognized Standards for Certification-

198212-ASE SealEFG Companies, the innovator behind the award-winning Hyundai Assurance program, announced today it has been awarded the Blue Seal of Excellence by the National Institute of Automotive Service Excellence (ASE), based upon the required certification level of  its claims organization. This certification exemplifies EFG’s commitment to customer service excellence while also enhancing the company’s ability to negotiate quality vehicle repairs on behalf of contract holders.

EFG continuously strives to raise the industry bar when it comes to providing superior products, administration and compliance. Earlier this year, EFG achieved 100 percent field team certification from the Association of Finance and Insurance Professionals (AFIP). With these two certifications, the company sets the industry example for leadership in effectively training, auditing and administering their clients’ business to whom these services are a critical priority.

“Our clients rely on our expertise when it comes to negotiating quality repairs for their customers,” said Barry Carter, Chief Operating Officer. “Our claims administration reflects back on their business and brand. By demonstrating our high level of expertise with this certification, we are giving our clients even greater confidence that all claims will be handled expertly, efficiently and respectfully, promoting a positive overall customer experience and driving greater customer loyalty for their business.”

Established in 1972, the National Institute for Service Excellence (ASE) seeks to improve the quality of vehicle repair and service by testing and certifying automotive professionals, the ASE National Institute exists to protect the automotive service consumer, shop owner and automotive technician. This certification provides legitimacy to both the repair shop and the claims administrator by signifying their level of expertise and recognized standard of their technical knowledge.

Throughout its 37-year history, EFG has continually demonstrated their commitment to exceed customer expectations. Customer service and claims administration standards and real-time performance is continuously projected on the company’s walls as a constant measure of performance. 95.88 percent of claims calls are answered within 90 seconds, and 96 percent of all claims are paid by corporate credit card within one hour of receipt of invoice.

EFG believes longevity and success is ultimately measured by a simple premise: keeping a promise to a customer at a time when they need it most. EFG prides itself on being a claims-honoring third-party administrator and this certification only enhances the company’s ability to fulfill that promise.

Categories
EFG Companies F&I

The Sub-Prime Cinderella Story: Who Has The Glass Slipper?

technology-may-2014After five years of consistent increases, used car prices are expected to collapse in 2014. According to NADA, the average price of a used car rose by 18 percent from 2007 to 2013, and is now roughly 10 percent higher than the average price of the past two decades. That bubble is expected to pop as NADA predicts 42 million units to hit showroom floors nationwide. Of that 42 million, 16 million units will be a result of lease-end models being returned to franchise dealers.

For an independent dealer selling used cars, this poses a significant obstacle. Beyond the drop in price per retail unit sold, other kinds of dealers will lay claim to 38 percent of the available used car inventory. However, there is an upside. According to a 2014 Equifax study, there is pent up demand for more than 26 million vehicles. With the labor force participation rate declining and moderate wage and employment growth, it’s a good assumption that consumers will continue the trend of preferring to buy used over new.

These recession-wary consumers are more willing to shop for the best price and financing available. This partly explains why used vehicles accounted for 62 percent of all vehicles financed for the fourth quarter of 2013, according to Experian.

While we ended the year with an almost even split between independent and franchise dealer market share in used car financing, independent dealers are well positioned to tap further into the current consumer market. For example, picture what you think a typical independent dealer customer looks like:

    • What’s their credit score?
    • Do they rent or own their home?
    • Are they employed?
    • If they have gainful employment, in what industry segment are they employed?

The reality of today might surprise you. With the impact of the recession weighing on bank accounts, even prime consumers are now browsing independent dealership lots. Once you lower your eyebrows, try this number on for size: 11.4 percent of buy-here-pay-here customers fell into the prime and super-prime category in the fourth quarter of 2013.

But what’s even more interesting is the subprime category. This category has become the consumer segment that holds significant value to all dealers: franchise, independent and buy-here-pay-here alike. Of all buy-here-pay-here customers, 88 percent fall within the nonprime, subprime and deep subprime categories. 1 These same customers make up 37.3 percent of franchise dealership customers. 1 While franchise dealers are new to woo this category, they are aggressive, and in some cases offering more than what independents have in their quiver.

When it comes to providing value and creating lasting customer relationships, franchise dealerships have service departments and a deep bench of F&I products to protect and repair the customer’s vehicle. Providing benefits such as these, which have significant impact in preserving the customer’s bank account, has been an uphill battle for independent dealers, specifically in the F&I department.

With an inventory ranging from zero to 70,000 miles, franchise dealerships have significant options in providing consumer protection products. Beyond the manufacturer’s warranty, F&I product providers underwrite extensive vehicle service contracts, maintenance plans, appearance protection products and some forms of insurance, like GAP.

The benefit of this deep bench is they have a better opportunity to increase their value proposition with the customer. By providing extensive coverage on various aspects of their vehicles, they can give their customers significant protection for their bank accounts, while increasing dealership profit per retail unit with upgrades or extended coverage.

Independent dealers paint a different picture. Vehicles on an independent dealership lot have been through approximately three ownership cycles and typically range in mileage from between 30,000 and 150,000 miles. With this in mind, their F&I bench is significantly limited in comparison.

The majority of consumer protection products tailored for independent dealers limit coverage to mainly the powertrain of these older-model vehicles. The reasoning behind this is pretty straight-forward. Older model vehicles are expected to break down more and therefore F&I product providers are more hesitant to create extensive protection products for them as they would expect a higher number of claims submitted.

However, in this value versus cost environment, nonprime and subprime consumers have a new level of expectation in the terms of the products available to them from both franchise and independent dealerships. The recession has forced companies across all industries to re-evaluate the customer service experience, as well as their value proposition. There is no difference in the auto industry. Now, it’s not only prime and super-prime customers that demand the highest level of service, but rather all customers expect to have the same level of respect for their business. While some customers may not be able to afford a traditional vehicle service contract, they are still very interested in purchasing mechanical breakdown protection for their vehicle.

For this reason, F&I product providers are re-evaluating the products they develop for independent dealerships. For example, EFG Companies, a consumer protection product provider based in Irving, Texas, developed a vehicle service contract called Best ReGuards that extends past the powertrain specifically for independent dealerships. This product focuses on several extended coverages while maintaining a low cost price-point:

  • Engine
  • Turbocharger/Supercharger
  • Transmission
  • Transfer Case
  • Air Conditioning
  • Electrical
  • Fuel
  • Seals & Gaskets

Another trend in consumer demands goes beyond mechanical breakdown to include benefits around personal safety, such as roadside assistance. Again, the majority of roadside assistance plans available for independent dealers only provide limited services, if any. However, no matter their credit score, people from all walks of life need the ability to take care of themselves and their family in the event that they are stranded due to a breakdown. With that in mind, EFG paired the following roadside assistance benefits with the mechanical benefits of their Best ReGuards VSC for independent dealers:

  • Towing
  • Flat Tire Changes
  • Jump Starts
  • Lockout Service
  • Nationwide Coverage

Beyond the product itself, the company also backed it with the same product administration that franchise dealers receive. This further emphasizes and ensures the level of customer service on which independent dealers can rely, and that positively impacts their relationships with their customers.

You can see how growth in options such as this gives independent dealers a more valuable toolkit to address each customer’s specific need when it comes to protecting their vehicle. They also fortify independent dealership’s customer appreciation model, which increases their customer retention. With revamped F&I products that provide more comprehensive coverage and service, independent dealerships are positioned to:

  • Increase their product portfolio to generate greater profits
  • Cultivate customer relationships by providing new market opportunities
  • Match consumer buying trends to the dynamics of their dealerships

As supply is expected to outpace demand in 2014, independent dealerships need to expand their product portfolio to be more competitive in the market. Considering how few independent dealers have access to provide F&I products, you are going to see more providers recognizing this growing opportunity and focusing product development efforts on this fresh dealer segment.