3 Ways a Dealer-Branded PPM Plan Improves Retention
How to make a prepaid maintenance plan program work for customers and your dealership
Dealers who implement a successful PPM plan drive consumers to their business, deliver a positive customer experience, and enjoy measurable ROI.
Keeping customers happy and coming back is job one for every employee in the dealership. That’s why staff members who know their products, who can comfortably engage customers, and have the ability to serve others are foundational to customer retention.
Couple this with a structured program for retaining your service department customers longer, and high retention and increased service dollars will follow. Regardless the nature of the plan you hope to put in place, make sure it:
- Drives consumers to your business, especially your service department.
- Delivers a positive experience, so customers continue to come back.
- Has baked-in accountability tools to measure the lift in customer-pay dollars for each visit, so program ROI is measurable.
Dealers who implement a successful prepaid maintenance plan (PPM) that accomplishes these three objectives can see results as great as:
- 85% first-year retention; 65% each of the following two years.
- $70 customer-pay upsell per repair order.
- On average, $1,105 in customer-pay service business for the majority of the six years (on average) consumers own their vehicles.
Here are three steps to make your dealer-branded PPM plan work for customers and your dealership.
1. Build PPM into your culture
Most consumers struggle to work a $500 emergency into their cash flow, notes Bankrate.com. Prepaid maintenance plans help customers maintain their vehicles more regularly, with little or no impact on budgets.
Implementing presale and postsale marketing and promotions raises awareness of plan benefits, and remind customers of their savings from plan use. Make sure your sales and service teams know about the plan. Provide them with insight into its design and their involvement in its use. Be sure they know how the plan works, how its services are redeemed, and how to promote both to customers.
In F&I, which typically puts 75% of these programs in customers’ hands, be sure employees understand the longer-term value of the plan as a service-volume builder, as well as a retention tool for future car purchases.
Familiarize your staff with PPM program marketing and promotion literature. Actively promote your plan and its details on the dealership website, in the F&I office, in the service drive, at the parts counter, in the accessories department—anywhere there’s an opportunity to explain how the plan benefits customers.
Assign an individual to champion the program, internally and externally. Charge this person with getting performance and ROI reports to key store managers. This employee should make sure staff knows about the program and can explain it, and are discussing it with customers at every point. If you spiff the plan, promote that fact internally.
2. Offer specific value
Customized plans specific for the local market offer more value to customers, so be sure the plan you opt for allows you this flexibility. Additional questions to ask when looking at a plan:
- Is the plan one-size-fits-all, or adaptable?
- Are plan configurations available in one-year, two-year, and multiyear options?
It’s a best practice to have preloaded plans that are offered freely to new-vehicle purchasers. The incentives tie the buyer to that all-important first service visit. NADA has noted that 75% of new customers who have regular maintenance performed at their dealership become repeat purchasers.
Preload one- or two-year programs on all new and used car purchases, and offer a multiyear upsell option through F&I. Offer the plan to every buyer. Used car buyers are the most likely customers to defect after purchase, so connect them to a dealer-branded PPM that is redeemable only at your dealership.
When selling PPM plans in F&I, allow yourself a reasonable markup, but realize the goal is product penetration. Penetration equates to additional revenue that flows from service when plans are redeemed, from the cash-flow advantage when the program allows you to hold your own reserves, and from the unfortunate spoilage from unused plan services.
3. Monitor metrics
Does the program deliver what it promises? Is comprehensive analytical performance reporting baked in, with metrics to show how many programs are in force? Does it provide details into upsell dollars earned—and by which service advisor—and spend per plan holder?
You should use metrics to determine if the plan is driving customers to the service lane. Know the amount of upsell dollars from plan holders earned per visit.
Finally, you need to know how the program is strengthening customer retention, and the value of that retention, over several years.
By offering PPM plans and following these steps, your dealership will realize the benefits of having a comprehensive three-point plan for reversing poor retention program performance.
Ryan Williams is president of Fidelis PPM, and is a veteran of more than 20 years in the auto industry, having served in multiple dealerships as sales manager, F&I manager, and GM. You can reach him at firstname.lastname@example.org.