Build a Lifetime of Customers With Warranty Programs

A basic mistake at many dealerships is making a single sale without focusing on the value of a lifetime customer


I’ve been asked to explain why lifetime warranty programs are so important to an auto dealership.

We’ve already talked about how this type of program can set your dealership apart from your real competitors—those dealerships in your market that sell the same cars you do. We’ve also discussed how you can avoid the profit-killing result of having a price war with your competitor.

For these and many other reasons, lifetime warranty programs hold great value, and have meant increases of millions of dollars in sales for dealerships across the country.

Now, let me tell you one of the most powerful reasons to participate in a lifetime warranty program: Lifetime warranty programs create lifetime customer dynasties. I’ll explain.

One of the most basic mistakes that many auto dealerships make is making a single sale without focusing on the value of a lifetime customer versus a one-time customer. This single-sale orientation is an offshoot of salespeople under pressure to close the deal.

There’s nothing wrong with closing a deal, of course, but if closing loses most of the profit (that Racing to the Bottom thing) or the pressure creates a bad taste in the mouth of the customer, there is a big, nasty unseen consequence.

Happy customers with lifetime warranties begin to trust your dealership. When they trust, they come back again and again. They bring their husband or wife to get their car. When it’s time, they bring their kids to get a car. Those kids have kids and later, they buy cars.

Take just a second to calculate your profit on that one customer buying four cars in his lifetime, his wife buying two, his kids buying three, and their kids buying three more. Trust also motivates this customer to recommend you to friends and relatives, so that may add a few more.

When you focus on closing one sale instead of creating a lifetime customer, you are scrambling for a couple thousand dollars and missing out on a couple hundred thousand dollars.


Lifetime warranty programs contribute to creating lifetime customer families. Like residuals in the insurance business, lifetime customer families pay you for years and years.

So, now that you see the short- and long-term benefits of a strong lifetime warranty program, one without gimmicks and “gotchas” that delivers true value to you and your customers, contact Binary Automotive Solutions at sales@binaryauto.com or 888-883-8557, ext. 307, to start the process of cultivating lifetime customers.

James Binkley

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