It’s official. People love their cars and want to protect them.
Not only has demand for new and used vehicles remained strong, a recent research study by Assurant Solutions reveals that there is a subset of vehicle buyers who are keenly interested in vehicle service contracts (VSC). The results offer insights into who these buyers are and how best to reach them in the face of changing consumer buying habits.
Out of more than 1,800 vehicle owners surveyed, 27 percent said they are highly likely to purchase a VSC with their next vehicle.
Two distinct personas comprise this segment. The first, whom we call “Superfan Sam,” is nearly 100 percent likely to buy a VSC. Superfan Sam represents six percent of those surveyed, is marginally more likely to be male (55 percent), is 40 or older in age (mean age of 47) and has a mean household income of $72,000.
The second persona, whom we call “Advocate Alex,” is 80 percent likely to get a VSC with their next vehicle. Advocate Alex represents 21 percent of those surveyed, is equally split between male and female, spans the entire age range from 21 and up (mean age of 46), is likely to be married and has a median household income of $76,000.
Both Superfan Sam and Advocate Alex enjoy the dealership experience. They are unique among respondents in the fact that they like to spend the majority of their shopping time visiting dealerships.
Conversely, those least likely to buy a VSC are those that feel the least comfortable, trusting, confident, and secure at the dealership. As such, they are more skeptical when it comes to being offered a protection program at the dealership.
Financial benefits and peace of mind are top purchase drivers for VSCs, according to the study. When asked why they wouldn’t buy a service contract, respondents cited the belief that the durability of today’s vehicles eliminate the need for one, and that protection plans are too expensive.
To overcome these objections, dealers should communicate how VSCs not only are a good value given the average cost for repairs, they protect owners from losing wages or employment by not being able to get to and from work, and keep our lives running as smoothly as possible no matter where or when the need arises.
Reach Shoppers Outside of the F&I Office
Dealers would be well served to look outside of the F&I office to educate consumers and offer VSCs. Though the dealership continues to be the primary point of purchase for VSCs, opportunities exist to reach consumers both earlier in the decision process and after the purchase of a vehicle.
According to the survey, 32 percent of respondents are receptive to hearing about VSCs during their research phase, and more than 20 percent said they would feel better about VSCs if they had learned about them earlier in the buying process.
Given that the majority of respondents spend the highest percentage of their shopping time online (approximately 19 hours prior to purchasing a new car) it makes sense to reach them during this stage with compelling reasons for choosing a VSC.
When customers do come to the dealership, consider offering easy access to the benefits of a VSC. Some respondents suggested that a brochure or tablet with information about VSCs would be a helpful reference during lulls in the vehicle purchase process.
Look for valuable post-purchase opportunities as well. Half of the survey respondents said they pay close attention to the expiration date on their manufacturer’s warranty and 17 percent are receptive to hearing about VSCs when the warranty expires. Given that six years is the average length respondents said they owned their vehicle, there is a good chance they will still have their vehicle after both the warranty and the initial VSC expire.
The service bay offers yet another chance to generate aftermarket sales. The franchised dealership is by far the preferred source for maintenance and repairs for VSC fans, increasing the chances that service customers would be open to an offer.
The important point to remember is that no matter when, where or how, dealers need to make a VSC offer to every customer. Of those surveyed, 18 percent said they were not offered a VSC in the past, and 20 percent say they would have purchased one if offered.
The survey results are clear. There are many customers who care deeply about protecting their vehicles and want to hear more about their options. Don’t miss your chance to connect with them and create lifetime customers.
John Laudenslager serves Assurant Solutions, www.AssurantSolutions.com, as president of its Vehicle Protection Services business. He is responsible for the overall success of the company’s vehicle service contract programs and services marketed to global industry leaders.0