Fixed Ops Journal - June 2019 - F20

FIXED OPS JOURNAL

TIES THAT BIND

2 features of service contracts are especially likely to retain customers
ALYSHA WEBB

S

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PAGE 20

JUNE 2019

ALYSHA WEBB

Tom Bell Chevrolet's Derek Hanson says tiebacks build service business.

the maintenance package "aggressively," but not to the extent the service department won't make money, General Manager Derek Hanson
told Fixed Ops Journal. Tom Bell Chevrolet charges $1,480 for the fiveyear plan, which includes eight oil changes and all other factory-recommended service. The retail value of the package is $2,422, Hanson
adds.
"We see the importance of getting people back into our service department," Hanson says. "If you sell a maintenance package with a tieback, we're married."
The dealership is targeting a 10 to 20
"You would be
percent take rate for the new package
among vehicle buyers and service
surprised how
customers, Hanson says, compared
many people will
with the rate of 3 to 4 percent for its
current maintenance package, which
drive 100 miles to
allows work to be done at other General Motors dealerships.
save $40 or $50."
Anchor Auto Group in North SmithMATT MAHAR, regional
field, R.I., includes a 40-mile tieback
general manager, Resource
clause in the service contracts it sells
Automotive
at its two dealerships. The contracts,
issued by Portfolio, include a disappearing deductible, generally $100. They also cover towing and rental
fees, says Chris Benoit, the group's parts and service director.
"Tieback is huge," Benoit says. "It helps you retain all the service business so you can best take care of the customer." He declined to estimate
how much business the contracts generate.

"

"

elling extended service contracts can help a dealership bring
vehicle buyers back to its service department, building customer loyalty and boosting fixed ops income. Two common
features of these contracts - a tieback clause and a disappearing deductible - are especially helpful to achieving these goals, dealers
and industry analysts say.
A tieback clause requires a vehicle owner to return for service to the
dealership that sold the contract if the car or truck breaks down within a
specified distance from the store, usually 40 miles. A disappearing deductible is a threshold out-of-pocket expense that is waived if a customer comes back to the selling dealership for service.
With these two features, "not only is the dealer making money selling
the service contract, he is also going to guarantee his service department will be loaded with work," says Max Zanan, president of Total
Dealer Compliance, a consulting firm in New York.
Tom Bell Chevrolet in Redlands, Calif., is launching a dealership-branded prepaid maintenance package for new and used vehicles
through the service contract provider Portfolio. The contract requires
maintenance work to be done at the dealership.
To make the tieback attractive to customers, the dealership will price

Incentive for advisers
Tom Bell Chevrolet's service advisers, including those in the express
lane, get $100 for every service contract they sell to their customers,
Hanson says. Otherwise, he says, advisers might be reluctant to
offer prepaid maintenance plans and to explain the benefits of the
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Fixed Ops Journal - June 2019

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