Digital Dealer - November 2019 - 17

WIN THE CUSTOMER'S TRUST WITH AN
INTELLIGENT PRICING STRATEGY."
your long-term profitability.
Think of the discount as an
investment in the on-going
relationship.
When you have a relationship with a customer,
your dealership will be the
only place they think of
when it's time for a brake
job or transmission work.
They won't even think of
shopping around. What is
that worth to you?
It may sound counter-intuitive, but your pricing
strategy needs to accept
lower margins on "commodity" type work such
as oil changes and new
tires, in order to get more
of the high-margin work.
Commodity jobs should
be discounted more than
complex transmission or
electrical work, for which
dealers are better equipped
and perceived as more capable. Not only your price,
but your messaging should
also reflect this strategy.
ADD VALUE TO PPMS &
EXTENDED WARRANTIES

Selling pre-paid maintenance plans and extended
warranties can be challenging. The customer only has
so much money, and when
they buy a car they're usually more focused on keeping their monthly payments
to a pre-determined limit.
You have another
chance to sell them as they
approach end of warranty,
but you'll only be successful if you add value. Make
a list of all the services in

a pre-paid maintenance
package or warranty, along
with their rack rates. Let's
say the total cost is $5,000.
But because the customer
is buying the services in a
bundle, they'll save 10 percent or 20 percent, so you
charge $4,500 or $4,000.
Another best practice I've
seen is to offer packages
with a progressive discount.
For your next service, five
percent off. For the service

period, host a consultation
with every customer prior
to the end of their warranty
period. Ideally, this consult
will occur when the customer comes in for their
last service prior to end of
warranty. Discuss ownership intent and likely service
requirements over the next
three to five years.
The purpose of this
meeting is to create a
service plan that reflects

ON VEHICLES
TRANSITIONING OUT OF
WARRANTY, IT'S OK TO
MAKE NO MARGIN ON
THAT OIL CHANGES, OR
TO HAVE A PRICE-MATCH
GUARANTEE."
after that, 10 percent off, 15
percent for the next, and so
on. Perhaps set a limit at
20 percent off. Recognize
that if you can retain this
customer for seven years
or even three years at a 20
percent discount, that's a
lot better than losing them
shortly after warranty. You
make less margin off each
customer, but you're retaining more customers, so the
profit should be the same (if
not higher).
CREATE SERVICE
PLANS

Many dealers fail to notify
their customers before their
vehicle goes out of warranty. During this critical

each customer's needs and
preferences. Most customers don't have any idea
what the cost of ownership
for their vehicle will be
when the warranty runs out,
so show them. Create a
customized plan, and create
three alternative approaches for the customer to meet
those requirements, while
demonstrating the value
associated with each plan.
You may have to concede
some commodity-type work
to secure more critical work.
For example, if the customer insists they want to
get their oil changes done
at Jiffy Lube because it's
closer to their home, or they

D I G I TA L D E A L E R . C O M

like buying tires at Discount
Tire, you don't have to
include those items in the
plan.
These three strategies
will help you retain more
customers after the warranty period ends, which also
gives you a shot at retaining
them throughout the entire
ownership lifecycle. As you
retain more customers and
as their service requirements increase, you'll still
be able to grow service
margin dollars, albeit at
slightly lower margins.
SCOT EISENFELDER is a
25+ automotive market veteran
who has driven innovation
across multiple auto sectors.
Previously, Scot was SVP
Strategy at AutoNation,
responsible for major change
initiatives in eCommerce,
pricing, IT and creating
a blueprint for auto retail
transformation and before that
served as acting CMO, focused
on realigning marketing
spending. Before that, Scot
led JM Family's dealer
software business and was
SVP Product Management,
Strategy and Marketing at
Reynolds and Reynolds,
leading both companies
through value-creating sales.
Scot is a board member of
Quorum, a public dealer
software company. He has an
MBA from Wharton School,
graduating with distinction
and is a Palmer Scholar. He
attended Mannheim University
in Germany as a Fulbright
Scholar and graduated summa
cum laude in economics
from Princeton. EMAIL:
seisenfelder@affinitiv.com

NOVEMBER 2019

17
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Digital Dealer - November 2019

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