Persistence + Process = ProfitHouston’s Auto Icon has between 30 and 40 cars on its lot – and they sell a vehicle service contract on every vehicle that’s financed.
“We’re hitting the same targeted sales goals,” Myers says. “We try to push VSCs as much as possible, though, because we have no overhead in it and we can still make a profit from them.”
Their challenge? Increase profit from their VSC business and better protect their customers from out-of-pocket repairs without increasing VSC volume. Sound difficult? For Tajgardoun and Myers, it actually was a synch.
It started with a call to their Dealer Consultant, Richard Baird. The number of deals financed wasn’t going to change, so their opportunity to sell more VSCs wasn’t going to spike either. And rather than increase markup or sell customers additional products they didn’t need, Baird was able to help the team at Auto Icon put into place a process that presents VSC coverage earlier in the process and helps put customers at ease when making the extra purchase.
“More people are just wanting to buy cars more than they are VSCs,” Myers says. “Throwing the VSC in there helps with their peace of mind, but not everyone wants to purchase one. We let them know the warranty is there just in case - just like auto insurance. You don’t plan on being in accident and you don’t plan on a breakdown.”
The first step was featuring GWC coverage prominently on their website. Thanks to seamless tools on GWC’s Dealer Portal, this process was a breeze for Tajgardoun and Myers, who now have GWC logos and videos showcased right on their homepage.
“About 85% of our sales come from the Internet,” Myers says. “And what better way to put the VSC in front of them as soon as possible than putting in on our website?”
Next was carrying that image over to the dealership experience. With point-of-sale materials like banners, mirror hangtags, glovebox hangers, floormats and more, Auto Icon’s in-person experience encourages customers to ask about service contract coverage, and walks them closer to making that purchase at each step of the process.Finally, it’s how the products are presented in the F&I office. The second a customer sits across from Myers, they instantly notice the banner cascading across the wall behind his desk. Following that up are brochures and masterful menu sell.
"When we do the financing, we have brochures on our desk right in front of the customers,” Myers says. “We’re trying to make sure our customers are covered as much as possible." The team at Auto Icon closes on the base payment first, and then presents payment options with a service contract included. Once they settle on a payment with customers, Myers then delivers all the good news about the added coverage options his customer just purchased.
Myers – who used to sell GWC’s Powertrain Plus Coverage – then proceeds to let his customers know that they are now protected with Essential Coverage. He highlights that this small upgrade just got them coverage on items like power doors, windows and locks as well as diagnostics, which can cost his customers more than the added cost of the upgraded coverage. Factor in that he upgrades most customers to a $0 deductible, and he can confidently send his customers off with the comfort of knowing they won’t need to pay a single cent for any covered repair.
How has it worked? Auto Icon once was selling Powertrain Plus to 70% of their VSC customers. At the same volume, inverting that production to nearly 70% Essential Coverage has increased VSC sales to the tune of more than double their average VSC dollar amount from the previous six months. Compounded by a percentage retail markup, the extra profit Tajgardoun and Myers sought has been piling up – quickly.
It started with a mission to increase profitability and better protect customers without increasing contract count. And just a few months into Auto Icon’s new process, it’s safe to declare mission accomplished.