also generates revenue,"
he said.
The reserve money that
dealers hold on to can also be
impressive. In the first nine
months of Hare's PPM program, more than $75,000 in
reserve money was collected
from the 466 plans sold. The
same anonymous dealer
Gorun referenced that
generated a half-million in
upsells also collected about
$1 million in reserve and paid
out only $226,000. "So he's
setting on about 700 grand,"
he said of the dealer.
Service and sales growth is
fueled by PPM, added Reed.
Ideally, a dealership will sell
about 40 percent or more of
its PPM in the service lane
with the balance sold by F&I.;
"That's what you'd like to
see," Gorun said, "about half
coming from each end."
That's because so many
more people are passing
through the service department of a typical dealership
as opposed to the sales
department, he explained.
People signed up for PPM in
the service lane are usually
there for a simple oil change,
he said, but a good service
advisor will sell them on the
benefits of a long-term plan
rather than pay-as-you-go.
Despite proven benefits to
the customer, it's not always
an easy sell. "Selling PPM is
like selling prepaid dental
care," said Bauer of Resource
Automotive. "Customers
don't get excited about it."
Automotive Development
Group's Troussov said that is
why dealers must make clear
to prospective buyers the
advantages of owning PPM
plans, making the packages a
powerful why-buy-here tool
to close a sale, which,
naturally, is the first step in
the retention process.
By making PPM a why-buyhere carrot, dealers can
dispel the notion held by
cost-conscious customers
that aftermarket service
facilities are less expensive
and provide faster service.
Depending on the plan, some
general selling points include:
• Drivers can pay for
tomorrow's maintenance at
today's prices.
• Since the work has already
been paid for, service can be
fast and convenient with no
waiting in line to pay.
• The cost of the package is
included in the monthly car
payment, eliminating maintenance budgeting worries.
• The work is always
performed by certified
technicians.
• A vehicle's resale value is
increased through digital
records of upkeep.
• A plan may be transferable
when the vehicle is sold.
• Timely service reminders
can be sent via e-mail or text
to handheld devices.
• Only factory-authorized
parts and fluids are used.
Lescota said using PPM to
drive regular income in the
service center is a win-win
for both dealers and customers. "Not only is it
good as a profit center," he
said, "but it's a great way
to keep customers and
avoid the high cost of
gaining new customers."