How to Sell Service Contracts to Every Car Buyer

Harish Makam

10 Jun 2022 2 years ago

Are you shying away from signing service contracts with your customers? Learn how to throw in a perfect pitch to sell service contracts and gain both revenue and customer loyalty.

A service contract is like an extended warranty where a car dealer signs a contract with its buyers to do some repairs or services. Its prices and coverage also vary widely. Some of them may extend to include the scope of the warranty. While others may cover only some maintenance tasks like an oil change or brake repairs. Moreover, a service can cover the cost of future repairs and maintenance for car buyers. 

Most customers don’t like the idea of spending more on a car and are wary of service contracts. This can put your car dealership at a disadvantage. But if you can sell cars, so can you sell service contracts. A service contract can help you get some extra bucks if you negotiate well with your clients.

You must be aware of the fact that every car buyer has different requirements. Some would want to take care of repairs by themselves, while others would only be happy to put gas in their tanks. Car shipping companies are undoubtedly the best option.

On the other hand, some customers wouldn’t even want to replace lights or starters. So, you just need to position your services properly to earn your customers’ trust. Your services must be cost-efficient yet also appealing to your customers. Here’s how you can create service contracts that no one will be able to turn down:

Know your audience

If you are selling service contracts to mechanics, you’ll need to offer a different arrangement than you would to people who don’t have any interest in maintenance. Try to upsell something easy such as providing them shorter contracts if they wish to sell their car soon. You can also sell various contract options and label them as Level 1, 2, or 3. 

For instance, level 1 may include tire and filter changes, alignments, and fluid tops for two years. Level 2 may consist of all tier 1 services plus changing brakes for three years, and level 3 may include all 1 and 2 services plus maintenance for five years.

Know your audience

Understand their Concerns

Tell your customers that you already know about their concerns regarding getting service contracts. This will dismantle the effect of those words that they’ve been told. Next, you can persuade them to understand that they’ve been reading wrong all along the lines. Explain to them why it is wrong and gain control of the conversation. Train your team to give rebuttals and positive arguments in favor of service contracts. Additionally, most of these companies also will give door to door delivery. This takes away both the fear of exhaustion and reliability.

Figure Out the Pricing

It can vary as there are so many factors involved. Calculate how much the parts will cost you, the frequency of specific repairs, and what the service contracts will include. You must find a way to sell service contracts, gain profit, and at the same make them affordable enough for your customers to buy them. 

There are several ways that you can make your service contract affordable. You can add the cost of the agreement into the automobile loan. For instance, if the loan is $400, you can add $15 or $25 into monthly payments to make it economical for your customers.

Work on the Statistics

Since covid, people are no longer buying cars as frequently as before. They want to keep their older cars. According to a survey by AutoMD, 78% of the drivers confessed that they want to keep their vehicles for the next ten years at least. In the same study, 54% responded that they would only replace their vehicle if it completely broke down. So, use these statistics to emphasize to your customers that they will eventually need repairs for their cars. 

Also, focus on the fact that customers who are taking their cars for repairs frequently are lining up the mechanics’ pockets. So, you can explain to your customers that a service contract is reliable enough to cover for them in the future. They won’t have to remain at the mercy of a mechanic down the road. Focusing on the care of their car for a long time will be worth its initial investment.

Work on Statistics

Build a Comprehensive Strategy

If your customers are still reluctant to invest in a service contract, you would need to plan a strategy that will upsell the benefits a contract holds. For instance, compare retail cost vs. the cost of service contract. Such as explaining the retail price of brake oil, which can be $50-$60, alignment for $100, and new brakes, which may be around $300-$400 or more. Now, list how much these services will cost with a service contract. Explain to your customers how much they’ll save on these repairs. Besides, when they need repairs, they won’t have to come up with $500 because their service contract will already include these costs. They won’t have to bear the costs of normal wear and tear. So they should plan ahead and go with a service contract.

Summing Up

As a car dealership, it could be quite challenging to upsell a service contract to your customers as most will be reluctant to purchase it. It is crucial for your business how well you position your services agreement. Some customers may not feel interested in buying a contract, while others will think it is not affordable. Try to understand their doubts and clear their negative beliefs. Sakaem Logistics has successfully been able to identify this issue and has found a solution. Our quote calculator will be able to provide you the cost to ship a car.

You can explain to them how it is less costly to buy a contract than to go for a mechanic for repair. Also, prepare your rebuttals and plan a strategy to spell out how a service contract is more affordable. If you are able to list out the benefits of holding a service contract, it is a win-win situation for both you and your clients. Your customers will be able to save on the cost of normal wear and tear. Besides, you’ll earn their loyalty as well as gain revenue.

Harish Makam