H&H Chevrolet Grows Service Revenues by $200,000 by Selling Prepaid Maintenance Plans Out of Service & F&IDealership Wins by Focusing on Retention, Caring More about Lifetime Value of Customer than Dollars
SAN RAMON, CA, June 14, 2016 – Performance Loyalty Group (PLG), today announced that H&H Chevrolet of Omaha, NE, has grown its service revenue by simply switching from a complimentary PPM plan and instead selling extended service plans in both service and F&I using the UltraCare dealership branded Prepaid Maintenance Program (PPM). Fifty percent of those plans are sold out of the service drive.
H&H Chevrolet introduced its UltraCare PPM program in February 2013, by including an 18 month plan for free with every vehicle purchase. Between February 2013 and August 2015 the dealership gave away just over 2,000 plans. While improving customer retention was the underlying purpose for providing those free plans, Steve Hinchcliff, President and CEO of H&H Automotive, was surprised when he looked at the customer data the plans were generating. While 88% of customers returned to purchase additional services when they utilized their free PPM, the average service up-sell amount was only $65.24 per visit.
“Complimentary factory scheduled maintenance started to nullify what we were doing with the complimentary plans. So we changed our plans and tried to enhance our maintenance packages around the factory as an enhanced offering. We felt if the customer had more skin in game, there would be a higher perceived value. And it is true, in fact now they are coming back and spending three times as much as they did when the plans were free. Our philosophy is based on customer retention, on the lifetime dollar value, not transaction dollar value. And this is really what our culture exemplifies,” Hinchcliff stated.
In fact, selling the plans resulted in three times the customer up-sell which has now risen to $222.16 per service visit, an increase of $157.00 over what the complimentary plans were generating.
The dealership now averages 138 plans sold per month with an average retail amount of $254.77, producing additional monthly revenue over $35,000. Besides being a great revenue generator the PPM plans are also a powerful retention tool as well with over 71% of the plan purchasers returning to the dealership for ongoing service.
According to Hinchcliff, three things have contributed to the success of selling the PPMs rather than giving them away for free. First is the perceived value to the customer. Second is selling the plans out of his service drive -- more than 50 percent of the PPMs are now sold directly by service advisors. And third is offering an added bonus of a dealership gift card, which is perceived by the customer as an additional discount.
Hinchcliff went on to explain that when he started offering PPMs in his service department he began to see better upsell numbers. “We decided that we had this wonderfully busy and customer rich service department that would benefit from offering customers a good plan to save money, while also giving us the fulfillment of retention. We are not real big on making a large profit per transaction, but see a huge value in the lifetime value of the customer,” said Hinchcliff.
An example of how the process works at the dealership is if the customer is in for an express service of some kind the service advisor will say, “Here is your quote for service, but by the way, we are giving away a $25 gift card with our PPM programs and you have a choice of 3, 7, 9 or 12 oil changes for X amount. Which is already a discount on what you are currently paying. And, you also get the $25 gift card to spend at our store. So in effect, you are winning twice.”
According to Hinchcliff, the key to the whole program is retention, not making money. He does not make a huge profit from selling each package but the value is when the customer keeps coming back. “Our goal is to have the customer for a long time and get repeat and referral business. We feel the number one reason car dealerships are not well thought of, and that customers defect to the independents, is that most consumers think it costs too much money. The traditional car dealer strategy is just not that workable. I did not create this idea of retention. You have to look at the fact that selling cars is not like selling groceries. A vehicle is not something the consumer needs to purchase every week. So our pricing has to be reasonable in service. Successful groceries stores, for example, cannot exist on exorbitant prices as customers simply will not come in,” Hinchcliff stated.
UltraCare is a web-based technology that auto dealerships use to create, manage and market their own PPM plans. These plans can be sold in both the service lane and F&I. There is no third-party administration, no sharing program revenue or forfeiture, and no service claim submission requirement.
Dealers interested in finding out more about UltraCare or any of Performance Loyalty Group's innovative sales, owner retention technologies and sales acquisition products, can visit Booth #3623C at the 2016 NADA Convention and Exposition, March 31-April 3, at the Las Vegas Convention Center, or call: 800-608-2080.
Founded over 85 years ago by Augie Hinchcliff and Joe Haney H&H Chevrolet is part of H&H Automotive Group. Today, the Hinchcliff family continues to conduct business in the same manner in all their Omaha locations. H&H remains focused on customer satisfaction and volume selling.
Established in 2001 and headquartered in San Ramon, California, Performance Loyalty Group (PLG) specializes in customer loyalty and retention programs for the automotive industry. It has designed and implemented custom loyalty (LoyaltyTrac®) and prepaid maintenance programs (UltraCare®) for over 700 individual and OEM automotive clients. PLG is the leading supplier of retention-based solutions dedicated to the automotive industry in North America.
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