Study shows UltraCare PrePaid Maintenance Plans Boost Service Repair Order Upsell $102 on AverageSan Ramon, CA - March. 4, 2013 - Performance Loyalty Group, a leading automotive loyalty and customer retention program provider, announced today results of a 48-dealership study. This study examined how dealerships market and benefit from the sale of prepaid maintenance plans to their customers. On average, dealers using Performance Loyalty Group’s UltraCare PrePaid Maintenance services receive $102 in additional revenue per repair order. Dealers also enjoy strong plan renewal rates. Many dealers’ results were significantly better than these averages.
“Our retention rate is in the 50% range,” said Jim McAfee, Parts and Service Director for Ancira Winton Chevrolet, San Antonio, TX. “Our average customer up-sell on customers owning our prepaid maintenance plan is about $80 per repair order, which has generated $577,982 in additional parts and labor revenue over three years.”
Prepaid maintenance programs offer customers future oil changes, tire rotations, car washes and other frequently needed services at a discount price. Most dealers sell the plans at their cost. Dealers sell these plans through F&I as well as the service drive.
Sames Ford, Corpus Christi, TX just started selling the UltraCare plan. “Our first month we sold 22 plans through service and F&I sold 22 as well,” noted Yancy Rodriguez, service manager. “These plans keep customers coming back. They increase our opportunity to up-sell additional needed services to them when they do.”
Javier Gomez, Parts and Service Director for Ancira KIA, San Antonio, TX, has been selling these plans at his dealership for three years. “On average, customers who buy this package purchase $104.32 in additional maintenance or repair work per repair order,” Gomez stated.
UltraCare is a web-based technology that auto dealerships use to create, manage and market their own in-house prepaid maintenance plans. Its captive service feature drives customers back to the dealer’s service department for the duration of their plan.
According to dealers in this study, three-year-term programs sell best in F&I. Purchasers buying these plans are less concerned about the plan’s cost, as the price is rolled into their finance or lease term. Those more price-sensitive service customers choose one-year plans.
Average plan retail prices for dealers in the study were:
- One year: $118.01
- Two year: $254.46
- Three year: $368.82
Three-year plans are most popular, at 64% of plans sold by dealers in the study – again, through F&I.
According to McAfee, the way advisors present these plans to service customers is important. “I instruct our advisors to introduce customers to the plan when they come in for an oil change or tire rotation, for instance. They share how the plan works and tell the customer that day’s services can be free if they’ll buy the plan today.”
Ancira KIA’s advisors use a similar strategy, Gomez said. “We give away first-time oil changes when someone buys a car. If they didn’t buy the plan in F&I we present it at the time of their first service and explain the plan covers future service such as LOF, for the life of the plan.”
“We do some traditional service advertising to grow retention, but this UltraCare plan is pretty cool for retention and up-sells,” Gomez noted. He sells plans for both diesel- and gas-powered vehicles.
Some other notable study findings:
- 81.2% of the dealers in the survey sell the plans in service as well as F&I
- 63% of all plans sold are in F&I
- 37% of all plans are sold in the service lane
- Almost 95% of all plan holders purchase additional services beyond those included in the plan
- Plan holders visit their service department three times as much as do customers not owning such a plan
- The average service up-sell to plan holders is $102 per RO.
“We sell these plans at cost because we value them as a retention tool,” McAfee said.
Headquartered in San Ramon, California, Performance Loyalty Group is a leading marketing technology company providing customized loyalty rewards, customer retention, prepaid maintenance and media tracking programs for the automotive industry.
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