There has been a noticeable push to sell service contracts from the service department in the last 12 months, but for this effort to work, it is important to remember that service drive success is not about the products you sell, but rather the process you put in place.

J.D. Power and Associates says service drive revenue will decrease 25 percent over the next five years, so customer retention is more crucial than ever before.

Because financing can be difficult to get, customers are keeping their vehicles longer, and as a result, they are purchasing service contracts.

The bad news for the dealership is that customers are purchasing these contracts from the Internet, direct mail and phone solicitations. These companies are selling over 20,000 service contracts a month.

Fortunately, the dealer now has options that allow him to sell these service contracts from the service lane along with other products that will drive profit to the back end and build customer retention.

The latest development has been the service drive menu, which is very similar to the F&I department menu. This menu allows the service department to put in customer information along with the odometer and VIN number. The menu will then reach out to the service contract provider and pull back any coverage that applies to the VIN number. At this point, the menu is ready to be built.

The menu creates an opportunity to present products in a non-threatening manner to the dealership’s customers. The idea is to raise awareness about the products available for purchase at the dealership and to help customers understand the value of the service contract.

Menu presentations are typically done in one of three ways:

1. Presented by the service advisor - this is often the least effective person because he has too many things on his plate already.

2. Presented by the F&I professional - this does work but there are some challenges:

   1. Timing – while the F&I professional is delivering a car, he may miss a lot of potential service drive prospects.

   2. Technique – an aggressive F&I professional could be bad for the service department’s customer.

3. Presented by the Business Development Center – often most effective because this department has more flexibility, which translates into availability when the service customer is available.

The dealership’s profit ranges from $400 to $600 per contract, all of which is kept by the service department. In addition, dealers get 5 percent to 10 percent penetration from the service drive.

This program can produce immediate and long-term benefits. For example, customers who come back to purchase another vehicle are more likely to buy another service contract from the F&I department.

The following is an example of an effective presentation to close a sale with a customer:

“Mr. Smith, thank you for bringing your car into ABC Automotive today for your service work. I am ______ and I will be your cashier today. Before I receipt your payment, I just wanted to take a minute to thank you for choosing our service department. Manufacturer's CSI Questions: Did we repair the issue you brought your vehicle in for? Did we complete the work in a timely manner?”

“If there was a way we could go back ____ years ago when you purchased your car, had you taken advantage of a service contract then, today you would pay nothing for your repair. Unfortunately, we cannot turn back the hands of time, but what we can do is make sure you do not incur these types of expenses again.” Show Menu

“We basically have two options. Mileage Plus plan coverage is more of a catastrophic plan that covers most of your larger expense components. The Mileage Plus coverage is for ____ months and _____ thousand miles and your valued price for this coverage would be $__________ or with $ _________ down $__________ per month at zero percent financing. The second option would be our Select program, which is more robust and similar to the factory plan which is an exclusionary coverage. The Select coverage is for _____ months and _____ thousand miles and the value price for this plan would be $__________ or $__________ down and $_________ per month at zero percent financing. Which program do you think would work best for you?"