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Four Common Mistakes When Selling Vehicle Service Agreements

Posted by Vanguard Dealer Services on Feb 17, 2016 11:30:00 AM


In order to maximize your sales and revenue, vehicle service agreements need to be a part of your strategy. Yet it can be tough to convince a skeptical customer that they need an extended service contract. Many dealers make the same mistakes when trying to position service agreements to sell. But if you know what these mistakes are, and how to avoid them, you'll see increased revenue and you'll keep your customers coming back.

Mistake 1: Getting Defensive with Customers

One of the most common mistakes dealerships make is trying to defend a service agreement against customer criticism. Many customers think a manufacturer warranty is sufficient and see extended warranties as a scam to make more money. Fighting these claims can make you seem defensive or argumentative - never a good position.

Instead of defending your service agreements, make their benefits clear. Explain the added coverage and time they offer beyond the manufacturer warranty. Show them the cost savings they would earn throughout their car's lifespan. In short, simply position your service agreement as a benefit rather than a cost.

Mistake 2: Selling The Agreement Separately

Many dealers make the mistake of waiting until a customer has agreed to buy a vehicle to discuss the service agreement. This can lead to lower adoption rates - most customers won't consider what they think are "tacked-on" costs.

Instead, start discussing the service agreement as a part of the sale from the beginning. This has several advantages over waiting until the sale is final:

  • You can gauge the customer's feelings about the agreement and determine whether to push or back off.
  • You can avoid "sticker shock" with the agreement price.
  • You have more time to sell a skeptical customer on the benefits of the agreement.

Mistake 3: Talking Too Much

One of the best ways to sell a vehicle service agreement is to show how they can benefit the customer. But at the same time, you can easily "show" the customer too much. Sometimes it's better to allow them to explore the benefits themselves.

For instance, many salespeople will simply tell customers when the manufacturer warranty will run out. Yet it can be more impactful to walk through the math with customers, or even to let them do it themselves. The same goes for costs - instead of just explaining how much they can save, allow them to calculate their savings. It can leave a big impression that will hopefully lead to a sale.

Mistake 4: Pushing Too Hard

Despite your efforts, sometimes a customer will walk away without buying an agreement. It's definitely a mistake to push a resistant customer too hard - you can look greedy and leave a poor overall impression, even on a good sale. 

It's better to push every customer a bit on a service agreement but to know when to move away from someone pushing back. Focus your energy on customers you can convert, and don't scare potential repeat customers away with an approach that's too forceful.

Of course, it also helps to have vehicle service agreements customers want to buy. Contact us for more information about our service agreement products and how to get them in your dealership or check out our FREE E-BOOK BELOW!


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