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Drive F&I Revenue with Second-Chance Marketing Program

Used Car Dealer Magazine (PDF)

Almost every dealer's F&&I manager does a great job selling the dealer's menu once a customer is sitting in their office. As they discuss finaning options and await loan approval, these customers are a captive audience. A good F&I manager is also a skilled face-to-face salesperson, leveraging the rapport they've built with a customer to introduce products such as vehicle service contracts that will enhance the ownership experience.

But what happens when that customer walks out of the F&&I office and hopefully into their new vehicle? In most cases, that's the last time they'll hear from the F&I manager. But while the customer may have rebuffed the purchase opportunity in the F&I office, they may be more amenable to a second-chance effort. By leveraging customer data and pre-existing relationships, your dealership can "find" additional revenue from your F&I department through a second-chance remaketing effort.

Choose the Right Products

Rather than open up your entire F&&I menu to a remarketing effort, choose one or two products that have broad appeal and make strategic sense for your dealership. In particular, vehicle service contracts(VSCs) are widely accepted and understood products that offer value to customers and dealers.

To customers, a VSC is pre-paid maintenance at a fixed cost. With the level of complexity of today's vehicles, a VSC provides much needed peace-of-mind. Insted of facing an unexpected four-digit repair bill in the event of a breakdown, they simply pay a small deductible(or nothing at all with a zero-deductible policy) and everything is handled by the dealer and warranty company.

Dealers benefit from VSCs in multiple way. First, the contract itself is a high-marging sale that generates nice revenue for your dealership. More impportantly, VSCs drive more business to your service lane, creating an additional and (hopefully) repeating source of revenue. The convenience of a VSC also enhances the ownership experience, which can translate higher customer satisfaction and loyalty in the form of repeat vehicle sales.

Crafing the Second-Chance Offer

The F&&I office can be intimidating for many customers. With all the financing figures flying back and forth and the stres of waiting for a loan approval, customers may not give their full attention to the F&I menu, even if it's properly and throughly presented. But just because a customer couldn't pull the trigger in the F&I office doesn't mean they will never consider those products. A solid second-chance marketing effort can help capture some of those lost opportunities.

One popular first step is to send a follow-up letter by mail at a time when the customer is going to be most receptive to a second-chance offer. Customers who purchased a car with some factory warranty remainig should be contacted just befor that coverage expires typically when the vehicle reaches 33,000 to 44,000 miles. For customers with vehicles outside of factory coverage, be sure to reach them once they've had a chance to evaluate their long-term commitment to that vehicle. Ninety days after purchase is a good benchmark for these customers.

Creating these customer "buckets" will require religious use of your DMS to track vehicle purchse dates, factory warranty coverage and anticipated current mileage. Your dealership should also track service-lane visitors without an existing VSC, regardless of when they purchased their vehicle. This is another target population you may wish to include in your second-chance campaign.

As with a face-toface sale, the key to successful second-chance selling is timing. About a week after the expected delivery date of your letters, conduct a round of follow-up calls to customers when you expect them to be home. This solid one-two punch of a targeted letter followed up quickly with a phone call can greatly improve the rate of response of your follow-up campaign.

Technology to the Rescue

If you're wondering how you're going to do all of this, you're not alone. Most dealerships don't have the resources or infrastructure to create an effective, consistent second-chance marketing program like the one described above. There's also the matter of incentive; your sales force makes money by working with customers on the floor, not by pulling data, writing letters and making phone calls to customers who haven't been there for months.

Thanks to technology, second-chance opportunities don't have to slip through the cracks. Used car dealers with even a basic DMS application often have sufficient data to identify customers who are the lowest hanging fruit for a VSC marketing campaign. A third-party partner who can use that data to creat marketing pieces and conduct professional, timely follow-up, in a transparent manner by acting as dealer representatives, can help generate revenue wihtout requiring the F&I manager to lift a finger.

Today's F&&I manager is as responsible for generating revenue for the dealer as the salespeople on the floor. By leveraging data and reputable products to creat a solid follow-up marketing program, savvy F&I managers can turn lost opportunities into new revenue and creat happier, more loyal customers in the process.

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