Do's and don'ts for selling service contracts in the service drive

With top management's support, proper training and a maximum of two levels of coverage to sell, service writers can significantly boost their dealerships' sales of service contracts, F&I trainer Rick McCormick says.

McCormick, national account development manager for Reahard & Associates Inc. of Soddy-Daisy, Tenn., last week conducted "The Secret to Selling Service Contracts in the Service Drive," an Automotive News PowerTRAINING Webinar.

Replays of the $99 Webinar are available at autonews.com on the Webinars tab. Here are five do's and five don'ts from McCormick during the Webinar.

Do's

1. Get management buy-in. "We've got to get the buy-in from the top because without that, the service drive sales are going to be considered as less important than the other things that they [service writers] have to do," McCormick said.

2. Keep the deal in the service department. "We need to keep the customer, the transaction and the compensation in the service department," he said. Splitting transactions between the service and F&I departments doesn't work, McCormick said.

3. Use F&I managers as trainers. F&I managers should teach service writers how to overcome common customer objections, McCormick said. In return, the F&I managers should receive a payment -- say, $25 or more -- for every extended-service contract sold in the service drive.

F&I managers "feel threatened but they love being made to feel like an expert -- and they are experts at selling service contracts," he said.

4. Say "why" before "what." McCormick said service writers should tell customers the benefits of an extended-service contract -- the "why" -- before pitching the product -- the "what."

"We have to talk about the 'why' first. 'We want to make sure you have a great customer experience. ... You'll have limited or maybe even no money out of your pocket. ... We do that by a service contract,'" he said.

5. Start small. "Have every service writer sell one service contract per week," McCormick said. "That's usually how [successful dealerships] start off the program."

Don'ts

1. Send customers to the F&I department. "We need to think like a customer," McCormick said. "They don't like being moved around."

2. Rely too much on technology. "Every time we try to do something new in the automotive business in the local dealership, it seems like we have this standard procedure that we do," he said. "The first thing we do is ... we load our people up with the technology. We give them word tracks and tell exactly what they're supposed to say, and we tell them, 'Go get 'em. Now let's make this happen.'"

McCormick said technology should be used to make it easier and faster for busy service writers to process paperwork. But technology is no substitute for management commitment and service-writer training, he said.

3. Overcomplicate. "Present a maximum of two plans," McCormick said. That is, don't give service writers and customers too many options for extended-service contract coverage.

4. Wait to bring it up. "The customer should never hear about the service contract when they are ready to leave," he said.

5. Take "no'' for an answer. That is, internally. Said McCormick: "Four words: 'It -- will -- never -- work.' I'm sure you've heard that at your dealerships a lot of times."