Amegod provided insight on selling service contracts during a Webinar last month hosted by the National Automobile Dealers Association and in follow-up interviews with Automotive News Special Correspondent Jim Henry.
Here are four of Amegod's tips.
1. Get started. "Dealers are leaving large sums of money on the table."
"When a client phones asking about an extended warranty, most frequently they are directed to a voicemail," Amegod says. "I've researched this. Half of them leave a message with their contact information and the fact that they're interested in an extended warranty. Eighty to 85 percent of the time they do not receive a return call.
"When a customer does reach somebody live and asks about buying a service contract, nobody takes their contact information. F&I managers are too busy, and the clients end up buying coverage elsewhere."
2. Get serious. Have a trained, dedicated, full-time person sell extended service contracts either in the service department or in a dedicated warranty department.
"It has to be someone who's good at building relationships and good at sales techniques," Amegod says. "Customers are conditioned to say no to everything in the F&I office. But in the service drive, they're not going into somebody's office; they're not shutting the door. ... I like an accessories and warranty department. Most dealerships aren't doing warranty [service contracts] after the sale. And they're not really promoting accessories."
3. Get up to speed in your market. Shop the competition so you know what your customers hear from other dealerships.
"Make it hypothetical," Amegod says. "'I'm thinking of buying my neighbor's car. What kind of coverage could I buy?' I've been told, when I was in finance myself, the first thing I needed to do was bring it in for an inspection. 'It's a two-hour procedure; it'll cost you $350.' That's on my nickel!
"Then I'm quoted a price that was two to three times what we were offering for the exact same coverage. That's where it pays to have a trained person who is 100 percent knowledgeable on the different coverage."
4. Get creative. Offer a wide variety of extended-service contracts.
"For example," Amegod says, "there could be a 'warranty remaining' option for used cars with remaining months or miles on the new-car warranty. The new one doesn't take effect until the new-car warranty runs out. If you tell someone they have a year left, the customer will always say they have a year to decide. You may never see that customer again. Anything can happen.
"You can also offer zero-percent financing on a service contract. A lot of dealers don't seem to know that's available. It's paramount to use some marketing techniques."