Mining a dealership's base of service customers for new-vehicle sales makes sense financially, says Nicole Tournaud, business development director of the LaFontaine Automotive Group in Highland, Mich.
"It is completely more economical," Tournaud told Fixed Ops Journal.
The LaFontaine group operates 17 new-vehicle dealerships, five body shops and two used-car stores. Selling out of the service lane is one way the group pursues its mission to "build lifelong relationships," Tournaud says.
Her group uses ELEAD1ONE's Xchange Trade Up Program software to promote vehicle sales to service customers. Although she declined to say what the company pays for the product, she says its cost "is not even comparable to what you would pay to acquire a new customer."
The typical dealership spent $629 on advertising last year for every new vehicle it sold, according to the National Automobile Dealers Association.
Equity mining in the service lane "has a manifold positive impact on the dealership," says Sandy Cerami, managing member of Applied Selling Dynamics LLC, a dealership consultancy in Wyckoff, N.J. "On a cost efficiency basis, you are reaching into your own database of customers to generate repeat business," he says.
Encouraging customers to trade in vehicles a dealership has been servicing regularly saves the used-car manager time, Cerami says. The service department gains business from reconditioning these cars and trucks, he adds.
And, "there is an enormous wow factor when a customer comes in expecting to spend money in the service lane, and they can take that money and put it towards a new vehicle that is going to be covered under the manufacturer's warranty," Cerami says.
Selling out of the service lane begins when a dealership's salespeople introduce new-vehicle buyers to the service department at the point of sale, says Todd Farrell, president of Benchmark X Inc., a sales consultancy in Sioux Falls, S.D.
That handoff lets buyers know that the dealership's service department can take care of them, and also repair vehicles that weren't purchased there, he says. It is a "100 percent profitable situation," Farrell says. "Sales sells the first car, service sells all the rest."
Helping service customers use the equity in their used vehicles to buy new ones builds loyalty to the dealership, Tournaud adds: "The whole goal is to keep them with the LaFontaine family."