Selling extended service contracts can help a dealership bring vehicle buyers back to its service department, building customer loyalty and boosting fixed ops income. Two common features of these contracts — a tieback clause and a disappearing deductible — are especially helpful to achieving these goals, dealers and industry analysts say.
A tieback clause requires a vehicle owner to return for service to the dealership that sold the contract if the car or truck breaks down within a specified distance from the store, usually 40 miles. A disappearing deductible is a threshold out-of-pocket expense that is waived if a customer comes back to the selling dealership for service.