The Preferred Customer Program (PCP) is a prepaid maintenance agreement that will be sold primarily through the F & I office. The Preferred Customer Program agreement is usually offered on a menu along with the other products such as Vehicle Service Contracts (VSC). The Preferred Customer Program offers many variations with its terms in an effort to satisfy the customers needs for time and mileage intervals.
The PreferredCustomer Program is not just another cookie cutter, one size fits all mentality. The Program is fully customizable to accommodate your service facilities needs. The Preferred Customer will receive a V I P Voucher Booklet that will be used at the time of service to debit the customers account at the cashier window. This is a cancelable product by way of pro rata just as a VSC. The Preferred Customer Program agreement will be disclosed on line five of the contract.
The graph below represents potential Dealership income by using the following assumptions:
- The Dealership sells 200 vehicles per month.
- The finance office maintains a Preferred Customer Program sales penetration level of 35% which calculates to 70 Preferred Customer Program maintenance agreements per month. This time line represents the same level of sales penetration numbers for 36 months.
The
Preferred Customer Program maintenance agreement will be the easiest up sell for the F & I manager for the following reasons
- The average cost is $300.00 which changes the payment approximately 4 to 6 dollars a month.
- The perceived value is over $1000.00 and can be justified with promotional material
provided by Dealers Choice Inc.
- Unlike Gap Insurance, Credit Life Insurance, Etch and other F & I products the customer actually NEEDS to perform and will be REQUIRED by the manufacturer to perform the basic maintenance to maintain the vehicle as well as the factory warranty.
- The F & I manager will maintain a high level of interest and excitement because they will be compensated on a per contract basis which ranges from $25.00 to $50.00 per sale (subject to dealer's discretion).
The graph below demonstrates PCP's ability to generate additional income via UPSELL opportunity in the service department.
The criteria for the calculations are the same as the graph above with one additional factor.
- The Dealership sells 200 vehicles per month.
- The finance office maintains a Preferred Customer Program sales penetration level of 35 percent, which calculates to 70 Preferred Customer Program maintenance agreements per month.
- The figure of $35.00 in upsell revenue per repair order(R O) is used with an average of 12 visits to the service department per PCP contract.
- This time line represents production for 36 months.
The Preferred Customer Program will increase service department income by creating additional opportunities for the advisor to present and recommend services.
Since there are no fees billed to the service department, Preferred Customer Program is the perfect tool to increase traffic in the service lane.
- The service advisor will maintain a high level of excitement and interest because of the increased number of qualified customers who will need the services they offer.
While there are many ways to increase profits in service there are very few that offer all the following:
- Three years of contract sales by the F&I offices that result in six years of service drive traffic and profits.
- A customized maintenance agreement that gives the customer peace of mind while paying the service department retail rates and provides a commitment to do so for an average of three years.
- A cost-free web-based application ensures that the customer is contacted and reminded of the recommended services, in accordance with their individual driving habits.
The figures within the chart below represent the total income generated by adding F&I contract sales and service department upsell revenue.
There is no other product available that offers such a positive impact for the dealership personnel and their customers.
- The dealership maintains the revenue from the sale and fully controls the extra income stream.
- The dealer retains all proceeds from unused vouchers as income.
- The increased service drive traffic generated creates opportunities for advisors to receive a performance bonus raise without costing the dealer any profit.
The customer establishes a relationship with the dealership and is rewarded with a host of benefits not otherwise available.
