The business office is a crucial profit centre for your dealership, so choosing the best supplier for your warranty products is imperative. The warranty world can be a tricky business and selecting the right products that will boost your bottom line while keeping customers happy is no easy task. The following guide will let you know what to look for when evaluating warranty products.
The first rule is to not be fooled by warranties that have an incredibly low dealer cost - if it seems too good to be true, it probably is. Warranty companies use their reserves to pay for your customer’s claims, so if their prices are too low, there may be issues honouring claims in the future. Look for competitive but appropriate pricing as protecting your dealership and customer should always take priority.
When it comes to claim payouts, you should always seek dealer referrals to ensure the chosen warranty provider has historically been easy to deal with, fair and ethical. If there is any evidence that the company uses contractual loop holes to get out of claims, walk away.
A large part of the revenue your dealership can create from warranties is the business generated in the parts and service department. Make sure claim repairs will be lucrative for your dealership.
Consider whether the warranty provider will pay at retail, cover genuine parts, and adhere to industry accepted labour time guidelines. Another important research point is to ensure you have control of your customer if you decide to end the partnership with your warranty provider. If the warranty provider can contractually steer your customers away, that is not a good thing for your dealership.
Seasoned business managers know to recommend the top-tier coverage, because they don’t want unhappy customers.
The best types of mechanical warranties are those that cover everything except a list of exclusions. It also helps to have a few lighter options for customers who insist on basic coverage or perhaps have an affordability limitation.
For wear and tear products, look for products that provide complete protection by covering many common mishaps. Be wary of coverage provided with protection products such as coating sprays as these products may offer little protection and be simply used as a way to comply with regulations.
A good mechanical warranty is always going to give your customer protection for many scenarios related to a breakdown.
Ensure that your warranties come equipped with roadside assistance, trip interruption and rental benefits. Another great customer incentive is rebate programs, where customers get credit, or cash-back, if they do not make any claims. The ability to offer your customers the opportunity to get a partial refund will really boost sales. Be cautious of third parties that insure warranty refund products as in most provinces these products may not comply with the regulations.
In most provinces there are rules and regulations developed by government agencies to protect consumers and dealers related to ancillary products sold in dealerships. Be sure that you understand those regulations in your market and then don’t be afraid to ask your warranty provider to supply evidence that they comply with those regulations.
Customer Service and Training
A good warranty provider is going to make it easy for you to sell their product. Once again, talk to existing customers and determine how happy they are with service. Good warranty providers should have very short phone queues, a dedicated dealer support representative and training available for staff.
Next time you evaluate which warranty provider to use, consider all of the factors that will impact your dealership such as profitability in the business office and service department. Also be sure to review the availability of ongoing training and support, and most importantly, exceptional coverage for your customer.
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