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Financing trends are squeezing once-reliable revenue streams. What is the best way forward for dealerships?
As we did back in 2010 and 2011, we are seeing top lenders quietly pulling back on what they will finance, and it is having a big impact on dealership revenue. Where do custom-fit finance, insurance, and maintenance products fit into the mix with dealers facing this trend in the market?
Yes, lenders are redoing their programming and rates are going up. They are pulling out of sub-prime and prime and pulling out of certain parts of the market.
What dealerships can do to respond comes down to custom programming and products. Custom insurance is great as it gives revenue back to the dealership through financing and adds real value for the customer.
Even better, are our custom-built maintenance and appearance programs. These allow dealers to focus on building relationships that last with their customers, keeping them coming back year after year.
We often share with our clients what we have observed – if you can get a customer to come to the maintenance department three times, they will be a lifetime customer.
Everyone is financing their vehicles now that banks are combing the market and raising rates. Dealerships need to differentiate ourselves on how we treat customers.
One great example of this is a client of ours that developed a custom-built maintenance program that they put on every car for free. Programs like this keep the customer coming back to the dealership, so when the time comes to sell another car to the customer, you already have that relationship.
Another important component of these programs is the added value they provide. Of course, a car has an intrinsic value, but how does your dealership differentiate your Ford Explorers from 100 other identical vehicles in the market?
Custom maintenance, insurance, and finance programs add significant value for customers, help you build lasting relationships with your customers, and mean that customers will nine times out of 10 pay more for the vehicle when they know they are getting added benefits.
In the end, when you find the best ways to add value for your customers and maintain not only the vehicle but the relationship – it is always a win, win.
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