How to win the battle on capped-price servicing & extended warranties

How to win the battle on capped-price servicing & extended warranties

As car dealers lock customers in with capped-price servicing and extended warranties, how can independent workshops fight back?

In recent years car dealers have come up with some clever and creative ways to keep customers putting money in their pockets.

Many dealers now give customers a service schedule, complete with the service price, making returning to the dealer for a tune-up an attractive option. According to the Australian Automotive Aftermarket Association, 60%* of cars under four years old have a service agreement. Vehicle warranties have been extended, so the average age of a vehicle covered by warranty has gone from three years to between five and six years. (Kia even has a seven-year warranty now.)

These tactics might be good business for dealers, but the result is a negative impact on independent workshops, as most vehicles are now between five and six years old before they visit an independent workshop. In late 2019, Capricorn’s State of the Nation survey found 32 per cent of Members were worried about these tactics.

We can’t blame the dealers for introducing tactics like capped-price servicing and extended warranties. From their perspective, these practices are simply good business. But that doesn’t mean independent dealers can’t fight back.

How do we do that?

Well, there are several things workshops can do.

Fighting back on extended warranties

Capricorn Chief Executive Officer David Fraser points out there is still plenty of opportunity for Members to carve out a solid position in the market.

“If 25 per cent of all vehicles on the road have a service agreement and 15 per cent are under warranty, that means 60 per cent of the market is winnable to the independent Member workshops,” he said.

“My advice to our Members is to play to your strengths. Your customers like dealing with the person who is working on their car, they like to shop local, they trust you and they are more likely to recommend you to family or friends.”

It’s also worth remembering that independent workshops are allowed to carry out logbook servicing. So, for Capricorn Members, who have access to a FREE global database of 34,000 vehicles and their service schedules through the AutoData-powered Capricorn Service Data, there’s really no reason not to target customers whose vehicles are under warranty.

Here are some tips to help you attract customers away from dealer services and back to your workshop.

Build a good reputation

If customers have heard good things about your workshop, they’ll be more likely to put business your way. Word-of-mouth recommendations from friends or colleagues are invaluable, so ask happy customers to spread the word. Google and Facebook reviews [Link to: /marketing-tips-for-beating-your-competitors/] are also well-read these days, so ask customers if they’d mind leaving a positive review.

Leverage convenience

Getting a vehicle serviced is usually considered an inconvenience. It’s at least a disruption to the customer’s routine and might even mean traipsing across town in rush hour. Consumers are often willing to change their habits if the experience is convenient, so leverage your location to your advantage in your community. Also, convenience isn’t just about location, it can also be about the systems you have in place, like online booking, webchat, local pick-up/drop-off, or replacement vehicles.

Exceptional customer service

It almost goes without saying that delivering a high level of customer service can be a huge competitive advantage. If your team are friendly, knowledgeable, and quick to respond and make the customer feel like you take care of them, customers are more likely to not only choose you but to keep coming back.

Think about ways you can go above and beyond, to impress your customers:

  • Can you detail the car after you’ve serviced it?
  • Use the customer’s name when you’re talking to them
  • Train staff to say hello to customers
  • Walk the customer to their car and run through the work done
  • Provide a clean courtesy car with a few little extras (like a bottle of water, complimentary mints, a notepad and pen, etc.)
  • Send SMS updates when the vehicle is ready.

Build trust

Deliver on your promise. Do what you say you’ll do, do it for the price you say you’ll do it, do it in the time frame you promise, and do it well. Do that every time and you’ll build trust with your customers that will not only make them loyal, but it’ll have them spreading the good word about your workshop, too.

Yes, dealers are doing everything they can to keep customers returning to them for services for as long as possible, but independent workshops aren’t powerless to fight back. More than half the market isn’t tied into dealer servicing; how you carve out some of that business for yourself is up to you!

Dealers aren’t the only direction pressure is coming from for workshops. Find out more here [Link to: /customers-put-pressure-on-profits/] about how customers are putting the squeeze on profits and how to charge customers who supply their own parts.

* TKP Market Research Consultants (2018). Australian Automotive Aftermarket Association – Servicing Insights. The Klein Partnership, St Kilda, Victoria, pp. 20, 47

This article was published 21/10/2020 and the content is current as at the date of publication.