Texas retailer Ancira Group is using UltraCare to sell private-label prepaid maintenance plans (PPM) to help lure customers back to the shop after the sale. The company introduced the Ancira Advantage plan at all eight of its stores, most in San Antonio, 13 months ago. In September 2010, Ancira Winton Chevrolet also started selling the contracts in the service lanes. The company eventually plans to sell the program out of the shops at its other stores. In addition to the Chevrolet store, Ancira has two Ford stores and Nissan, Volkswagen, Kia, Chrysler Dodge Jeep and Buick GMC dealerships.
The company’s best-selling PPM contract is a 12-month/12,000-mile package that includes three oil changes, two tire rotations and balances and three 27-point inspections, plus a 10 percent discount on any other service, accessory or part. The contract retails for $139.95.
During a recent interview with Automotive News, Joey Blackmon, Ancira’s Vice President of Operations, provided the following feedback on Ancira Group’s new PPM program:
Why did you introduce the program?
We just felt like with the cars being made better and the volume of car sales dropping over the last two years, we wanted to do something to tie our customers into the dealership.
What kind of results have you seen?
Ancira Winton Chevrolet sold 195 policies in September, 105 in the shop and 90 in the finance and insurance office. Ancira Chevrolet sold 242 new and used vehicles in the same month and wrote about 2,500 repair orders in the shop — giving it a 37 percent sales penetration in the F&I office and a 4 percent sales penetration in the service bays.
Sales were lower in October. In the F&I office, we sold 54 contracts out of 199 new and used-vehicle sales. In service, we sold 75 of the contracts. So service is still outselling F&I.
On average, the customers who purchased the plan and come in for one of the services it covers also buy $85 in additional service work.
Do you sell other maintenance contracts?
We sell the manufacturers’ contracts. On Credit life and disability and GAP, we partner with Service Life and Casualty out of Austin (Texas). We also do an in-house extended service contract where we are self-insured.
What results have you had with other PPM programs?
We sold a few of the factory programs, but never did a good job at it.
What did you expect when you sold the Ancira Advantage plan?
In its first month, the service department outsold the finance department — we didn’t expect that to happen. We’ve sold extended service plans out of the service lanes for years and years. If a store did four or five sales a month in service, it was doing a lot. This was a shock.
We also were shooting for a 30 percent sales penetration in F&I; we got a 37 percent penetration in September. We had a 29 percent penetration in October, but that’s still about on target.
Why do you think you sold more maintenance plans in the shop than you did the F&I office?
The service advisors were cautious. They needed to believe they weren’t taking advantage of the customer. They didn’t want customers to challenge their credibility. If we tried to make a big profit out of the deal, the customer would ask: Why would you charge me more than I could buy the individual item for? Customers are conscious about that, so we lowered the price.
When you cut your price, were you able to make a profit?
We weren’t trying to sell it to make a profit up front but to tie our customer to the dealership. We can break even on the contract and get repeat customer upsells from that. We might get away from service advertising if we have a continuous stream of repeat customers.
We also are banking on customers not using all of it. That helps offset our cost. We sell it for a little less than the street value would be.
What kind of incentives did you pay the service employees to sell the plans?
I can’t say what the spiff is. But we spiff the service manager and the service adviser.
Do you need to spiff both?
I think we do have to spiff both. People are driven by the profit opportunity. Most pay plans are commission-based. People do a better job when they have got skin in the game.
The service manager gets a smaller spiff. It’s based more on volume. He gets the spiff on every one the service advisors sell. The advisors get a larger spiff on each one they sold individually.
Did you spiff service employees when you tried to sell other plans from the service lanes?
We spiffed the other products we offered in the service bays, and it didn’t work. The service advisors weren’t comfortable selling them.
What’s the advantage selling maintenance plans in the service lanes?
If you sell one in the finance department, the customer drives the car several thousand miles before getting an oil change or tire rotation. It takes time to build business. But if you sell it in the service drive, they might already have 20,000 miles on the car. They need it immediately, and you can upsell something more than you can off a new car.
What kind of terms do you sell?
We have one-, two- and three-year plans. We’re mostly selling the one-year plans right now. I am happy as long as we’re bringing customers back that might buy from us again.
So what’s the key to your high sales penetration?
The key to selling it is having it priced right and having the person selling it think it’s a value to the customer. That’s especially true of service advisors. Service people are a different breed than F&I people. A lot of the service advisors were technicians before. They have got to be confident that what they are offering the customer is a good product for the price.
What results have you seen through your PPM program?
How do those results compare with this dealership’s?
What do you think determines the success of PPMs?