The training team at GWC Warranty acknowledged even the best F&I presentations are oftentimes countered with an objection over the added monthly cost of a vehicle service contract. The company also understands how dealers emphasize that overcoming this common customer concern can make or break the store’s entire F&I operation.
In an effort to clear these challenges, GWC Warranty explained some helpful strategies using basic math formulas that might not even necessitate the calculator app on your smartphone to process.
“In most cases, it’s simply a matter of breaking down the costs into simpler terms,” GWC Warranty explained in a recent blog post. “By speaking about the month-to-month investment and the potential cost of repairs in a relatable way, you stand the best chance at convincing a customer that a vehicle service contract is worth the price.”
GWC Warranty suggested that F&I office staff can describe costs time specific timeframes. The company first began with a day-by-day explanation.
“When you break down a monthly payment — even without a service contract — it can help make things easier for the customer to digest,” the company said, while computing that a $300 monthly payment can be viewed as costing the customer $10 per day to have the vehicle.
If a vehicle service contract lifts that monthly payment to $350, GWC Warranty recommended showing the customer that means the daily cost would only go up by a little more than $1 a day.
“Doing the math this way makes it easier for a customer to understand that just $1 a day could be worth the peace of mind to know that unexpected repairs won’t cripple their budget,” GWC Warranty said.
Next, the company showed how F&I managers could show the value of a VSC via a week-by-week scenario.
“Most of your customers fight back on added costs because of the value they place on every hour they put in during a 40-hour work week,” GWC Warranty said. “You can use this priority on weekly work to discuss what it would cost to overcome a major repair.
“Using your customer’s credit application, you can work backwards to estimate an hourly wage,” the company continued. “If a $2,000 repair occurs, use the hourly wage to determine how many hours of work would be needed out of that 40-hour week to cover the repair.
“Compare this to the number of hours of work it would take to cover the cost of a service contract each month,” GWC Warranty went on to say. “Your customers will begin to see how much easier it is to regularly absorb the service contract cost as opposed to that of a major repair.”
Finally, GWC Warranty close by touching on the month-by-month setup by reviewing the customer’s monthly budget. The company recommended that F&I representatives work the customer to compile six months’ worth of payment with and without a service contract.
Then, inject that a major repair happens on the fourth month and review the two plans.
“On the list with a service contract included, add a $100 deductible to the payment. On the month with a major repair, add $2,000,” GWC Warranty said. “Now, ask your customer which is easier for them to overcome during a regular month.”
This blog post and other instructional material can be found on GWC Warranty’s website.