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Why VSCs and PPM Work for the Modern Car Buyer

Why VSCs and PPM Work for the Modern Car Buyer

Prior to the Digital Age, dealers shouldered the weight of the customer journey from start to finish, and for better or worse, you were tasked with educating the customer throughout the sales process.

That script has now been completely flipped.

Consumers are now empowered with a wealth of information. In fact, research shows that up to 90% of vehicle shoppers begin with online research and know what they want and how much it will cost before they walk into your dealership. So what does this mean for you, and how can you adjust to this new dynamic?

First and foremost, you need to continue to gain a better understanding of your customers. To that end, my company undertook a recent survey of 1,411 U.S. vehicle owners. We identified the following five customer mindsets and attitudes that are front and center when it comes to the car-buying process:

1. Earn My Trust.

Despite being empowered by online research, many consumers are unsure of what sources they can trust. Consequently, dealers are facing a trust gap with potential customers even before they visit the showroom.

To address this, you should concentrate on becoming a trusted advisor to your customers. This can include offering the right balance of information through your own digital channels as well as validating the customer’s online research.

2. My Time is Valuable.

Just about half of the respondents in the survey who bought or leased vehicles from dealerships indicated they did so based on a positive customer experience.

So what exactly does this customer experience look like, and how can it be improved?

Start by looking at store-level data to understand where the experience may be breaking down for customers. In all likelihood, what you’ll learn is that spending too much time and effort visiting and negotiating at the dealership is a major pain point for the customer.

To resolve this issue, consider streamlining the process by taking advantage of mobile technologies and video that educate customers before they reach the showroom.

3. What’s the Total Cost?

Research shows that anywhere from a third to half of customers report dissatisfaction with post-purchase expenses, including insurance and maintenance.

Consequently, you must respond by highlighting the role of a vehicle service contract in saving buyers money. Key to this includes providing information on total costs in the online shopping experience to better set expectations at the dealership.

4. Earn My Maintenance Business.

This is particularly important. The great majority (85%) of respondents believe they’ll spend less on vehicle repairs and maintenance than the national average. Consequently, dealerships need to provide transparency around the “real price” of automotive ownership, which will build trust and help earn customer’s maintenance business.

The research also showed that many customers don’t use dealerships for service and repairs because they believe they’ll be overcharged. However, those who felt their dealerships were trustworthy said they would gladly take their cars back for servicing.

5. Tell Me About Your Service Contracts.

Unfortunately, when customers research VSCs online, they find a series “buyer beware” messages. Despite this, they are still often open to buying a VSC. Of those respondents who were offered a VSC, 40% purchased one.

The key is to make sure you are offering the VSC. Nearly half of the respondents said they weren’t presented an opportunity at the time of purchase. This also illustrates the importance of a having a well-trained F&I team equipped with the right educational resources instore and online.

While the digital age has upended how dealerships have traditionally done business, it has also created significant opportunities. By embracing new customer research preferences, harnessing online platforms and continuing to build relationships with customers post-sale, you can provide a new level of transparency and build better customer experiences that will enable them to grow their businesses.

-Previously printed in F&I and Magazine by Dave Worrall on March 28th, 2019. Dave Worrall is senior director of global training and development at Assurant Global Automotive.