Itcaptainslow
Obsessed member
- Sep 4, 2023
- 379
- 425
3, 5 or 10 year service plans make me uneasy. I get the economics - inflation proofing and all that - and it’s tempting.
However, with many years in sales, these ‘deals’ smack of “great for the salesperson but cr%$ [poor] for the customer”.
Once the service plan commission has been paid what margin is left for the dealer who actually services the vehicle?
Do service plans make us low-priority customers or high-priority customers? There’s no obvious value-ad or benefit other than inflation proofing. Or am I wrong?
I suspect they make you a low-priority customer; a recipient of hygiene levels of performance and execution at best. There’s no incentive to go the extra mile or secure future loyalty.
Correct me if I’m mistaken but the plan is not only transferable but portable? So any dealer has to honour a service plan [which they may not have earned a commission on] and then claim back their costs and margin through Toyota Head office?
So my problem is there’s no incentive to surprise, delight or retain the customer through price, execution or delivery.
If this sounds cynical let me share the thoughts of a relative who operates a car dealership up t‘North:
- “customer screws me into the ground on purchase price and discount - why would I bother to help them out two or three years down the line?
- Customer who doesn’t screw me into the ground, returns for MOT, service, parts and accessories - needs help on Christmas Eve two years later…. I go out of my way to help them. Hell, I get in my car, meet them at the roadside and drive them to the party.”
Anecdotal and non-scientific but we all got to earn a living and the dealers make their margin from finance, GAP-Insurance, paint protection and alloy wheel Insurance.
May explain why dealer customer service is underwhelming and why they aren’t thrilled by a centralised direct/on-line sales process.
I’ll be working on building a relationship with my local dealer and following the pay-as-you-use route .
I used to be a service manager at a main dealership. Service plans were massively pushed (overly so, in my opinion) by head office to retain customers - it’s a guaranteed workshop visit, with the potential upsell opportunity from additional work the car may need, especially as it ages. Their standard was every customer had to receive a service plan quote on every visit unless they had one, which I found cringeworthy and overbearing.
There were two different types - those administered by the manufacturer, sold with a brand new car, and those administered by EMAC, which could be sold with a new car, but were mostly sold as a standalone plan or with a used car. They paid similar labour rates (around 2/3rds of standard retail) and usually demanded a discount off parts.
We treated all customers equally, whether they had a plan or not, fleet, Motability or retail. My ethos was to deliver an open, honest and decent customer experience, and keep people wanting to return, rather than lock them in with service plans.
It worked, as out of 250 odd dealerships in the UK, we were at one point in the top ten for customer satisfaction, and consistently in the top quartile.
