Tuesday, August 21, 2007
Selling warranties provides longer term profit
MB&G Insurance, the UK's largest privately owned motor trade warranty specialist has revealed the true cost benefit of a dealer selling a warranty on a used car. The results show that warranties provide a good medium to long term revenue opportunity for dealers by keeping them in regular touch with their customers.
MB&G has estimated that during an average 12-month warranty period based on a one in four claims ratio, a dealer generates around around £235 on each warranty claim and another £140 on a driver getting their car serviced at the dealership. These two transactions generate around £185 in profit for the dealer, but more importantly start an on-going relationship with the customer.
Bearing in mind there are 19 million used cars on the UK roads, customer communication and loyalty must be a dealer's main consideration for long term profitability. "Too many dealers are looking for a quick profit fix and choose to sell items such as paint protection cover to a customer that gives a one-off benefit to their bottom line. They may sell a used car with paint protection without a warranty and risk never seeing the customer again, which is a very short term approach," explained Kevin Pearce, MB&G's new operations director. "Selling a warranty generates revenue and profit, but also gives the dealer regular contact with a driver and an opportunity to develop a long term relationship which will generate more revenue. Why not sell paint protection cover and a warranty and benefit from both opportunities?" he added. Other packages that are worth a dealer selling, according to MB&G, are MOT insurance which covers any work that may be needed in the driver's next MOT, GAP Insurance and Vehicle Replacement Insurance. "Dealers should focus on selling any value added package that encourages regular communication between them and the customer and that gives them a reason to come back time and time again," said Pearce.
DATED: 21.08.07
FEED: AW
MB&G has estimated that during an average 12-month warranty period based on a one in four claims ratio, a dealer generates around around £235 on each warranty claim and another £140 on a driver getting their car serviced at the dealership. These two transactions generate around £185 in profit for the dealer, but more importantly start an on-going relationship with the customer.
Bearing in mind there are 19 million used cars on the UK roads, customer communication and loyalty must be a dealer's main consideration for long term profitability. "Too many dealers are looking for a quick profit fix and choose to sell items such as paint protection cover to a customer that gives a one-off benefit to their bottom line. They may sell a used car with paint protection without a warranty and risk never seeing the customer again, which is a very short term approach," explained Kevin Pearce, MB&G's new operations director. "Selling a warranty generates revenue and profit, but also gives the dealer regular contact with a driver and an opportunity to develop a long term relationship which will generate more revenue. Why not sell paint protection cover and a warranty and benefit from both opportunities?" he added. Other packages that are worth a dealer selling, according to MB&G, are MOT insurance which covers any work that may be needed in the driver's next MOT, GAP Insurance and Vehicle Replacement Insurance. "Dealers should focus on selling any value added package that encourages regular communication between them and the customer and that gives them a reason to come back time and time again," said Pearce.
DATED: 21.08.07
FEED: AW
