Determining the Best Customer Retention Strategy for Your Dealership

A common question we hear from auto dealers is, “What’s the difference between Manufacturer and Dealer Maintenance?”And if you want to know which strategy is best for your dealership, then this is a great place to start.

To answer the question in laymen’s terms, the difference between Manufacturer Maintenance and Dealer Maintenance comes down to the customer retention strategy and is dependent on who benefits from the program.

There are four contributing factors:

1. Who owns the program?
2. What is the underlying retention strategy of the program?
3. How does the program affect and influence customer’s service habits?
4. Who benefits from the program and how?

When we apply these four questions to each program I think you’ll start to notice the significant differences pretty quickly. Let’s start with Manufacturer Maintenance.

What is Manufacturer Maintenance?

1. Who owns the program?
   1. The manufacturer owns the program and dictates program coverage, schedule terms and reimbursement rates.
2. What is the underlying retention strategy of a Manufacturer Maintenance program?
   1. Manufacturer Maintenance programs allow customers to return to any franchise dealership to claim their maintenance advantages, therefore, their retention strategy is based on promoting vehicle brand loyalty. For example, Toyota (by use of ToyotaCare)is interested in driving their customers back to any Toyota dealership in hopes of building service relationships that encourage customers to repurchase another Toyota brand vehicle. Manufacturers don’t necessarily care which dealership the vehicle is serviced at or purchased from — just as long as it’s within a Toyota-branded facility.
3. How does a Manufacturer Maintenanceprogramaffect and influence customer’s service habits?
   1. Since Manufacturer Maintenance allows customers to return to any franchise dealership for service, there is not a direct link driving customers back to your dealership for maintenance claims (even if they did buy their vehicle from you). This means that customers may or may not return to your dealership for their routine service visits, which could cause problems with retaining customers in the long-run. This is a problem because service provides a direct link that is proven to lead customers back for warranty work, more expensive repairs and eventually for vehicle repurchase and trade-in opportunities.
4. Who benefits from Manufacturer Maintenance programs and how?
   1. There is some benefit to the dealership for promoting Manufacturer Maintenance programs, such as providing a great purchase experience for customers, since they don’t have to pay out-of-pocket for routine maintenance visits in the first 1-2 years of vehicle ownership. And, it’s a convenience to customers that they can return to any franchise dealership for service, perhaps there’s a closer location on their way home from work. However, ultimately, the manufacturer is the one who benefits the most from Manufacturer Maintenance programs, as you might assume. In the long-run, these programs are successful in increasing factory brand loyalty, which is why Manufacturer Maintenance programs were implemented to begin with.

To recap, Manufacturer Maintenance programs are designed to benefit the manufacturer, not the dealership.

Cons of Manufacturer Maintenance:

• Service retention isn’t limited to the selling dealer.
• It doesn’t promote pre-owned inventory.
• Doesn’t include service reminders or retention process.
• Factory dictates coverage and reimbursement.
• The factory receives unused reserve money.

Dealers Can TakeControl

Despite the cons of a manufacturer-owned program, there is a solution. Certified Maintenance® Dealer-Owned Maintenance Programs allow franchised auto dealers to create and own their own program to control customer service visits back to their dealership. These programs are available to both dealers who already have a manufacuter program in place and to dealers who don’t have any form of maintenance program in place.

Dealers WITHManufacturer Maintenance:

Manufacturer Wrap Plans are available to dealerships who already offer Manufacturer Maintenance and are looking for a way to limit service retention to their dealership or dealer group. A wrap plan is a dealer-owned plan added on top of a manufacturer plan that gives the dealership control.

DealersWITHOUT ManufacturerMaintenance:

Dealerships who don’t have a manufacturer maintenance program in place have a competitive advantage over factory maintenance plans. Dealer-Owned Maintenance PlansallowYOU to create your own maintenance program to compete with manufacturer maintenance! And since YOU own the plan, customers can only return to your dealership for service, which creates a true customer retention strategy for your dealership.