Prepaid and Complimentary Maintenance Plans Equal Loyalty From Next Gen Customers

While most dealerships offer some degree of prepaid maintenance (PPM) or complimentary dealer and OEM maintenance plans, many questions how effective these plans really are and if they do in fact provide the intended retention and ROI. Good news—research shows that they do and additionally they provide the unique opportunity to tap into the highly desirable younger market segment.

DMEautomotive’s recent national consumer survey provides fresh insight into the state of prepaid and complimentary maintenance plans, along with evidence of their powerful ability to provide consistent dealer retention. Research shows that strong programs can keep customers coming back for repairs long after the expiration of their respective maintenance package—shifting business that typically bleeds into the aftermarket, into firm dealership territory. Below are some of the key findings of DMEautomotive’s recent survey:

• Roughly one in four U.S. vehicle owners have a dealer or OEM prepaid or free service plan.
• Free or prepaid, 35 percent of customers are not using plan for all maintenance. While 65 percent use plans for all scheduled maintenance, a surprising 25 percent only use it for “some” and nine percent have not used it at all.
• Plan usage and satisfaction levels align: those using their plans for all scheduled service at the dealership report the highest satisfaction and 75 percent are either “extremely satisfied” or “satisfied.”
• Next-generation servicers (under 35) are more likely to have a plan (31 percent) than those over 35 (18 percent) making these plans a powerful tool for young, dealer-disloyal servicers.
• Plans drive long-term retention as 56 percent of consumers with a prepaid or “complementary” service plan report they are likely to continue servicing their vehicle at their dealership after the plan expiration.
• Loyalty during plans impacts future loyalty—almost twice as many consumers who use their plan for all maintenance (versus those who only use it for some) report they’re “very likely” to continue servicing their vehicle with that dealer at plan-end (30 percent versus 17 percent).

One of the most valuable pieces of information gathered from the survey is that there is a new way to reach our younger customers. Results show that younger consumers are significantly more likely to use their plans for all maintenance than older consumer segments. Notably, 84 percent of those aged 25-34 (who used the plan for all maintenance) reported high plan satisfaction, in addition to 62 percent stating they are likely to service at the dealership post-plan. Given that the 25-34-year-old age range is typically the largest group of dealer-disloyalists, it’s clear that maintenance plans can be yielded as a uniquely powerful tool.

While maintenance plans provide a powerful opportunity, they do take effort. We have learned that customers covered by maintenance plans often stray from the dealership for repairs. While this may initially be seen as a profit gain, research shows that customers who stray are more likely to take servicing needs elsewhere upon expiration—demonstrating the importance of consistently engaging with customers post-sale; something to keep in mind as you manage your ongoing customer relationships.

Mary Sheridan is a CRM insights analyst for DMEautomotive’s strategy and analytics team, which is focused on producing cutting-edge research on service customer behavior to help automotive retailers build greater customer loyalty and retention. Sheridan has a PhD in clinical psychology and has nearly a decade’s experience in primary research, including over four years in customer experience and loyalty.