The average dealer leaves over $250,000 on the table each year for every 100 units sold per month. That’s right, a quarter-million dollars. Surprised? That’s what your dealership sacrifices when you don’t offer Environmental Protection Packages (EPP), also called paint & fabric packages, to 100% of customers 100% of the time. Consider these facts:

 

  • Sadly, the average number of car buyers in the US that choose to protect their investment with an EPP product is only 11% ** (Automotive News)
  • The root of the problem is that only 31% of all car buyers in the US are even offered the opportunity to purchase the protection! ** (Automotive News).
  • Now, consider that of the 31% that are offered the product, 42% say yes! Think about this…of every 100 customers, only 31 are offered the product but 13 elect to add it to their purchase…if we simply offered it to all 100, 42 would elect to purchase it…and that is largely with “traditional” sales methods that leave much room for improvement as we discuss here** (Automotive News).
  • EPP is # 3 in PVR profit, following only warranty and gap products.
  • EPP is not ‘snake oil’ but rather a hugely valuable product that really works. No customer should leave without protecting the 2nd highest investment for the average family.
  • EPP product warranties have an absolutely negligible claims ratio from a re-insurance perspective.

 

What are we doing? We are failing to help our customers and our bottom line. Why? It’s fairly simple…we don’t offer it!

 

What are the remedies?

First, consider this: have you ever met a high-performing finance manager or sales representative that didn’t work their pay plan to a “tee?”

 

If dealerships motivate the key people who can get passionate about this super valuable product, they will present it more and get more sales. Good F&I managers always could stretch the boundaries, right?

 

Now’s the time to start selling more EPP. Here’s how you do it:

 

Create a true motivational compensation plan

The lack of consistent execution or absence of key processes is the primary reason salespeople traditionally struggle with selling ancillary products like EPP. However, the underlying issue is that they don’t want to upset the stability of the sale. They already earned one ‘yes’ from the customer. The one that matters the most. The fear is that pursuing another ‘yes’ might put the entire sale at risk.

 

To clear that fear hurdle, you have to motivate salespeople to take the risk. It’s not always enough to pay an equivalent to the commission. Sometimes you have to over-incent to change behavior. We’ve seen dealerships compensate in varying ways depending on whether they post EPP to an addendum on every vehicle, or have a checks-and-balance system that ensures consistent presentation execution.  Here are two options:

 

  • Flat Bonus – This works best if you have an addendum on every vehicle with an EPP applied with an opportunity for the customer to upgrade the warranty period in F&I. In this scenario, the goal is to incent the salesperson to endorse and set-up the product. The flat bonus:
    • Should be equivalent to a higher % than they receive on the commission of the vehicle. For example, if you pay a 20% vehicle commission, consider paying a 25% flat bonus on the sale of an EPP. This can be funded by off-setting the F&I commission.
    • Should be paid weekly in cash in a sales meeting environment where you can recognize and celebrate high-performers. Cash is king!

 

  • Commission-Based – If you have a sound process and system in place that ensures a consistent and effective presentation of the EPP, you can include it in the regular commission structure in your store.

 

There is a lot of profit to be made from EPP.  At $349 average profit per policy in the US, it’s plain to see the product is way undervalued. With an average cost of under $300 (re-insured), that means the average selling price is in the $600 range. When well presented, this product is worth much more.

 

Paint a picture worth a thousand words

Visual sales tools are the way to sell the value to customers. Think physical samples of real body panels that have and have not been protected, video presentations, and pictures.

 

In a fantastic article in F&I Showroom, (I highly recommend a read!) F&I development manager Rick McCormick suggested another great visual technique. Hand the customer a golf ball and explain the minor pits and valleys are what vehicle paint looks like under a microscope. While the finish may look uniform, these divots collect water, dirt, and road salts when the protective wax finish wears off in six to eight weeks. These elements can eat through the clear coat and damage vulnerable paint. That’s why EPP is critical.

 

Don’t forget to always start with the “why” before the “what.” Emphasize that these products keep vehicles looking showroom ready. Tailor your presentation to your region and time of year. In sunnier locales, talk about the degrading effects of year-round sunshine. In colder climates, point out the negative effects of salt kicked-up from snowy and icy streets.

 

Make your presentations personal

Today’s customers roll their eyes at cookie-cutter presentations. Your “why” has to be personal so customers can see how EPP makes sense for their unique situation. This is selling 101. Utilize the normal Finance Questionnaire questions to find the right product for every customer.

 

Questions may include:

 

  • Is this a family vehicle?
  • Is this a work vehicle?
  • How many miles do you drive per week?
  • Do you generally drive around town, on expressways, on unpaved roads?
  • Do you park in a garage or on the street?
  • Will you likely sell or trade your vehicle, or pass it down to a family member when you reach the time to replace it?

This last question is key. It’s been proven that EPP helps retain vehicle value and results in a higher appraisal price. That’s an added value every customer will understand.

 

On that point, when preparing your customer for the appraisal of their trade, add a few questions to the process to allow foreshadowing additional sales opportunities:

  • When you purchased your current vehicle, did you elect to have the paint and interior protected? Do you happen to have the paperwork?
  • What type of warranty did you elect when you purchased your trade?
  • Did you service your vehicle at the selling dealer? Do you happen to have the service records?

Consider offering a trade bonus voucher for “Yes “answers

 

Double down on EPP

If your customer sees the value on their new vehicle purchase, why would they not want to add it to their other vehicle? The average household in the US has at least two vehicles, if not more. You can offer significant discounts for insuring more than one vehicle. F&I trainer John Tabar offers a great F&I Tip of the Week explaining how to double down on appearance protection.

 

The facts prove that dealerships leave money on the table every day when it comes to EPP. Be the dealership that doesn’t. Train your influence team on the facts, benefits, and effective sales techniques. After all, we’re talking about adding more than $250,000 to your bottom-line every year.  

References:

 

**F&I Best Practices from Zurich, Automotive News

** Fico Decisions, Global Consumer Survey of Vehicle Finance Perceptions

 

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