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It wasn’t too long ago that most dealers shunned recalled vehicle owners, describing the additional traffic as a nuisance, or they viewed them as consumers who occupied service bays that could be more profitable with other types of business.
However, changes in OEM recall reimbursement policies, along with revenue data that indicates more than 50% of recall customers opt for customer-pay ROs, has forced dealers to take notice. The good news doesn’t stop there. Many dealers are also now warming up to the fact that service-to-sales is a viable source for additional units from recall customers.
In fact, service drive technology platforms have added complete service to sales components into their software to assist in the identification of customers that are a good potential source of front-line units and/or additional sales.
Why has the perception of recall traffic shifted? The answer is obvious – the data. The mischaracterization of recall traffic is easily overcome with data that demonstrates how recalled vehicle owners are not only reconnecting with the dealership and opting for additional customer pay services, but these consumers also look favorably upon the brand and the dealership. So much so, that they are open to purchasing their next new vehicle when they come in for the recall repair.
In our industry there is still somewhat of a stigma attached to these recall customers. After all, for consumers, dealing with a recall is not a pleasant experience. Historically, dealers have not rolled out the red carpet for them, nor have they had systems and processes in place to accommodate their needs. Unavailable parts, long wait times, poor scheduling, limited information, lack of transportation or loaner vehicles, and other mishaps have left these consumers feeling unwanted and left behind. As a result, many dealers view them as annoying or frustrating and not enough dealers put these feelings aside and focus on the opportunity that exists to take recall customers from service to sales.
I’ve been a bit of an evangelist for recall consumers and how dealerships can transform their operations to meet the needs of these recall customers. The fact is, if you do, there are huge rewards in both sales and service. It turns out that some of them end up buying their next car from the dealership that makes them feel valued at the time of recall repair. In fact, it happens quite a lot and this business is certainly worth a better look into.
According to DMS data from Recall Masters, approximately 9.7% of recall customers end up buying another vehicle from that dealership. How can that be – aren’t these consumers frustrated with the brand that caused the recall in the first place?
Late last year, Recall Masters conducted an in-depth consumer survey which has some very enlightening results. Surprisingly, recall customers don’t necessarily feel that the brand responsible for the recall is unreliable and will purchase the same brand from the same dealership. They don’t blame the manufacturer, they perceive it as simply the cost of owning a vehicle. Especially when their vehicle is an older model. At an average of 15,000 miles per year, a six-year old car could be expected to have around 90,000 miles on it. Most consumers accept that a vehicle with that many miles is likely to have problems and will probably be primed for a new vehicle if the figures work for them.
So, the true psychology of your recall customers is actually quite eye opening. Rather than rejecting these customers, those dealerships that work with their recall customers, and have processes in place to handle them properly, can win over these consumers and add more car sales to their bottom line.
It turns out that most consumers in fact characterize vehicle recalls as an acceptable part of the manufacturing process. They would rather be informed of potential dangers than have the OEM hide them. There’s also a clear correlation between vehicle purchase and model year. Recall customers tend to own vehicles that are more than six years old. Often, these vehicles have problems in addition to the recall which can lead to a large repair bill. Just like any other customer, if that is the case, the recall customer may simply opt to buy a different vehicle rather than deal with a recall AND a large repair bill. In addition, many more financing options exist these days for individuals who may not have qualified for a vehicle loan the last time they visited the dealership, which helps in the purchase process.
Factors such as the customer experience when dealing with recalls, along with every step of the interaction between notification and the customer’s arrival at your service department, can easily mean the difference between gaining consumer confidence and losing it. The dealership staff dictate the customer’s experience. Aside from proper training and tools, the employees need to buy-in to the fact that these customers represent future sales.
Relying on software and data to dictate potential service to sales candidates is great. But it is also important to ensure your provider can help you market to owners of vehicles six-years or older that have recalls and could potentially need additional repairs. Imagine using this as part of your conquest strategy. Wouldn’t you want to sell upwards of ten percent of recall customers a new vehicle?
Recall customers are just as valuable in the service-to-sales opportunity, and perhaps even more so, than any other service customer… if you know what to look for, how to treat them and your staff is staff is prepared to handle them correctly. And, just like any other customer. It’s much less expensive to sell an existing customer than it is to acquire a new one.