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How to stay competitive with online VSC companies

Keep in mind that since many online VSC sellers start the conversation with chatbots that move them to a telesales team to finish up the sale.

Since the pandemic hit, dealers are finding that the landscape of online aftermarket providers has increased, and they are targeting consumers that want to order everything online, including their Vehicle Service Contract. 

With that increase in online-only options, a set of players in the VSC space are popping up at a rapid rate. Companies are taking their VC cash infusion and creating slick websites to compete with dealerships that sell VSCs. 

How do you, as the dealership expert, compete with the new online retailers? Can you compete? You absolutely can, but you have to be a bit more creative to win out with your customer.

Why now?

For decades, car buyers have dreaded sitting in the F&I office and getting the hard pitch on VSCs, and enduring the old-fashioned scare tactics to scare people into buying them. Add to that the sometimes enormous overcharging that many in the industry got away with in the past, and no wonder people looked at the car buying experience with such a sense of dread.

Many car buyers may want to buy a VSC and know its value but don’t want to have to be in person to buy one. Like the Carvana‘s of the industry, these newcomers saw an opportunity to be that provider without a brick-and-mortar presence and without having to tie themselves to any one dealership to do business. Straight-to-consumer is not a new concept, it’s just easier to find them now, and they have tapped into a new way of buying VSCs.

Countering the online VSC

A consultative approach at the dealership is where your F&I department shines—being able to talk with someone who is an expert in those products and understands why they are essential. Having a staff that is skilled, professional, and able to handle any question with ease is always going to be better than ‘ordering’ a warranty online or talking to a chatbot to buy it.

But what do you do if you have a customer in your office that says, “No thanks, I’ll get one online.’ Chances are you’ve already heard that once or twice.

Gently and professionally, let them know that you are an expert in the value and terms of VSCs and have had years of experience helping car buyers protect themselves in case of a mechanical breakdown. You are not late to the party, and neither are your F&I providers. Many have been around for decades versus the fly-by-night online companies. They will be here when you need them.

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The right questions are key

Ask your customer if they have done their research on the online VSC provider they have in mind. Let them know that many of these newer companies tend to leave the industry after a few years, and that’s what sets your dealership apart. You only work with companies that are A-rated, insured, and that have a long reputation in the industry.

Don’t be afraid to ask if they fully understand the coverage levels offered. You’ll find that once you start asking these questions, they may realize they aren’t as sure as there were about all those details as they thought they were.

Keep in mind that since many online VSC sellers start the conversation with chatbots that move them to a telesales team to finish up the sale, it’s still a bit impersonal to the average customer. There is little to replace the advantage of sitting down with someone who’s knowledgeable and running through the many questions you may have about VSCs and their value & terms. You have the advantage of the personal touch.

And of course, you can factor your VSC into their payments, so they don’t have to come out of pocket to buy it. 

Making it easy means educating early

Always position your F&I department and your product offerings in the most favorable light from the beginning. Make sure your staff has a strong presence on your dealership website. Offer tutorials or explainer videos to describe the main menu items that are available to them. Today’s car buyer wants to be educated on their choices, not sold. 

Keep everything about the customer experience in F&I in mind to help make it easier and more efficient. If a customer is feeling good about being at your store to buy their car and they are treated well by F&I, it will be easier to close them on your products rather than having them leave to buy it on their phone the next day.

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Kristine Cain
Kristine Cain
Kristine Cain is a contributing writer for CBT News. She has over 26 years of experience in the automotive industry specializing in F&I and B2B sales.

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