The average bumper to bumper car warranty lasts three years. After this time, customers can choose to extend the car warranty or can go without protection. If the customer goes without protection, it can cause a dent in how often they visit for service, cutting into your bottom line. For this reason alone, you need to understand why selling extended warranties is good for customer relations and the dealership’s profitability.

While there are probably many more factors to consider, we point out the top four for you to think about.  

Increases Loyalty

When your customers have the factory warranty, they are more likely to return to the dealership to have work performed. Once the warranty expires, they feel like a free agent, able to pick wherever they want to go for service.

You can change this mindset if you get them into an extended warranty. Even if they aren’t required to visit the dealership for service, many of them will feel obligated. This extension gives you the time needed to further bond your relationship with the customer, ensuring they continue visiting once the warranty is over. 

Encourages Maintenance

When there is a car warranty on the vehicle, customers are more apt to follow through on maintenance. They don’t want to do anything that could void their warranty. 

However, these maintenance appointments aren’t included in the warranty. Your customers will need to pay for these visits separately, thereby increasing the bottom line. Again, every additional visit gives you the chance to establish deeper relationships with your clients.  

Ensures Proper Protection

Your customers want to know you are always looking out for them. By showing that you care about their vehicle’s well-being, you position yourself as a friend, not just someone looking to make a profit. 

Additionally, you want to show your clients that you care what company they choose. After all, there are plenty of shady warranty companies. By showing them which ones are best, you help them avoid a costly mistake down the road. When their warranty repairs are covered, they will thank you for caring.  

Adds Opportunities for Upselling

It’s important that you cross-sell services, from maintenance, repair and upgrades. When a customer is visiting for warranty repair, you have the availability to upsell other services and products to them. There are plenty of things not covered by the extended warranty, so you have a lot of room to wiggle. 

For example, when the customer is in having the engine fixed, you might upsell the importance of maintaining the transmission as well. You can also supply complimentary multi-point inspections during the visits so you know what needs to be repaired or maintained. These free checks only further ensure that your customers feel respected and cared for.

The more services you provide to your customers, the better equipped you are to handle everything the clients need. You want to become the one-stop resource for your customers, that way, they know where to go when the time comes to buy another car. 

Did you enjoy this article from Brian Jones? Read other articles on CBT News here. Please share your thoughts, comments, or questions regarding this topic by submitting a letter to the editor here, or connect with us at newsroom@cbtnews.com.

Be sure to follow us on Facebook and Twitter to stay up to date or catch up on all of our podcasts on demand.

While you’re here, don’t forget to subscribe to our email newsletter for all the latest auto industry news from CBT News.