Tag: D2C

Direct to Consumer VSC Sales

Direct to consumer (D2C) service contract sales can be divided into two broad categories: with and without dealer consent.  This, along with the lifecycle “touchpoint,” determines the choice of tactics. Today’s post will discuss the state of the art for dealer-driven D2C selling.

Direct-to-consumer marketers price VSCs to absorb high cancellation rates and can generate margins in excess of 25% – Gina Cocking

Outfits like Car Shield market directly to consumers using their own advertising and their own lead lists.  These are generally brokers, selling service contracts from their chosen administrators, outside the dealer process.  Car Chex does this, and also does marketing for dealers.  Endurance, whose ads you may have seen on television, is actually an administrator.  On the dealer side, obviously, D2C marketers will offer whatever service contract is sold in the dealership.  The leaders here are APC and Dialog Direct.

The traditional tactics are telemarketing and direct mail, but there are some exciting new entrants.  The image above is from Tec Assured.  Their 2-8-28 contact program uses a combination of digital and phone messages directing the customer to a branded website.  The site handles credit cards and premium finance.  Instead of a call center, Tec Assured leverages the dealer’s BDC.

So, the ideal approach would be some Hegelian synthesis of the old and the new.  First, though, let’s talk about touchpoints:

  1. Second chance – this is around thirty days after the vehicle purchase, and the talk track is something like, “hope you’re enjoying the new car, and you forgot to buy a service contract.”
  2. Warranty expiration – this is a few months before the factory warranty expires. A postcard is traditional.  Directing the customer to your website, via digital marketing, is more modern.
  3. Service visit – dealers have the inside track here, because they can follow up a service visit with something like, “lucky thing that repair was covered.”

Thinking about these touchpoints, you can see the power of adding digital tactics to traditional D2C marketing.  You may also have noticed the eligibility issue and the financing issue, because the sale is happening outside the dealership and after vehicle purchase.

Servicecontract.com offers monthly subscription pricing, which may begin during the factory warranty period.  This means the customer is paying in advance for coverage that hasn’t started yet.  On the other hand, if the factory warranty is expired, then they require an inspection at Pep Boys or a 30-day waiting period.

Financing is key.  No one is going to buy a $2,000 service contract on their credit card.  This is why Dialog Direct is affiliated with Budco, a well-known premium finance provider.  APC also has a financing arm.  Servicecontract.com is essentially an innovative form of premium finance.

In my experience, the hardest piece to build is the call center and support infrastructure.  Whoever handles the finance contract has to support accounting, cancellations, and customer service.  Even if you’re not doing telemarketing, you still need a call center.

Digital marketing means using email, text, social, and retargeting to direct the customer to your website, following a contact program like Tec Assured.  As a Salesforce trailblazer, I would call this a “customer journey.”  The journey should be driven by some analytics, and culminate in the customer clicking a Personalized URL that links to the website.  The journey can also include phone contact and direct mail.

The website can change its skin to match the dealer’s branding, based on the PURL.  When I was at MenuVantage, we supported a dozen different brands, like GMAC’s IntelliMenu, all from a single code base.  The site UX will include the usual shopping and checkout features, along with sales tools like testimonials and TCO data – not unlike an F&I menu system.

Also like a menu system, the website must be able to originate contracts via API for whatever product provider the dealer chooses.  See my various posts on this topic, as here and here.

This is classic digital transformation.  The challengers bring new tactics, and these tactics will certainly become the norm.  The incumbents are well entrenched, though, and tactics can be copied.

Corona News Roundup

I spent my sequester time looking for smart people with fresh takes on the crisis.  First, in the “obvious” category: a lot of people got hurt, and dealers who could sell online got hurt a little less.  By the way, if you’re in need of some encouragement, click on over to Megadealer News and check out some of the philanthropic efforts underway.  I have been actively seeking positive news for my Twitter feed.

I like to frame this in terms of people developing new capabilities. 

Going forward, buyer behavior is going to change.  Some of this is an acceleration of existing trends.  Balaji Srinivasan writes that corona is putting an end to the Twentieth Century:

  • Offices → Remote work
  • Stadium sports → eSports
  • Movie theaters → Streaming
  • TV news → YouTube news
  • College → MOOCs
  • Public school → Internet homeschooling
  • Corporate journalism → Citizen journalism

He might have added socializing by video conference.  We had our kids staying with us, doing remote work by day, and Zoom parties in the evening.  I like to frame this in terms of people developing new capabilities.  Here is Andrew Tai talking about people in his neighborhood having groceries delivered for the first time.

I got to know Max Zanan from watching Joe St. John’s webcasts, talking about touchless car delivery and service pickup.  In a pandemic world, we are not just worried about dirt on the floormats.  Interior prophylaxis is part of the service.  Max also points out that, if you can’t sell service contracts in the dealership, you can still sell them Direct to Consumer.  This is something I know a little about, so maybe I’ll do another post just on that.

Ridership on New York’s transit system is down 90%, and experts say this could portend a permanent change in the mobility equation.  The alternative to a personal vehicle used to be public transit or, in drivable cities like Atlanta, ride hailing.  Both are good ways to get sick.

Guns, ammo, and survival gear sold out rapidly, as if everyone is suddenly a “prepper.”  I imagine these people will want to have their own vehicle, with four-wheel drive.  I can relate, because I lived in South Florida for many years.  You don’t want to be waiting on Uber when there’s a hurricane bearing down.

My last few findings are from the world of computer networking.  Infrastructure becomes a challenge when the dealership shifts to online work, notably network security.  Virus scanning and security procedures may not be up to speed when people are working from home.  Also, not all dealer software is web-based, so VPN access becomes a requirement.

Be safe out there.