Mak­ing a plan…

Clar­ity the key to a ve­hi­cle main­te­nance prod­uct’s suc­cess

Finweek English Edition - - Focus On -

IF PROP­ERLY DE­VEL­OPED and ar­tic­u­lated, ve­hi­cle main­te­nance plans be­come an im­por­tant tool in any sales­man’s ar­moury. The ve­hi­cle in­dus­try has its back to the wall. It’s one of the world’s tough­est in­dus­tries and ar­guably cur­rently more so than ever be­fore. For starters, there are too many ve­hi­cles and not enough buy­ers. One way of mak­ing ve­hi­cles more at­trac­tive buys is by adding main­te­nance plans to the deal and those have also be­come a prin­ci­pal means of dif­fer­en­ti­at­ing var­i­ous brands.

For ex­am­ple, Hyundai claims the long­est plan at 150 000km or five years. BMW claims to have in­tro­duced the con­cept to SA. What­ever the de­tail, such plans have be­come a sta­ple el­e­ment when buy­ing any ve­hi­cle. If you’re buy­ing a new car, a main­te­nance plan or some other form of it, is an ex­pected part of the deal.

All lead­ing ve­hi­cle man­u­fac­tur­ers and many fi­nan­cial in­sti­tu­tions of­fer main­te­nance plans and some ded­i­cated ser­vice providers do noth­ing else. Sim­i­larly, a sec­ond-hand car can be made sig­nif­i­cantly more at­trac­tive by a deal­er­ship if it comes with a strong plan.

Paul Mokoena, group ex­ec­u­tive: mar­ket­ing at In­no­va­tion Group, says buy­ers are in­creas­ingly us­ing the value-added main­te­nance plan as a de­ci­sion-mak­ing tool when as­sess­ing which ve­hi­cle to buy. As a re­sult, the de­mands on mo­tor man­u­fac­tur­ers, in­sur­ers and deal­er­ships to de­velop strong of­fer­ings con­tinue to in­crease.

And yet there’s a clear irony at play in this sce­nario, as many prospec­tive buy­ers don’t fully un­der­stand the dis­tinc­tion be­tween the var­i­ous plans on of­fer. For ex­am­ple, a ser­vice plan is a very dif­fer­ent prod­uct to a main­te­nance plan, as is the case with a war­ranty.

In­de­pen­dent providers, such as the In­no­va­tion Group, have de­vel­oped and man­age prod­uct ranges for many mo­tor brands and in­sur­ers op­er­at­ing in this mar­ket, as well as prod­ucts of­fered to the end cus­tomer. They have ex­pe­ri­ence of all sides of the mo­tor plan par­a­digm, man­ag­ing the ac­tual busi­ness pro­cesses that lie be­hind main­te­nance plan of­fer­ings – from the call by the buyer to the call cen­tre through to the lo­gis­tics that sup­port the work car­ried out by re­pair­ers.

Mokoena high­lights the im­por­tance of match­ing a plan with a ve­hi­cle and in the right in­di­vid­ual con­text. “For ex­am­ple, it would be a re­ally bad idea to buy an MMP de­signed for the 1 500cc mass mar­ket ve­hi­cle if you own an up­mar­ket ex­ec­u­tive ve­hi­cle. Be­cause it’s de­signed for a mid-range mass­mar­ket car your cover would ex­clude cer­tain items found on a lux­ury car and the price cap on parts cover wouldn’t cater to the cost of lux­ury ve­hi­cle parts. So con­sumers re­ally need to make sure they un­der­stand the tech­ni­cal fea­tures of the cover and whether or not those de­tails are suited to their spe­cific sit­u­a­tion. Oth­er­wise they’ll end up feel­ing as if they’re be­ing ripped off.”

This mat­ter of feel­ing ripped off is a com­mon thread through­out the re­tail mo­tor trade and es­pe­cially in ve­hi­cle plans. It’s largely be­cause the buyer failed to read what he was buy­ing and had un­re­quited ex­pec­ta­tions.

“It’s a fas­ci­nat­ing time, be­cause new dis­tri­bu­tion chan­nels – such as the In­ter­net and mo­bile tech­nolo­gies – for prod­ucts are re­ally com­ing into play now, cre­at­ing op­por­tu­ni­ties to en­hance ease of ac­cess, im­prove client ed­u­ca­tion and lower the cost of the prod­uct,” says Mokoena.

“Re­cently we’ve seen play­ers look­ing to de­velop ‘mix and match’ plan com­bi­na­tions. For ex­am­ple, at In­no­va­tion Group we re­cently de­vel­oped a prod­uct that com­bines key el­e­ments of a ser­vice plan and a war­ranty plan. Be­cause plans are priced to cover the cost of an ex­ten­sive range of orig­i­nal equip­ment man­u­fac­turer (OEM) parts, and be­cause they of­ten cover items re­ally un­likely to need at­ten­tion, they can be quite ex­pen­sive.

How­ever, the mix and match con­cept pro­vides great cover for items most likely to need re­plac­ing or ser­vic­ing while adding a cost com­po­nent for the cus­tomer when it comes to other less com­monly dealt with parts. Those sorts of op­tions dra­mat­i­cally lower pre­mi­ums for the end cus­tomer, so we ex­pect to see that trend grow­ing stronger in years to come,” he says.

What prod­uct is ul­ti­mately bought – and whether some­one buys at all – of­ten has more to do with the ac­tions and mo­ti­va­tions of the car sales­man than to how the mo­torist per­ceives the qual­ity of the var­i­ous plans of­fered.

In fact, of­ten the car sales­man acts as a very ef­fec­tive buf­fer, pre­sent­ing only

the of­fer­ings he feels will add value to the deal and will be easy to ar­tic­u­late and sell. Mokoena says sales­men and fi­nance and in­sur­ance staff on the deal­er­ship floor may be re­luc­tant to of­fer value-added prod­ucts for fear of chas­ing the buyer away with com­plex ex­pla­na­tions of the of­fer­ing. That’s es­pe­cially rel­e­vant in a re­ces­sion­ary econ- omic cli­mate, where deal­er­ships are push­ing hard to make sales.

“If main­te­nance plans are go­ing to be a strong point of com­pet­i­tive ad­van­tage for mo­tor man­u­fac­tur­ers it’s es­sen­tial they’re ex­plained in de­tail on the deal­er­ship floor and in a way that en­sures the buyer will quickly com­pre­hend all the de­tails and the ben­e­fits. Cus­tomers are keep­ing their cars for longer pe­ri­ods. There­fore they de­sire ser­vice and main­te­nance plans. How­ever, the way the prod­uct is de­vel­oped and pack­aged is cen­tral to ac­tu­ally meet­ing that need. If the prod­uct is prop­erly de­vel­oped and ar­tic­u­lated it be­comes an im­por­tant tool in the sales­man’s ar­moury and will be used.”

Con­sumers must un­der­stand the tech­ni­cal fea­tures of the cover. Paul Mokoena

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