Becky's blog

Subscription Service - A New Way to Build Customer Loyalty?

Is your dealer on board with subscription service? Some major automotive groups are getting into the act - offering a third alternative to buying a car! Customers just don't want to be on a long-term contract that cost a fortune to get out of from under!

Subscription car services have become the latest trend in auto retailing. If you’re not paying attention to it, you should be.

These services are another way for the consumers to acquire a car for their everyday transportation needs.

The basic business model for these services gives subscribers the ability to swap out a car whenever they want for a monthly price. That price typically includes insurance, road assistance, and maintenance.

Depending on the service, there’s no long-term contract. The subscriber can drive the car as long as they want with the flexibility to walk away at any time.

The whole process can be done by simply using a mobile app.

This new way hasn’t yet covered the country. But it’s coming, and dealers should be paying attention and figuring out a way to hop in as the services pick up speed.

It’s not just startups like Clutch, Flexdrive, Fair.com and others that have launched services. The OEM’s have ventured into the business – Ford, Hyundai, Cadillac, Volvo, Porsche, for example.

F&I folks may be scratching their heads over this new way of moving new and used cars, and wondering how this all affects that side of the business.

Subscription car services probably won’t upend auto retailing as we know it. But they do present another opportunity for dealers to develop relationships with customers.

You’ll have to think outside the box, though, when offering value-added products or service to subscription customers.

Subscribers to these services tend to be quite savvy with technology, so you have to get creative. Maybe offer a plan that uses tech for finding hotel and airport parking accommodation as a value-added feature. If the customer is responsible for the wear damage or accidents, perhaps a diminished value product or excess wear and tear might be something worthwhile to consider?

All of this is so new, the sky could be the limit on how creative you can be in presenting options that keep you competitive.

Perhaps creating a customized subscription car service could help revive some of your dead deals. How many of those deals do you accumulate during the month that you simply can’t put together?

A customer’s limited credit, excessive debt, or time on job leads to dead deals. But with subscription car service, as long as they pass a background check and have a valid driver’s license and record, credit has nothing to do with it.

Think about it. You have the opportunity to keep customer in the driver’s seat by putting them into a car with payments they can afford until their credit situation improves.

You have now offered a customer a third alternative, one in which they don’t have to pay on a high-interest loan that is next to impossible to get out of over the next four to five years.

The customer sees you care about them. You’ve helped them with a need, and you’re building a different revenue stream.

As you know, taking care of the customer, even those with challenging credit, builds loyalty. And a loyal customer will stick with you forever.

The subscription service may not be the perfect solution. But as the service becomes more popular, it certainly could be a good option that helps establish a relationship that will eventually grow your business and turn into a retail commitment.

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