BLOG How upselling warranties can provide revenue opportunities

The used car market has seen 18 months of consecutive growth thanks to new cars returning to full delivery capacity and the increased supply of used vehicles as a result.

However, recent figures from the SMMT show that sales of new cars to private buyers fell for the ninth month in a row in June, just as the new car market hit the half-year one million mark. Used car prices are dropping too, with a fall of 7% recorded in May 2024 – and there is talk of prices continuing to decline until the end of 2024.

Now more than ever, dealers are looking at ways to increase revenue from upselling of add-on products. For Big Car World in Leicester, paint protection is a crucial part of their profit strategy. In just six months, Big Car World was able to more than double its paint protection sales and create substantial profit.

Big Car World’s objective was to maximise its profitability and boost customer loyalty.  To achieve this, they required a high-quality product that enhanced the longevity and appearance of customer’s vehicles.  The product then needed to be integrated seamlessly with their sales process, to make it an attractive and natural addition for customers.

Over a third (37%) of Big Car World’s customers are now purchasing paint protection, up from 18% with its previous provider. By the end of 2024, the dealer is expecting this to grow to at least 50%. With an average profit of £250 per unit, the increased penetration has already enabled them to make an additional profit of £10,732 so far from paint protection sales alone.

So, what is the secret to upselling?

Big World’s high-quality products, comprehensive training and strategic sales processes have enabled them to achieve additional profit. Successful upselling requires strategic changes within a dealer business. Here are some helpful tips:

1. Extensive training: Ensuring your sales team have detailed product knowledge and upselling skills will inevitably help your business close more deals. They should be confident in explaining the product and highlighting the benefits (as well as any significant exclusions), demonstrating how it can meet the customer’s needs and overcoming objections.
2. Listening to the customer: Listening to customers allows for personalised recommendations of products that are relevant to them. Starting discussions with the customer early in the sales process too builds confidence and eases them into the sale.
3. Visual and physical display: Where possible, use physical samples or visual aids that showcase the products. Customers often respond well to seeing and touching what they are considering purchasing.
4. Transparent pricing and financing options: Be transparent about the pricing of your products and offer clear financing options if applicable. Some customers will be more likely to purchase if they can spread the cost over time.
5. Feedback and adaptation: Continuously gather feedback from customers about your products. Use this information to adapt your sales strategies and improve the overall customer experience.
6. Marketing activity: Implement a combination of online and offline marketing activities such as social media content, e-brochures, banners, and videos to promote the products across various channels.
7. Bundle packages: Make the offer even more attractive and create a sense of urgency by running limited-time promotions or incentives when the customer purchases multiple products.
8. Post-sale follow-up: Follow up with customers after the sale to ensure they are satisfied with their purchase. This also presents another opportunity to offer further products that complement their initial purchase.

Phil Miskelly is head of business development at Warranty Solutions Group