How to Maximize Profits During a Recall

Car mechanic and customer shaking hands

Since the start of 2015, there have been more than 100 million vehicle recalls in the United States. A major pain point for the automotive industry is figuring out how to improve recall completion rates. In a 2016 study, Carfax reported there were approximately 47 million vehicles on the road with at least one unrepaired safety recall. While this is bad news for OEMs, it can be a promising opportunity for dealers. Recalls provide opportunities to generate profit from service upsells, and from new customers who are more likely to purchase a new car.

Many dealers believe it’s the manufacturer’s responsibility to get the situation handled. However, completion rates are still not up to par. The best completion rates on new cars (less than 3 years old) will sometimes hit 80 to 90 percent, while older models struggle to reach 50 percent completion. This means there are still many unrepaired vehicles on the road. Take advantage of an opportunity to gain new business and help repair a damaged OEM brand image.

Why should my dealership pay for recall leads?

There are three major reasons you can profit from a recall.

  1. The recall service is fully paid for by the OEM.
  2. Upsells from non-recall service. A significant portion of recall customers will get additional, non-recall service work done at the same time, or they will eventually come back for service work.
  3. New car sales. Some people will visit the showroom while they wait, giving you the opportunity to convert them into a sale. This is especially promising for customers with cars that are more than 3 years old.
Car Mechanic Fixing Door

Doesn’t the OEM already notify customers about the recall?

Sure they do. But that doesn’t mean they are doing it effectively. There are still millions of people who choose NOT to bring their car in for recall service.

This burden largely falls on the OEMs and their “one-size-fits-all” approach to notifying customers. Vehicle owners receive the letters from the OEM, but still decide not to come in. According to a 2016 recall study, there are a couple main reasons for this. Many vehicle owners consider the recall an inconvenience. Some consumers believe the OEMs are not doing enough to address their concerns and frustrations. Others don’t fully appreciate the impact of the defect, and how it could affect their day-to-day lives.

Don’t rely on the OEM to supply information to consumers. The methods OEMs use to contact consumers are often too generic and ineffective. Instead, send your own marketing message to share the significance of the recall and attract customers from your market area.

Automotive recall letter

How do I craft a compelling message to bring in customers?

Deliver a promising message. Inform your market of the recall, explain the repairs needed, and be sure to let them know that they won’t need to pay anything. Let consumers know they can get a reliable and hassle-free recall appointment at your dealership. Most importantly, make sure your message delivery is personalized. This is a great PR move and generates opportunities for new service and sales business within your market area.

In the 2016 Automotive Warranty Recall Report, SRR found that personalization was a key factor in increasing completion rates. SRR’s analysis determined that vehicle owners respond better to certain types of recall messages.

  • Letters that use the word “apologize” are found to enhance the completion rate. Words like “sorry” and “regret” are not as effective.
  • Personalized text drastically improves response rate, as opposed to generic greetings like “Dear Customer”.
  • Impact words like “accident” and “crash” perform better than scare-tactic language such as “death” and “burn”.
  • Letters that address the vehicle owner’s most important “pain points” receive better response than a generic method.

Using the right language and incentives in your message is key. It creates opportunities to develop new relationships with customers that could lead to multiple transactions.

Profit Car Key

How do I maximize my profits during an automotive recall?

One key factor will be critical to your success: Make sure the people in your target list are still the owners of their vehicle.

You definitely don’t want to waste your money sending recall notices to people who don’t need them. Owner Verification Technology (OVT) is our data cleansing solution that separates active titles and transferred titles in your data list, letting you know which people no longer own the vehicle on record.

Before you jumpstart your campaign, it’s important to make sure your list is optimized and accurate. As a result, your recall message will go to the best possible prospects, resulting in the most profits for your dealership.

2018-06-15T18:31:23+00:00