For years, the automotive industry has used after-the-sale service and maintenance as a way to generate additional income for their dealerships and to stay top-of-mind with clients. In fact, you may be surprised to learn that car dealerships make around 44 percent of their gross profit from the service department.
Using Penske Automotive Group (owner of 326 auto franchises covering 40 brands) as an example, Popular Mechanics reports that “the gross margin for service and parts was 57 percent for the Penske group, vs. just 8 percent for new-vehicle sales.”
But what does this have to do with the construction industry? Well, the same ideas that helped car dealers nearly double their profits and develop long-lasting relationships with their clients can be applied to the business of homebuilding.
Building Trust via After-the-Sale Service
The primary reason people bring their cars to a dealer for service is peace of mind — they trust the dealer as the expert on their vehicle. When you bring your Ford to a Ford dealership, you are dealing with technicians who know these vehicles inside and out. The local mechanic down the street knows about engines, but not necessarily the nuances of every specific make and model. The dealership provides ongoing training that keeps their mechanics up to date on Ford models and parts, and they have greater familiarity from working on these cars day in and day out.
The same holds true for construction. Who better to advise and direct repairs and maintenance for a home than the contractor who built it? A home is a much bigger investment than a new car, so surely protecting that investment should get just as much consideration.
Fostering Ongoing Relationships
People also take their car to the dealer for service because, throughout the buying process, they’ve established a relationship with that dealer. Loyal customers who return for regular maintenance and continue to receive good service are far more likely to refer future customers and to continue doing business with that dealership.
Providing a service plan to new home buyers is a great way to leverage the trust they already have in your company and continue to build a long-term relationship. Few homeowners are aware of how critical preventative maintenance is for retaining their home’s value and saving on repair costs. And even fewer actually do it. Offering to come in quarterly and do the simple maintenance and checkups that keep a home in good condition benefits everyone. The homeowner is grateful to have their home’s expert help retain its value. And you, the builder, benefit from being top-of-mind for referrals and future projects.
Stopping Preventative Maintenance Woes
New cars come with a sophisticated feedback mechanisms that tells owners when it’s time to change the oil, check the battery, and even replace the tires. The automation of the car’s maintenance requirements makes it easy for owners to protect and extend the life of the car.
Homes don’t come with a dashboard, but the average homeowner could certainly benefit from one! Regardless of how well you inform them of the home’s recommended maintenance items, even the most conscientious homeowner will soon forget. And the few who do perform preventative maintenance will not recognize the early signs of dry rot, termites, or water damage – meaning it won’t get noticed until it becomes catastrophic, expensive, and inconvenient.
A well maintained home retains its value, and structure and systems kept in good repair make for a more comfortable home with fewer unpleasant surprises. Considering the fact that for most people, a home is the largest investment they’ll ever make, it seems natural for them to want to protect the property. Make it easy for them by offering a maintenance plan.
A Shift in Perspective
As contractors and homebuilders, these ideas are a shift in perspective. The industry is accustomed to “building and forgetting.” Yes, there may be a home warranty involved, but how well does that help build relationships, ongoing trust, and your bottom line? If the industry were to adopt a strategy similar to the automotive maintenance model, it could see similar success.
The good news is that Glasshouse has developed and tested a software platform that makes adding a Service Plan simple and straightforward. We created a quarterly preventative maintenance model that makes sense for all homes and is easy for any field technician to perform so that nothing is overlooked or neglected. Glasshouse’s platform helps foster and profit from those relationships that you’ve worked so hard to establish.