MOTORING NEWS - Not many people know that the renowned 'car service plan' used by car manufacturers across the globe was the brain-child of a South African.
The revolutionary concept was created 20 years ago in August 2000 by Knysna resident John Jenkerson, at the time the after-sales marketing manager for the Ford Motor Company. Jenkerson came up with the idea in order to overcome after-sales loyalty problems that motor manufacturers were experiencing in the parts and service area of the industry.
He retired to Knysna 18 years ago, but, as a self-confessed petrolhead, his love of all things car-related remains undiminished. Jenkerson shared the story of how his service plan was born with CarMag:
For as long as the motor industry has been in existence, the franchise dealer has struggled to retain the customer after the warranty period had expired. The main reason was the perceived high cost of the franchise dealer service. These high costs were influenced by labour rates that were higher than the independent service workshops and the higher price of the genuine part versus the non-genuine part. In the old days we called them pirate parts.
Companies like Ford Motor Company (FMC) launched numerous customer retention programmes in an effort to get customers to continue servicing their vehicles at the dealer after the warranty period had expired. There was a good reason to adopt such a strategy. Should a dealer be able to provide an excellent after-sales service experience to his customer, there was a good chance that the customer would remain loyal to the brand and to the dealer when it came to buying another vehicle.
But these programmes did not address the real issue of affordability or value for money. Customers continued to migrate away from the franchise dealer.
Service plan creation
There is no greater grudge purchase than to pay for the service or repair of one's vehicle.
Towards the end of the 1990s, at a time when the vehicle warranties were still at 12 months or 20 000km, it prompted me to find another solution. The sale of genuine parts were seriously affected.
As after-sales marketing manager for the FMC, I was responsible for creating marketing opportunities to improve Ford dealer parts and service profitability. The manufacturer's parts market share was being severely eroded by Midas, Femo and other fast-fit chain outlets.
The inspiration for the service plan came from market research conducted by myself during regular holiday visits to the Garden Route.
• To provide vehicle owners with manufacturer-approved quality service at the franchise dealer for an extended period after the warranty had expired, using genuine quality parts.
• To enable the franchise dealer to keep customers coming back to the dealership for their servicing requirements after the warranty period had expired.
• To give the franchise dealer the opportunity to develop a loyalty relationship with the customer and create a customer for life.
Of course it will work!
I presented the concept idea to one of my staff members, Errol Adendorff, who had many years of parts marketing experience.
After explaining how we could retain customer loyalty for at least three years or 60 000km, he asked, "Johnny, do you really think it will work?" I responded, "Errol, not having conducted any market research, I don't know, but we must test it with Ford dealers and customers."
His next question was, "Johnny, why has nobody else in the world thought of this before?"
Needless to say, there was only one answer: "I honestly don't know!"
His main concern was that the market would find it difficult to understand the difference between the already existing fleet maintenance plan and the new concept of a service plan.
I believed that the concept deserved exploration, as there was no risk or cost involved.
For many years the motor industry, and particularly fleet owners, had access to the purchase of a maintenance plan at a substantial on-cost, which was added to the price of a new vehicle. The service plan was different in that it was included in the price of a new vehicle and it covered all the costs of the service requirements detailed in the owner's handbook.
Originally, a number of customers would only stay with the dealer for 12 months. This period would now increase to 36 months, and more recently, up to five and seven years for some brands.
Malcolm Perrie of The Marketing Shop in Johannesburg had for some time been facilitating quarterly meetings with the after-sales managers and directors of the various manufacturers to discuss issues of common interest that were affecting all franchises.
The Marketing Shop conducted syndicated parts market research and was in a position to add value to our discussions.
It was at one of these meetings that I presented the Ford Service Plan programme. The idea was labelled "revolutionary" and immediately adopted by Toyota, Nissan, Volkswagen and other manufacturers present. And the rest is history.
Enjoying my retirement in Knysna I am proud to have been the creator of a proudly South African unique product, and pleased that we can celebrate the fact that the service plan has stood the test of time - 20 years since creation.
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