5 Opportunities to Increase Extended Service Warranties
The sale of extended service programs and warranties can be lucrative. It also provides customers with peace of mind and the feeling that we work in their best interest. In those companies who sell these warranties, opportunities to make that connection are often missed.
Here are five times during the customer service lifecycle where the sale of extended service warranties can be easily promoted:
- Value Added – By bundling an extended warranty at the time of purchase with the manufacturer’s warranty, you can maximize the opportunity without a second sales effort.
- Warranty Expiring – Contact customers before their warranty expires can be a great time to make an extended warranty sale. You’re able to see how many problems they’ve had already and can capture them before their coverage has lapsed.
- Warranty Expired – This can be the moment of panic when a customer realizes that if anything happens, they might on their own. Contacting them with a reassuring (but slightly ominous message) will yield great results.
- Cross-selling – When there is an opportunity to sell additional products to the customer, you are able to sell the extended warranty on the prior sale. This is a moment when the customer is open to a purchase and will see the value of keeping existing equipment working.
- Renewal – When drafting a new contract to replace an earlier contract is an excellent time to offer an extended warranty. The customer is expecting some changes and you are showing your concern for their needs.
In a recent study among professionals involved in selling Extended Warranty /Extended Service (EW/ES) programs, they were asked about when Extended Warranty (EW) was offered. Here is what their responses indicated:
- The majority of companies offer EW/ES only at the point of product purchase
- However, a large percentage also offer these programs at any point during the product lifecycle
- Less than one-third of respondents experience contract attachment rates higher than 50%
- Nearly 60% of companies cross sell-upsell EW/ES programs during the initial warranty entitlement process
- By cross-selling – upselling EW/ES programs, companies can expect to improve their attachment rates by 25% or more
- In fact, 25% of respondents experienced a 50% or more increase from this tactic
These five opportunities, when maximized, can increase sales and profits in any service-based or manufacturing business.
Author: Michal R. Blumberg.