In today’s highly
competitive retail marketplace, providing valuable add-on services is essential
to increasing profitability and enhancing customer satisfaction. But,
determining the value of an extended service plan (ESP) is often in the eye of
the beholder. For some consumers, it’s seen as a security blanket, knowing
their investment is protected long after the manufacturer's warranty runs out.
Others, however, see warranty plans as another line item on their receipt that
they can’t justify during challenging economic times. As retailers look to
bolster profit margins in times of flat sales, it’s important to drive home the
benefits ESPs offer consumers above and beyond the warranty terms and
conditions.
One Size Doesn’t Fit
All
In light of slumping
retail sales, extended warranty programs have become an essential and
profitable value-add for retailers. Extended warranty plans such as product
replacement programs, extended service plans, on-site service and comprehensive
service programs offer distinctly different options to help customize a plan
that best suits the consumer. By knowing the specifics, your staff will be
better equipped to capitalize on the value these plans offer.
Satisfaction
Guaranteed?
The only way to have
valuable dialogue with the consumer is to have a well-represented team selling
products and the services associated with them. Generally, there are four
factors that go through the consumer’s mind when considering an ESP:
1. Value of item being
purchased
2. Price of extended
warranty
3. Length of
manufacturer's warranty
4. Length of extended
warranty and date coverage begins
Through various sales
tactics and techniques, your sales team can re-engage the consumer beyond the
normal talking points by highlighting the services your warranty provider
offers that often get overlooked:
1. Save time and money — If a product fails during the extended
term, the consumer will not have to deal with repair hassles or bills because
either a replacement (delivered same day or next day) or repair of the product
will be handled by the provider. Locating an approved service center by the
consumer’s ZIP Code is also a valuable time savings.
2. Ongoing support — For ongoing product support or
questions about a plan, consumers can call a dedicated toll-free ESP hotline
for inquiries or other details during the term of their extended warranty.
3. Trusted partner — The extended warranty plan is attached
to the consumer, not the store. Since the rate of foreclosures and bankruptcies
are up in today’s economy, it never hurts to point out the ownership aspect of
the ESP.
The Bottom Line
The world of consumer
electronics is cut throat — profit margins are slim, and prices have to remain
competitive or stores lose business. For retailers, finding new ways to
increase profits are not easy to come by. But, ESPs cost virtually nothing to
market, take up little to no inventory space and are easy to promote. Retail
personnel, especially, are in a unique position to sell extended plans to
consumers because the transaction takes place lives, in-person and at the point
of purchase. Timing is definitely part of the sales equation, but selling value
to an informed consumer provides better customer service and sought-after
profit margins.
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