It’s true. Extended warranties and protection plan coverage are often misunderstood by consumers and salespeople. It’s unfortunate because the fact remains that no matter how careful the customer is with their cell phone, dishwasher, TV, or laptop the product can still break, accidents will happen, and the customer is left holding the bag. This is an opportunity for retailers to capitalize on the power of providing extended warranties and protection plans for their customers.
Why Are Extended Warranty Programs Important?
Retailers, be it appliances, mobile devices, consumer electronics or computers, can utilize warranty programs to gain competitive advantage. Extended warranty programs help maximize sales, build customer loyalty, and improve morale on your sales team. If you care about driving more revenue for your store, a warranty program will be imperative to your success.
Additionally, warranty programs help improve customer retention and satisfaction. When your sales team effectively sales a plan on big-ticket item, the perceived risk customers experience is minimized thus reinforcing the buying decision, building trust with your sales team member, and improving the overall customer experience.
Typically, you need a warranty provider to help you implement a quality service, train your sales team, and handle the claims coming to your store. To help you figure out what kind of warranty provider is right for you, we’ve compiled the 3 questions every retailer should ask before picking a warranty provider.
Question #1: How Does the Warranty Provider Operate?
Whenever you choose an extended warranty partner or provider, you should do your research and ask important questions to figure out how your potential provider operates. You should consider researching and finding answers to questions such as:
- Are all of the contracts fully insured by an A rated insurance company? If not, the provider may be underwriting the risk themselves and not adequately reserving for future claims that are to occur. Are they in compliance with provincial and state regulatory bodies?
- How long has the provider been in business?
- What is the provider’s financial stability? What happens if they go under? If they do go under will the insurance company step in and honour the obligations of the customer's protection plan?
- Do they offer any reporting, analytics, or data on warranty programs that have been implemented?
- What is culture and initiatives of the company? Do they match your company’s values?
By digging into the provider’s operations and values, you will come away with a clear understanding of who you are doing business with.
Question #2: Does the Program Provide Value to You AND Your Customers?
It is extremely important, as you know, to provide value to your customers. This includes an extended warranty program that your customers and rely on and trust. You should explore every detail of the plans your potential provider offers. It is also important to ensure the program is valuable to you and your total revenue.
Ask questions to ensure important features are included and that your customers are receiving the best service. Additional questions to answer include:
- What is the fine print of the extended warranty or protection plan?
- How many different plans can be offered to customers?
- What benefits does the customer received in each tier?
- How much does the program cost me?
- What is the retail price of the plans to customers?
- What additional costs beyond traditional deductibles can be expected?
- What is the claim process for customers?
- What happens if you go out of business?
- How long does a claim settlement take to finalize?
- What is the most complicated process of your claims process?
- What will my team be required to do vs. your team’s responsibilities?
Basically you want to analyze the customer experience and cost benefits to your company. Identify items that could cause headache in the future and make sure you completely understand the process. Have other team members do the same, and compare notes.
Question #3: What Additional Support is Included in the Program?
Let’s be honest. Implementing a new program, training your sales team, and expecting increased revenue is a tall order for any retail store owner or manager. There isn’t enough time in the day to get everything done. Working with the right extended warranty provider will ensure that you are able to keep your daily activity focused on what you care about most while the provider focuses on doing what they are best at - training and driving revenue through higher attachment rates.
When choosing an extended warranty provider the program being offered should include:
- A goal setting and planning meeting
- Revenue and margin targets
- A sales and marketing plan
- Easy integration with your POS system
- Merchandising insights for your store
- Sales training and follow up education
- Promotional materials and incentive programs
- Reporting that includes weekly sales, recognitions, and awards
- An online claim management portal
- Toll free customer support
- Factory authorized repairs
- Customer satisfaction surveys
- Optimization for future launches and promotions
Choosing the best warranty provider for you can be a daunting process, but you can minimize stress by preparing yourself with the above tools and questions. Not all providers are created equal, so doing your research is imperative to partnering with the right company. Above all else, remember that choosing a warranty provider should impact your company and your customers in a positive way.