Selling Security as an Add-On: Warranty Business Takes on Importance in Difficult Times

December 2011 By Michael McEnaney

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In an economy that is making it very difficult to see year-over-year increases in profits, imaging retailers need to turn over every stone in an effort to make their numbers work. Increasing markups in these tough times is certainly not an option, and reducing stock oftentimes puts you at a competitive disadvantage in this have-to-have-it-now atmosphere that tech savvy consumers live in today.

One always-viable solution is to sell the customer something extra—something that does not have to be held in stock or carry with it any additional operating costs.

Have you thought about offering your customers extended warranties?

Unlike a camera sale or a sale of any stocked item, there is no initial cost, or investment, when it comes to warranties. The trick here has always typically been twofold: 1. Getting your sales team focused on how to properly offer the customer an extended warranty. 2. Overcoming the customer perception that extended warranties are useless due to past experiences. 

With ever-tightening restrictions on return policies at many retail locations, consumers often feel they’ll eventually encounter some kind of hidden loophole with an extended warranty. This is particularly true when dealing with a product like a digital camera or camcorder where usage is such that any glitches may not turn up until long after the warranty expires.

To overcome these perceptions, many warranty companies have stepped up their efforts to strengthen their cases with retailers and end users. Many of the larger companies are shoring up efforts on all fronts—marketing, customer support and sales training—while continuing to drive home the perennial “peace of mind” message the category has always been built on.

“Training has always been a huge part of the process for us with regard to a dealer’s sales staff,” began Jennifer Monasterio of Mack Worldwide Warranty in New Jersey. “That kind of education is our best ally. What separates us from the pack when it comes to our service contract is the fact that the program is supported by very specialized and attentive customer support teams. We also do training seminars with dealer salespeople to fully prepare them to sell warranties.”

Mack also provides signage, brochures and other marketing materials, but most of all, as Monasterio explains, “The bottom line is that warranties are essentially an accessory to generate profit for the dealer, and learning how to properly sell that accessory is key. It’s always been important to us so we pass that strategy and knowledge on to the dealer.”

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