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.”
The bottom line regarding the sales part of the equation involving your counter personnel and the selling of warranties is, “It’s always about selling the services that go with the products to not only maximize the customer’s satisfaction but to bring a larger measure of security to the purchase as well,” added Noel Green, retail analyst and former sales associate at Custom Camera in Bellmore, New York.
Neal Bobrick, senior vice president of sales, Warrantech, agreed that the sales process is key with regard to warranties: “Selling an intangible can be a difficult thing, and a lot of retailers struggle not only with selling it but also with managing the sales process and helping their salespeople develop the skill set to sell this product in a way other than using the scare tactic of the 'break-fix' model.”
Bobrick added that another key is management has to first feel it’s an important add-on sale before the sales floor will.
Making price points as attractive as possible is another important spoke on the wheel. As a rule of thumb, most of the dealers we spoke with who offer their own warranties go with a pricing guideline of 10% of the product’s cost. The fact camera failure rates are way down from what the industry experienced years ago has made this equation work out well for most dealers.
“Warranty companies are sensitive to pricing these days as well,” explained Joe Romano, senior vice president at N.E.W. Customer Service Companies, a Sterling, Virginia-based warranty company. “We are helping to make sure our retailers are offering plans on all eligible products and that their service plan price points remain attractive. Today you also have to be looking for opportunities to enhance their program or expand into new categories so retailers can provide more value to consumers and ultimately increase sales.”
If you’re looking to go through a warranty company, here’s a list of some of the better ones in both the imaging and consumer electronic spaces:
Mack Worldwide Warranty, Springfield, New Jersey. mackcam.com
Precision Camera, Enfield, Connecticut. precisioncamera.com
C.R.I.S. Camera Services, Chandler, Arizona. criscam.com
American International Group (AIG), New York, New York. aigcorporate.com
AMT Warranty, Bedford, Texas. amtwarranty.com
Assurant Solutions, Atlanta, Georgia. assurantsolutions.com
Bankers Warranty Group, St. Petersburg, Florida. bankerswarrantygroup.com
N.E.W. Customer Protection Company, Sterling, Virginia. newcorp.com
Service Net, Jeffersonville, Indiana. servicenet.com
Warrantech, Bedford, Texas. warrantech.com
The Warranty Group, Atlanta, Chicago and Montreal. thewarrantygroup.com