Sure, extended warranties are often misunderstood by consumers and salespeople, but for retailers they can be used as a competitive advantage that can maximize product sales and build customer loyalty. No matter how careful customers are, the fact remains: products still break or malfunction. If not covered properly, that new fridge, dishwasher or TV could end up costing far more than anticipated – and then nobody’s happy.
By effectively offering extended warranties on big-ticket items, sales associates can ease the perceived risk customers feel when making big purchases. Done effectively, this can reinforce the buying decision and improve the customer relationship.
The effective sale of extended warranties starts first with the right warranty partner and plan. But with hundreds of warranty partners all claiming to be the right one for your company’s needs, the process of selecting a partner can be a big roadblock.
Sound overwhelming? It doesn’t have to be. Here are three key questions you should ask that will help you select the right warranty partner.
No. 1: What is the company structure?
Before engaging, do your own back-end research on the warranty company. Take note of the company’s overall financial standing, longevity and customer claims. Are they the sole coverage provider or are there third-party pieces to their insurance puzzle? After initial research, engage with the warranty provider to learn a bit more. Is the company plugged into regulatory compliance updates? Does the company offer transparent reporting by sharing loss data and analytics? Also, check that the provider’s business objectives align with your own for achieving the performance level desired by both parties.
No. 2: What support and training initiatives are provided?
Once you’ve narrowed down a list of providers, it’s time to dig deeper into the variety of support and training initiatives that will be available. As your warranty partner, the provider should offer a suite of marketing materials, as well as product and sales training for your employees. Providers also need to deliver clear compliance guidance and the assistance required for typical and escalated claims. If there are holes in training, claims or marketing support, it’s time to look at your next candidate.
No. 3: Does the product meet customer needs?
The most crucial aspect of the process is to make sure that the partnership you choose will ultimately provide value to your customer base. It’s at this point that you need to explore every nook and cranny, making sure to check the following important factors off your list:
- * Does the warranty provider offer competitive pricing?
- * How limiting is the coverage compared to price?
- * Are there extra benefits with the plan?
- * Are there additional costs or fees beyond traditional deductibles or administrative fees? If so, are they clearly outlined?
- * Is it easy for customers to make a claim? If so, what claim processing options are available?
- * And just how many hoops will your customers need to jump through to get what they need? For example, is there a lot of front-end paperwork? How many times will a customer need to contact the company?
- * How quickly is a typical claim settled?
In short, analyze the overall customer experience. Identify any loopholes that you think may cause problems down the road. Go through the process yourself to ensure customers are able to easily purchase a plan, file a claim or request service in an accurate and timely manner. If you’re happy with the process, then have others on your team do the same. From there, you can make the final call and determine if your customer will be happy with the product and recommended provider.
The process of choosing the best warranty partner is extensive but it doesn’t have to be overwhelming. It’s also important to keep in mind that not all providers are created equal; due diligence is the order of the day to find the provider that fits your company best. And remember: The best provider is one that affects both you and your customers in a positive way.
Bryan Finnerty is warranty VP at Fortegra, a Tiptree Financial company. Fortegra is a single-source insurance company that, through a network of preferred partners, offers a range of specialty program underwriting, credit protection and warranty solutions for mobile devices, CE, major appliances and furniture and bedding.