By Allyssa Baird, YSN
Product warranties and the high margins they provide play an important role in retail. Indeed, attachment sales of these highly profitable products have often made the difference between red and black ink for big-box chains.
Todd Hall, president of BrandSource member Duerden’s Appliance & Mattress in Bountiful, Utah, is no stranger to extended warranties and added the option to his e-commerce site about a year ago. They’re now automatically offered with every major appliance purchase from the company’s online catalog, and that, along with the addition of a credit card payment gateway in March, and the ease with which consumers can opt for the add-on sale, has led to some unexpected results.
As Hall explained, his online attachment rate for extended warranties is about 11 percent, or nearly three times that of his in-store rate, which is less than 4 percent.
“The big difference,” he said, “is that the website does not need to be reminded to offer a warranty; it’s automatic. I would guess that when we actually present a warranty properly, as part of the in-store retail sale, that our attachment is higher.”
“The big lesson,” he added, “is that if you offer it 100 percent of the time, you will get a lot of takers.”
Still, convincing the customer of the value of extra product protection can be challenging for the sales staff, as new products are already covered by manufacturer warranties. What’s more, Hall believes most customers are already pre-disposed to either always purchase, or always reject, added coverage. And it doesn’t help that some big-box stores are so pushy about add-on sales that customers are cajoled multiple times, no doubt souring them on the concept.
“I remember once buying an electronics product in a Best Buy and having to say ‘no’ to add-ons four times on the sales floor and an additional four times at the cash register,” Hall recalled. “After saying ‘no’ eight times in one trip, I didn’t even like myself, much less the store!”
To help streamline the in-store process, each member of Duerden’s sales team has a portable Microsoft Surface PC, which they can carry around with them in the showroom. This allows staffers to write up orders quickly and efficiently right on the sales floor, which has improved warranty attachments and other add-on sales significantly.
Another potential stumbling block is the third-party companies that administer the warranties. These providers are the point of contact for the customer when filing a claim, and it can reflect poorly on the dealer if the experience proves less than satisfying. “Although we use a third party, the logo on the bill of sale is ours,” Hall explained. “Therefore, every warranty call is an opportunity to excel or fail.”
Hall recalls a time in 2017 when a warranty provider had a meltdown as it changed corporate hands, and Duerden’s was forced to replace about $5,000 worth of appliances to preserve its reputation within the community.
“When BrandSource brought in alternative providers, the primary factor I evaluated was not the price or margin, but the company’s commitment to actually taking care of the customer call,” he said. Luckily, New Leaf checked all the boxes for Duerden’s Appliance & Mattress.
Hall’s parting thoughts may also appropriate for the sales floor: Appliance repairs are seldom inexpensive, and although it is unlikely that a customer will ever need to use their extended warranty, it only takes one service call to make them glad they invested in one.
BrandSource is a unit of YSN publisher AVB Inc.