Consider setting performance requirements to increase these high-margin attachments

By J.R. Zirkelbach, New Leaf Service Contracts

Retailers who are effective in selling extended service plans (ESPs) are committed to making them an important part of their business. However, it is not uncommon for one or more salespeople to fail to respond to that commitment.

Often, this is due to the fact that historically, many of independent retailers have actually sold against service policies.  It can be challenging for a salesperson to suddenly reverse course after years of a certain style of selling.

The most effective way to overcome this is to first communicate to your sales staff why selling service plans is important to your company.  Remember that if your staff does not know why this is important to you and your company, it will not be important to them.  Once you have clearly communicated the importance of selling service plans and the profitability and customer assurance they bring, you can set a minimum level of expected performance.

It is best to start with a low minimum performance requirement, and to give your sales staff a timeline in which to meet it.  For example, as an initial requirement you may set a 5 percent attachment rate (one plan for every 20 units) and give your staff 30 days to begin meeting this goal. Often all that is necessary to reach that 5 percent rate is to simply make customers aware that services plans are available.

After meeting the performance requirement your staff will realize that it was not as difficult as first thought.  The mountain that was first imagined was in reality only a mole hill!  Congratulate your staff on meeting the challenge and leave the issue alone for 30 days. 

Afterward, raise the minimum performance requirement to 10 percent.  Again, give your staff a timeline in which to meet the new performance requirement.

Here are a few performance benchmarks from New Leaf Service Contracts that you may find helpful in determining the effectiveness of your sales team:

  • < 10 percent attachment rate = salespeople not regularly presenting plans to customers
  • 10 percent attachment rate = salespeople making most customers aware that service plans are available
  • 20 percent attachment rate = salespeople presenting service plans to customers in a moderately effective way
  • 30 percent attachment rate = salespeople presenting service plans to customers in a very effective way

Lastly, make sure the administrator of your extended service plan program has effective sales training available to help your team increase its sales effectiveness. Someone once said that a truckload of free washing machines does little to help a dealer if there is no one to sell them to.  The same applies to your extended service policy program. Dealer cost, plan features, and other factors mean little if your salespeople aren’t selling.

J.R. Zirkelbach is a business development specialist at New Leaf Service Contracts and a 30-year veteran of retail and retail services. J.R. implements New Leaf-administered extended service programs at BrandSource dealer locations, which helps members provide exceptional service to their customers, create earnings opportunities for their salespeople, and increase their overall profitability.

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