Not Selling Furniture Protections Plans?

Here’s why you should consider doing so

By Andy Kriege, YSN

Dan Miller has been educating BrandSource members about the benefits of selling furniture protection plans for years.

Dan Miller

As a regional sales manager for Guardsman, a BrandSource furniture care partner, he has hosted seminars on the profitability of protections plans at our national shows and supports all of the supplier’s buying group activities while leading a 23-state sales team.

YSN recently spoke with Miller about the advantages of adding these high margin, value-added attachments to members’ furniture mix, and shared some surprising facts along the way.

YSN: Some furniture dealers are skeptical about selling protection plans. Why should they consider them?

Dan Miller: Aside from the fact it protects their customers from accidents that happen to their purchases, protection plans offer upwards of 75% margin for dealers. The added revenue also benefits their sales associates, who can earn enough commission selling protection plans to pay their monthly mortgage. It’s a winner for the customer, the business, and the people selling them.

How should a dealer choose from the many protection plans that are available?

In general, I recommend a comprehensive plan, which covers fabric, leather and wood all in one retail ticket. You also want to make sure that your protection plan covers all stains, including any type of fluid; mechanisms, including motors; one-time animal damage; and structural damages such as rips, cuts, tears and burns.

I also recommend selling plans that are specific to mattresses and to adjustable bases. 

If a customer purchases a protection plan and files a claim, in what instances might it be denied?

The number one reason claims are denied is that the customer does not report the incident within 30 days. Being able to process claims online has abated this issue to some degree, but it is important to educate your customers on the claim process.

What are some of the other reasons a claim would be denied?

There are a few: cushion flattening; an accumulation of stains, rather than filing a claim when stain occurs; items covered by the manufacturer’s warranty; and moving or storage incidents outside of the home. Also, ordinary wear and tear is not covered.

How should salespeople be compensated in order to encourage attachment sales?

You should pay your salespeople a minimum 20 percent of the price of the plan to start, and then pay them a higher percentage when they achieve certain levels. For example, a salesperson achieving a 50% attachment rate should be paid 25% to 30% of the purchase price.

And how do you determine a plan’s purchase price?

Retail the plans at 11% to 15% of the retail ticket. For example, for a $1,000 sectional, retail the “gold complete plus plan” at $139.99.  If the customer makes one claim in the five-year period, they recoup their investment and then some. Tech visits start at $125 to $175 per hour, not including their trip charge.

OK, we see your point on why it makes sense to sell protection plans. How does a retailer get started?

It’s pretty straight forward. At Guardsman we simply have you fill out a credit app and then educate you on how to enter the information for the plans online.

Any final thoughts for BrandSource members who are adding furniture protection plans to their mix?

Know what is covered and what is not covered by your plans and educate purchasers on how to file a claim. Most important, know that the success of the program starts and stops with the owner. The business owner needs to be fully engaged to be successful.

BrandSource, a unit of YSN publisher AVB Inc., is a nationwide buying group for independent appliance, mattress, furniture and CE dealers.

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