Offering a partial refund on unused service plans can help close the sale

By J.R. Zirkelbach, New Leaf Service Contracts

When asking your customers to purchase an extended service plan, you will receive many objections. What’s interesting about this is that your customers want five years full coverage on their new product. What they don’t want is to pay for it! But offering your customers a money-back guarantee on their service plan if they do not use it removes the price objection. 

Here’s how it works: Say to your customer “Mrs. Customer, if you purchase five years full coverage on your new product today, and you don’t use the coverage during that term, we will refund 50% of the retail price of the coverage back to you in the form of an in-store credit.”  Close the sale and give the customer a certificate detailing the guarantee to redeem if the coverage is not used within its term.

There are some catches involved. In order to receive the credit at the end of the coverage, the customer must:

  • Not have had any service claims or paid benefits on the covered product
  • Have the original certificate in hand
  • Use it within a specified length of time after expiration of the coverage
  • Meet a minimum purchase requirement.

The website of the plan administrator will likely allow you to search for any claims on the contract to ensure that there have been no repairs or paid benefits. Treat the certificate as if it were a $100 bill. If the customer loses it, then it is lost. Do not offer to reproduce it. Give the customer a specified length of time within which she must use the certificate after the coverage’s expiration; for example, 90 days. Set a minimum purchase price of $499 or more so you don’t have to give small or inexpensive items away.

You might be concerned about the impact a program like this can have on the overall profitability of your service policy sales. That’s a healthy concern, and here are a few things to remember:

  • Many customers will use their plan
  • The business rules you establish create breakage
  • The certificate is good nowhere but your store, meaning you are going to sell the customer another product, and likely also sell a service policy on that product. 

If this concept appeals to you but you are not necessarily interested in the responsibilities of administering it, look for an extended service policy provider that will administer it on your behalf.

Consider implementing this creative idea to overcome price objections and increase attachment rates.

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

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