Mize recently conducted a study among service executives and warranty professionals who are involved in marketing and selling service contracts and extended warranty (SC/EW) programs. The findings validate which strategies and tactics offer the best results.
Optimize Your Service Contract Operations: Increase Your Service Contract Revenue
A statistic to overcome: Companies realize less than 15% of potential service contract revenue.
Overall, unachieved revenue results from businesses not offering service programs beyond standard product warranties. Even when service programs are offered, the attach rates remain low as some retailers and channel partners may not focus on service sales, or customers fail to understand the value of these programs.
Last week, Mize hosted a webinar titled “Benchmarks to Optimize & Maximize Service Contract Sales”. The webinar presented the results of study conducted among service executives and warranty professionals who are involved in marketing and selling service contracts and extended warranty (SC/EW) programs. Representatives of 96 companies participated, providing an elusive look into how they’re configuring their contracts, sales and marketing approaches, results realized and planning for future expansion of this customer-connecting, revenue-generating profit center.
Eric Arnum is the editor of Warranty Week, an online newsletter for warranty management professionals. Since 2003, Eric Arnum has been publishing reports on product warranties, extended warranties, and claims rates in various industries. Warranty Week has gained a broad following among manufacturers, retailers, servicers, and insurance professionals.
Mize is currently conducting a study among service executives and warranty professionals who are involved in marketing and selling service contracts and extended warranty (SC/EW) programs. Our objective is to identify best practices involved in marketing and selling SC/EW and extended service programs and evaluate the impact of these practices on key performance indicators (KPIs).
Most people may not get excited about Service Contracts, but Warranty Week estimates that Service Contract industry generates at least $42 Billion revenue annually. The Service Contracts Industry Council (SCIC) estimates that over 250 Million contracts are sold annually.
Your product install base provides a huge opportunity to grow service contract revenues and profits, but attach and renewal rates for extended warranty and service programs (EW/ES) stay below the desired levels.
The sale of extended service programs and warranties can be lucrative. It also provides customers with peace of mind and the feeling that we work in their best interest. In those companies who sell these warranties, opportunities to make that connection are often missed.
Here are five times during the customer service lifecycle where the sale of extended service warranties can be easily promoted:
Blumberg Advisory Group and G35 Software partnered to conduct a study among professionals involved in selling Extended Warranty /Extended Service (EW/ES) programs and asked them about Processes Covered and Resources Provided by their programs. Here is what their responses indicated:
Given the enormous attention that field service organizations (FSOs) are placing on growing topline service revenue, Blumberg Advisory Group and Giuntini and Company recently partnered to conduct a study among service executive about best practices involved in selling extended warranty and/or extended service programs. A key finding of the survey is that the configuration of extended warranty and extended service programs has a tremendous impact on the sale of these programs. In other words, the length of coverage, level of customization, processes engaged and resources employed in delivering the warranty, and entitlement levels offered play a key role in driving sales. These findings suggest that the more distinctions a company can make about its service program, as defined through the configuration, the more effective the company will be at getting customers to purchase it.
