Warranty Wise

Drafting a Warranty, ESP or Maintenance Program Business Plan

• P&L’s
• Cash Flow and Balance Sheet
• Revs and Forecasts
• Ops
• Insurance
• G&A
• S&M
• Summaries and Recaps
• Etc.

All this stuff has to be  looked at.  Most importantly though:

Are you offering a warranty you should if you are looking at an OEM program? Does it give the purchasers confidence to buy your product?

Are you offering a warranty that people want to buy if you are offering an extended warranty program? Is it the right coverage at the right price?

Are you offering a maintenance program that insures the business or consumer you are serving can keep on operating?

Yes, you should not be in the business if it doesn’t pencil out so drafting a business plan and in depth financials are important, but why bother penciling it out if your programs won’t sell…

What is your vision to make your warranty program a benefit and how will you differentiate yourself from your competition?  What will it look like?

Warranty programs can be powerful….This is where you want to start before you can even put a pencil to the paper with financials.

This month, we will be taking a closer look at some great ideas and what financial questions have to be asked to make them work….

Just because you can does not mean you should

Consequences.  Consequences from decisions. Consequences from decisions about the use of technology. Consequences from statements you make to your employees.  Consequences from how you treat your customers. Consequences from your actions.

 

Do you remember the movie Jurassic Park?  Jeff Goldblum has this great line.  He tells the rich Dinosaur loving grandpa something like, “you were so caught up in the fact that you could make dinosaurs that you didn’t stop to think about if you should”.  Well you know how that turned out.

 

Every day with every encounter of your employees and your customers keep every body’s best interest in mind when ever you can.  Too many business decisions are made for short term gain instead of long term integrity and effect.

 

In the ESP business, “Terms and Conditions” are written to protect against abuse by consumers to the retailer or to the underwriter.  Unfortunately they often are used against the consumer as a way of not paying a claim and that gives all of us some bad long term consequences……….

 

Consequences

Do Extended Service Plans Matter?

· Ask the retailers that sell them: more revenue, more bottom line, better customer retention, lower returns

· Ask the associates and levels of management that sell them: more income, less turnover, fewer unhappy customers

· Ask the customers who buy them:  less headaches, very convenient, inexpensive relative to repair or replace costs in this economy, secure

· Ask the administrators that make them work:  easy to help people, satisfying to all their customers, a great opportunity to turn direct costs into overhead, a great business to build

· Ask the insurance companies who underwrite them:  great risk-reward value, good long term addition to the portfolio, great way to build name and brand reputation.

After Market: A Few Final Words

We have spent a week or two talking about After Market efforts which really are a way to stay in touch, or get in touch, with the users of your products.  Like all businesses efforts this really gets back to your Strategy, Execution and Control, (SEC). That of course starts with questions.

Who       am I sending this to, (define your audience), is doing this for my company, is in control?

What      am I trying to say, learn, sell?  Stay on point.

When      is the best time to reach out?  Immediately after the purchase, 30 days, before warranty expiration, renewal, or itch time?

Why       am I doing this, would the person read or listen, would the person take action?

Where     is the best place to reach them?  Will I be controlling the campaign?

How       will I measure success, will the customer make a purchase should they choose to buy or act?  Is it easy?

After Market has built many companies.  What are you doing with yours?

After Market, Inquire and Inform

So let’s say that your identification and indication works and your customer seems to want to hear more or see more. What do you do next?  Ask them!

·         Inquire if they have a potential need for your product or service, or if their item you are offering the Extended Service upon is still in their posession, and if you have permission to continue.  This show of respect will pay off handsomely in the long run.  Don’t assume that they do and run them over with content or verbose offers. Ask them.  Have a conversation and do that by inviting them to engage you back.  On the phone this is done with Q&A. In writing, this is done with a call to action and a simple way for them to contact you or make a purchase.

·         Inform them of everything they need to make a decision.  Give them the prices, the options, the terms and conditions, the features, the advantages, the benefits...Don’t assume they know.  Don’t assume they don’t know…Just give them what they need to make a decision.  Keep it Short and Sweet.  Ask for the order. Best to use and alternative of choice close.

People buy Extended Service Plans primarily for Convenience and Peace of Mind.  Keep that in Mind. Keep your After Market offers or Renewals on Point. People buy accessories because they make sense for how they use their product. Keep that in Mind and Keep those offers on point.

Respect your customers.  You will sell more.

After Market, Identification and Indication

It should be pretty obvious that if you mail, or e-mail something that you should have it “grab the attention” of the reader immediately. A Headline, (the Indication), is what I like to call it. It should have your easily identifiable logo and have a direct identification of what your customer purchased.  No generic baloney.  This way they know the contact is relative to them and their product, it is from your company, and based upon the Headline, they may go ahead and actually read it.

A call is similar except you do not have a colorful logo in their face so the words better immediately identify who you are and why you are calling.  This verbal Identification and Indication is of key significance.  Leave any of this out, the mail is thrown out, the e-mail deleted, the phone call stopped.

Some Sample Headlines:

* Your (Brand) laptop Warranty is expiring next month.  Is it working OK?

* Your Printer Warranty is running out…Ink a Renewal and we’ll include some Ink.

* The New (GPS) is now available as a Trade to Replace and Improve your Old GPS.

Of course, you better follow up with some pertinent copy, or be ready to discuss the big F>A>B.  Without Features, Advantages and Benefits to your customer, what are you selling anyway?

Identification and Indication gets you started.  You never get a second chance to make a first impression.  Don’t waste it.

After-Market, State it Directly, Say it Loud, Say it Proud

People know immediately if they want to give whatever it is further consideration.  Keep that in mind.  When you are touching them with any Aftermarket offer, (everything you mail, e-mail, say over the phone), you better hit the point immediately.

• Identify who you are, (Company, Contact name and location).

• Indicate why you are contacting them, or what your purpose is and how you will both benefit from your contact.

• Inquire if they have a potential need for your contact, (this is the part most marketers leave out) and if you have permission to continue….this show of respect will pay off handsomely in the long run.

• Inform them of everything they need to make a decision.

ESP Aftermarket Programs (Timing)

We’ve all heard it said, “timing is everything”. Good thought to include while building your ESP, or really any other, aftermarket strategy.

·        Immediate to confirm and/or thank someone for their purchase and invite them to contact you if any need arises.  You can also use this opportunity to have them give you “permission” for future contact.

·        30 days to those that did not buy an ESP or particular accessories.  This should be short and matter of fact and relative benefits.  Simple to purchase. Non”Sellie”.

·        30 days before OEM warranty expiration to confirm that the warranty is about to expire and that your customer can cover themselves past that date.  Should include length of coverage and payment options.  As above, Short and Simple.

·        After OEM expiration to show an ongoing concern.  This risky offer should be coupled with how is the product working tone, and can we do anything for you tone.  Good time to mention “new accessories” that may be available.

·        Renew Time is commonly done about 60 days and again at 30 days prior to the end of the ESP period.  Obviously the price will reflect the age of the product.

·        Itch Time is when the product life is coming to an end.  Though this isn’t necessarily an ESP thing, the ESP database is a good one to comb to see how long people have owned their products.  I can’t remember where I heard this term, but I like it….People get and itch to buy a new upload before a new DVD, which is before a new computer, which is sooner than a new appliance….You get the picture….Help them scratch that itch.

Timing is Everything.

Retail ESP Aftermarket Efforts: Direct, “E” Mail, or Call

Regardless of what approach you are using, know this:  Unless you have their permission to send e-mails or call, don’t. It is not worth the time or money, and more importantly, it’s rude and unacceptable.  In this day and age, one of the few things people have some control of are in-bound contacts.  We now commonly refer to this as “Opt-In” or “Permission Based” marketing.  Start with that in mind and you will be ahead of the curve.  Translated, you will have a better chance of succeeding and more importantly, enjoy a higher ROI.

Here is a link from

Seth Godin

’s blog that dealt with “Permission” quite a while ago.  Enjoy.

http://sethgodin.typepad.com/seths_blog/2008/01/permission-mark.html