Apple is right now the biggest consumer brand, but can you guess what is Apple's most profitable and highest margin product? (Hint - It's not the latest iPhone) AppleCare extended warranty offering is the company’s highest margin (at 63%) and second-largest segment.
While Apple is acing the selling extended warranties process to its loyal customer base, new consumer brands are constantly struggling, or even worse, are unaware of about just how highly profitable can selling extended warranties be.
While learning about high-profit margins in selling extended warranties is not a difficult process, learning how to sell them effectively is. And this blog show's you how you can do it effectively.
Here's how consumer brands can sell extended warranties to their customers -
Provide a seamless warranty registration experience -
A smooth and pleasant first warranty experience is the basis on which you built your post-sales connection with your customers, hence you must ace it.
It is necessary to have a warranty registration process in place that can help you build a two-way communication channel with your customers. You can do this by choosing a warranty management software that can work in unison with your current CRM and also brings you contact details like Names, phone numbers and emails of your end customers.
You would also like to maximize your warranty registrations so that you have maximum potential buyers for your extended warranties. You can do this by offering your customers something in return for the registration like loyalty points or limited extended warranty coverage.
Give customers several price/ feature options -
One size does not fit all and that holds for warranties as well, all customers are different and are looking for different features from their extended warranties based on their risk analysis of the product. It is in your best interest of you to create several prices and features combos by including (or excluding) several features.
First, decide how much you want to charge for the warranty. You might offer a free trial period or a discount for the first year of coverage. If you want to create a long-term relationship with customers, consider offering discounts for multiple years' worth of coverage.
Extended warranties come with several features that might not be standard in other types of warranties — like free shipping, free returns, and even free replacements if something goes wrong with the product (such as if it's damaged by water). These features can attract customers who are looking for more than just replacement coverage — they might also want to get their money back or have an item replaced at no cost after a certain period.
Highlight the need for an extended warranty -
Educating is the first part of selling. For your customer registering a warranty is the last step of their product purchase journey. To sell extended warranties successfully you would have to educate your customers on the benefits of having one and on the risks of not having one. You can do this by researching and coming up with numbers to back your claim, for example, the percentage of extended warranty users who claimed a warranty, the amount of money usually required to get a product repaired etc.
Digitize warranty management -
Traditional warranty processes put a lot of burden on customers by making them secure and manage their purchase bills, warranty cards and other related documents, as a result, to quit the hassle most customers do not opt-in for extended warranties.
You can solve this by having digital warranty software like NeuroWarranty take care of your warranty process. As NeuroWarranty digitizes your warranty process, your customers no longer have to secure old purchase bills and warranty cards. Instead, customers can register and claim a warranty in just a single click, easing up the process of first registration and opening doors for extended warranties.
Use Email to your benefit -
Selling extended warranties typically has a longer sales cycle compared to other post-sales services. You will have to keep engaging with and educating your customers for them to take a purchase action. You can do this by periodically sending your customers emails about the same. But at a time when most consumer brands depend on marketplaces like Amazon for their sales, how can you get the email ids of your customers? To do this you will need a solution that can overcome the complex challenges of your sales channels and bring you data of all your end customers.
NeuroWarranty's warranty management software specializes in delivering end-customer data to brands, and at the same time, helps brands build a profitable interaction with their customers. To know how NeuroWarranty helped market leader Syska increase profits by harnessing customer data read the complete case study here.