Going The Extra Mile: Overcome Todays Buyer Anxiety By Offering Warranties And Service Agreements

By Andrew J. Birol, President, Birol Growth Consulting, Inc.

In these uncertain economic times, many sales and marketing people are growing increasingly frustrated over the ambivalence of prospects and customers. Despite strong consultative sales efforts, many sales professionals are finding it takes more time and effort to close business. Even more frustrating are prospects that express remorse over or simply reject customized solutions they helped to define. While buyer anxiety over the economy is increasingly the cause, what is the answer?

If a prospect is not convinced that your solution will work, why not warranty the product or offer a service agreement to insure results? While this is nothing new for capital goods and software products, most any product or service can be warranted or guaranteed through a service contract.

Why would a warranty or service agreement make good sense for your business to offer?

  • It represents an opportunity for you to eliminate a perceived or real element of risk in the minds of your customers or clients. This will be particularly attractive to managers oversensitive to meeting company objectives and minimizing their personal career risk.
  • In a downsizing world, fewer internal resources can be used to insure the job gets done. Outsourcing is often a likely consequence to cost cutting
  • If priced correctly, service and warranty contracts are profitable. It is more difficult to compare and price shop agreements than products or services.

What parts of your product or service can be delivered through a warranty or a service agreement?

Almost any business, from a consumable or durable product to an intangible service can be covered. The key is to be creative and to break down what you sell in the eyes of what the customer or client is buying.

  • Delivery: When, in what form, within what time frame, and with how much notice. For example, the challenge of food service is not having food ready; it is having it properly presented in quantities that match quirky appetites
  • Performance and output: How will the product or service meet the defined need, to what standard, with what outcome, through whose cooperation or involvement? For example, can you commit to your product or service being available 24x7x365?
  • Acts of God: Standard insurance policies cover many of these, but how else can you be creative? If Ohio can have an earthquake, what else could happen?
  • The Unforeseen: We all laugh at how quirky life can be, even when it comes to routine tasks. Somebody must have insured (and profited) from Tiger Woods’ cataract operation. The bigger the downside, the bigger the opportunity.
As with anything new, there are pitfalls. Here are a few worth considering:
  • You are now in the service business. This may be very different from how you currently operate. You own the problem long after you have booked the sale.
  • You must deliver to the letter and in the spirit of your customer’s expectations
  • You are financially exposed in a new way. Be sure you cover your risks

The bottom line is that selling warranties and service agreements in an uncertain economy can be a real source of salvation to you and your customers. As with all new businesses, if you set, agree on and meet reasonable expectations, success will be yours.

Articles by Birol Growth Consulting are © copyrighted and all rights are reserved. However, articles may be reprinted with prior written consent if attribution is included as follows:

© Copyrighted by Andrew J. Birol, President of Birol Growth Consulting, who helps owners grow their businesses by growing their Best and Highest Use ®. Andy can be reached at (412) 973-2080, by email at abirol@andybirol.com, or on the web at www.andybirol.com.

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