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Tuesday, 07 May 2013

The Do’s and Don’ts of Selling Extended Service Plans

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Most consumers have a preconceived view about of extended service plans as protection they don’t need. How you train your sales team to present your plan to the consumer can make a huge difference in your success rate and in customer satisfaction levels. Here are just a few tips for successfully selling ESPs:

Don’t Sell Point-of-Purchase ESPs (If You Can Avoid It)

Unfortunately, retail has experienced some struggles in the last five years, and many companies have stopped training employees to sell extended service plans. Instead, some stores put plans in plastic packaging near the checkout with other impulse purchase items. They hope the customer will take the initiative to read about, understand, and buy the ESP on their own.

This kind of impulse buy may work for gum, but not for an ESP, which requires an explanation of benefits. Customers need help understanding the value of this investment. Depending solely on a point of purchase display to sell the plan is not impossible but more than likely won’t succeed.

In addition, customers at the checkout are ready to pay. They’ve already filled out the check in their head and are prepared to spend a certain amount of money. Expecting them to spend another $39.99 isn’t very realistic unless your cashiers are skillfully trained on how to quickly create value in the customers mind. Otherwise, the customer is thinking about checking out, walking out, and driving away—not spending more money.

Don’t Wait Until the Last Minute to Offer ESPs

Even if you’re not placing ESPs near the checkout, most sales associates don’t mention service plans until the end of the sale. Sometimes, this occurs when the associate is prompted by the register to offer the plan, and other times it’s simply an afterthought. If the prompt is the only reason the associates are offering the plan, then they’re acting out of compliance, as opposed to offering something they believe will protect the customer’s investment.

Instead of making the ESP a last minute add-on, train your team members to incorporate the benefits of the ESP throughout the entire sales process so it becomes part of the overall product purchase in the customer’s mind. For example, as your appliance salesperson is leading a customer back to the washing machines, they can mention that all of your models qualify for your exceptional service plans, which can be explained in greater detail later.

By mentioning the ESP during the sale, you plant a seed in the customer’s mind that the plan is something they not only need as part of their purchase, but will expect to hear more about later. In fact, this approach can sometimes result in customers initiating questions about the service plan and making the sale themselves.

As your sales associate introduces the features of any product to the customer, they can link those features to corresponding benefits in the ESP. This causes the customer to begin including the purchase of the service plan in their spending strategy.

Do Believe in the Product You’re Selling

As you probably know, body language is a huge part of sales. You can tell just by looking at the body language and facial expressions of sales associates whether they believe in the product they’re selling.

There’s a difference between offering an ESP because your boss is making you and offering it because you think it’s right for the customer. If your sales team offers an ESP because their manager told them to do it, the customer will sense the sales associates’ disinterest and reject the offer. But if they present the plan because they believe in it, the customer will hear that belief in their voice and see it in their body language and will be more likely to purchase the plan. Remember, the goal is taking care of the customer versus compliance.

Do Train Your Team

The No. 1 reason sales associates don’t believe in an extended service plan is because they don’t fully understand it. The best way to get your employees to believe in and consistently offer an ESP is to educate them. They need to understand the benefits of the ESP, how it will help the customer and how it will create customer loyalty.

Train associates on the difference between a manufacturer’s warranty and an ESP. Most consumers don’t know the difference, and we’ve found that many sales associates don’t either. While a warranty is limited to defects in materials and workmanship, the ESP offers more protection for things like accidental damage, surge protection, in-home service, as well as one-on-one help for the customer in the event they have a problem with the product.

If sales associates understand that what they’re selling is peace of mind and convenience through customer service after the sale, they’ll be more inclined to help the customer understand the benefits of an ESP and less inclined to skip offering it altogether.

In general, if your people are offering the ESP 80 percent of the time, you’re doing phenomenally well. But that means the other 20 percent are never being offered! Now factor in that you are probably closing 30 percent of those 80 percent being asked and it all adds up to a tremendous opportunity to improve company profits, customer satisfaction, and your commission, if that applies.

By tweaking the way you present plans, training your team to understand and believe in them, and incorporating ESPs into the overall purchase experience, you’ll be amazed at how much your success rate, and customer satisfaction rise.

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John Quattrucci

John Quattrucci is President of Stuart & Associates, a retail consulting firm specializing in Sales and Margin Growth Programs and Returns Reduction Programs.

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