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 who 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 ensure 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 it make good sense for you business to offer a warranty or service agreement?
- 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 ensure 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 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 24/7/365?
- Acts of God: Standard insurance policies cover many of these, but how 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 operated before. You own the problem long after you have booked the sale.
- You must deliver to the letter and in the spirit of your customers’ 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 for you and your customers. As with all new businesses, if you set, agree on and meet reasonable expectations, success will be yours. Andy Birol ([email protected]) is president of PACER Associates Inc., a Solon-based firm that provides expert advice to owners and leaders who need to grow their businesses. He can be reached at (440) 349-1970 or at www.pacerassociates.com.
