How to Build Sales With Extended Benefits
An area that can become profitable for many businesses in
building the offer within sales copy is selling (or "upselling"
customers with) extended services, products or packages, also
often called the "extended warranty."
Extended warranties are subtle forms of insurance policies that
guarantee a product or service's performance, especially after
an initial period of time.
While the guarantee promises benefits, the warranty promises
that the enjoyment of those benefits will continue. In other
words, an extended warranty is like a "guarantee's guarantee,"
if you will.
A warranty promises that a product will perform the way it is
supposed to for a very specific period of time. If your product
comes with a guarantee, then consider selling an extended
warranty that ensures its continuation.
But if your product is can not be guaranteed for whatever
reason, consider a warranty that may take the form of future
upgrades, additional benefits, membership programs, points clubs
or support service packages.
For example, if you sell computers, you can also offer a
buy-back plan. For an additional fee, customers "buy" the
privilege and ability to choose to trade in their systems for a
better model within a year following their purchase.
The plan, which may appear in the form of an official
certificate, coupon or letter, promises them a complete refund
of the purchase price that's applied towards their upgrade. If
they choose to exercise their option, they only pay the
difference when they upgrade to a later model.
The Silent Profit Center As for services, the extended warranty
is a little different since services are intangible, do not
break down, need repair or depreciate in value.
But they are just as profitable.
Warranties can take the shape of memberships, points clubs,
preferred customer programs, priority service packages, extended
service packages, prepayment plans, premium services, future
discounts or upgrades plans, etc.
In short, warranties are much like service agreements. For
example, if you're a consultant you can offer prepaid retainer
packages that include several hours of consulting or on-call
priority privileges, all at a discounted rate.
On the other hand, if you offer repetitive services such as a
hairstylist or a chiropractor, you can offer a number of prepaid
visits at a discount. If your cashflow is particular low during
a specific month or season, you can arrange your packages so
that they renew at that point in time.
The summer is a slow time for snowplowing services. But with
prepaid packages, which are sold in the summer and renewing in
the summer, it creates an income stream when things slow down.
These programs are often more advantageous to the client for a
variety of reasons. And many marketers and businesses shy away
from them. But they really don't see it from their client's
perspective.
Beyond the obvious price incentive, the benefits of extended
warranties include less billing, more convenience, preferred
service, faster delivery, extra privileges and many others.
Another is the sheer feeling of "belonging" to a special, elite
group of people to which higher attention or priority is given.
Join the Club That's why premium programs, or "preferred client
clubs," are very popular. They have a mystique and a sense of
extra value about them, which is being part of that elite group.
As Amex says, "membership has its privileges."
For example, club members might enjoy a members-only 1-800
service number, extra premiums, discounts on joint-ventured
partners, express checkout services, special members-only
contests and so on.
Online, clients can become members of a private site, access
premiums, receive additional web-based services (such as
reminder services, automated shipping, real-time support, even
special software, like eBay's Toolbar, etc).
But keep in mind that the savings factor in such programs is the
greatest motivator. Consumable products translate into repeat
sales. Therefore, an extended warranty in this case would be a
repeat customer program.
(Also called "rewards programs.")
This could involve a flat discount rate on all purchases made at
a particular store during a certain timeframe. What this program
also does is to preemptively reduce the possible loss of a
client to a competitor.
Bookstores sell avid reader membership programs. For an annual
fee, they offer members a fixed discount rate on all subsequent
books purchased during the time that the program is in force.
These programs can range from one month to a full year. Costco
Price Club is another great example where an annual membership
fee is charged but members enjoy wholesale or bulk prices.
Nevertheless, while extended benefits are in and of themselves
profit centers, they're also powerful positioning tools since
they help to increase your core business at the same time.
People love options and the feeling that they are being taken
care of. They also want to reduce the element of risk in the
buying process. People want to avoid pain, and that includes the
pain that comes with the potential or future loss of a benefit.
So, help them feel more secure with the knowledge that they will
continue to enjoy your product or service.
Sell them an extended warranty!
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