Extended Service: The Profit Center You
May Be Missing
Pt. 1 of 3
By Tom Egelhoff
 In
February of this year I had the privilege of presenting my "25
Ways To Bring In The Business" seminar at Knowledgefest
2002 in Nashville. My talk was sponsored by VAC Service Corp of Middletown, NY; which
provides MERA
members with extended service protection on the products they
sell. In talking with the VAC reps I was amazed to find that
many dealers are not taking full advantage of this valuable profit
center. When I sold consumer electronics I made a pretty good
bonus income from sales of extended service. So I thought I might
be able to pass on some tips on how to present and sell extended
service.
The first point I want to make is that there are three kinds
of customers when it comes to selling extended service contracts.
There are people who always buy them, people who never buy them
and those who sometimes buy them. It's this last group where
the real profit is made.
Baseball teams play a 162 game season. Good managers know
that they are going to win 50 and lose 50. It's what happens
in the other 62 games that decide pennant winners from those
that go home and wait till next year. But no matter what kind
of team you have all teams must play all 162 games. Which means
you must present extended service to each and every customer
to win your profit pennant.
I guarantee that if you simply ask every single customer to
buy extended service that you are going to sell some. But what
would it mean to your shop if every salesperson's gross monthly
sales volume carried an additional 6-8% in extended service dollars?
What would that do to your bottom line? Six percent of a $50,000
sales month is $3,000 in additional gross sales per salesperson.
It means additional profit with no additional inventory expense,
floor space, labor and only a small amount of additional time
on the salespersons part. The salesperson benefits and so do
you ESP can make a mediocre month a good month and a good month
a great month.
Creating Value and Planting Seeds
What are your customers really looking for when they come
in your shop? They are looking for a product that will fill a
need they have. A NEED. Keep that word in mind. Not a desire,
or a wish, but a genuine need in their mind. Good sound, protection
from car theft, whatever the need, they are there for you to
fill that need for them.
Doesn't it make sense that they want to protect that need?
So as you present a product to your customer you are not only
presenting features but you are also explaining benefits to your
customer, which will fill that need. The more benefits a product
has for your customer the more of a bargain it becomes. As you
are pointing out the benefits of the product you also want to
demonstrate or explain quality and complexity. You might want
to include how fast a CD deck spins, the kind of motor that makes
that happen, the electronic components that make up a car alarm
and relate these items in the total cost of the equipment.
How much of the cost of the unit does the motor account for?
The computer board? These are the elements that may require service
or replacement down the line because they are eventually going
to wear out. Show the complexity of what the customer is really
buying during your demo. This creates value in the product and
will make the ESP explanation later seem more natural. The customer's
car is going to travel over all types of road surfaces. Some
smooth - some not so smooth. Is that product going to get some
rough treatment? You bet it is. Point these things out to your
customer.
I know most of you think that ESP is an additional sale. It
really isn't. It's an option just like the type of speakers the
customer might like. It's an enhancement to the product. The
biggest mistake salespeople make is trying to introduce it at
the end of the sale for the first time without laying a proper
foundation for it during the product demonstration.
The last point I want to make is faith in the product. I don't
believe that many salespeople are very successful unless they
truly believe in the product they are selling. This is no different
for ESP's. You must believe in the integrity of your ESP provider
and feel confident that if your customer has a problem you won't
have any problem taking care of it for them.
Next month I will outline a plan on how to improve your closing
ratio of ESP and I will deal with some common objections that
I know you all are hearing. "If it breaks I'll just buy
another one." "So what you're telling me is this isn't
a good unit if I need this insurance?" " The cost of
the ESP is almost half the cost of the unit, that's just too
much money." "I think I'll take my chances with the
manufacturers warranty."
Part Two
- Click Here
Part Three
- Click Here
Based in Bozeman, MT, Tom Egelhoff is the author of How To Market, Advertise & Promote Your
Business Or Service In A Small Town, and The
Small Town Advertising Handbook: How To Say More And Spend Less.
He is also a seminar and workshop presenter and trainer.
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