Selling Fear
After 5 years, my laptop finally gave up the ghost. I ventured down to a big box electronics store on my lunch break. My salesperson was friendly, got my name, and helped me with my purchase. To my surprise, he did a lot of things right. Until…
The extended warranty spiel.
I listened patiently as he outlined every benefit of the extended warranty. Five minutes later it was finally over. My response?
“I think I’ll pass.”
He looked surprised. “Can I ask why?”
I gave him points for that. Rather than saying the real reason (I’m too cheap), I replied with a more elusive, “I’ll take my chances”
He actually grimaced at me. “Well you will certainly be rolling the dice”. His tone was if I had decided to drop out of school, or take up cake juggling, not refuse a $200 warranty on a $500 laptop.
He went on, “The failure rate on laptops is quite high. And the power cords? They generally only last 12-14 months before they give out from regular use, and then you’re looking at $100 to replace them. If you need parts for repairs, it can take weeks to get them from the manufacturer” And on and on.
And on.
He did relent after I refused again, but it left a sour note on an otherwise pleasant sale.
So what was he selling me exactly? It didn’t sound like an extended warranty anymore. It sounded like he was serving me a big heaping pile of fear – though he did stop short of claiming my computer could (and certainly would) burst into flames at any moment.
Why do we sell warranties this way? The fear tactic must work on some people. But I have to wonder, are those people satisfied customers?
Extended warranties can be great, and are valuable and necessary in the right circumstances. That said, I am curious if there is a better way to sell them that doesn’t sabotage the salesperson’s hard work on the floor. What do you think?
What techniques do you use to sell extended warranties? As a shopper, what has convinced you to purchase them?
Posted on December 6, 2011, in 'We Get Retail' Business Tips and tagged business, extended warranty, fear, retail, sales, warranty. Bookmark the permalink. 4 Comments.
mmspos 
As someone who worked in retail and sold extended warranty for years this was always one of the great debates between sales people; how do you effectively sell warranties to a customer?
Many sales people I worked with used the fear technique, and I wholeheartedly agree that this is not the best way. In my experience, people buy warranties for the same reason they buy any other product or service; it provides value and addresses a current or future need. In taking this approach you go from selling a ‘warranty’ (major stigma attached to this word) to a maintenance or service plan, the words maintenance and service imply value, and the word plan suggests an intrinsic purpose to the additional purchase. But how do you communicate this value?
I always began every sale reminding myself that people want to feel good about their purchase and believe they’re a smart consumer. This is especially important when selling an item or service they didn’t originally intend to buy. It’s important to broach the topic of maintenance/replacement/service/warranty plans early in the sales cycle as you’re discussing the primary purchase. Tie the plan to the value of what they’re purchasing:
Salesperson: “Laptops today are terrific desktop replacements, you’ll be able to do all of the tasks you had mentioned on this particular unit and it’s powerful enough you won’t grow out of it in the next 2 years. To help make your laptop experience even better, we offer an extended maintenance plan that will allow you to leverage our in house technicians if you ever have any issues. Factory warranties are pretty minimal and this will ensure you get your laptop back much quicker and we cover much more than the factory warranty. I will provide you with more details if you choose to make a purchase today.”
At this point you haven’t sold anything yet, but you planted the idea that maintenance plans can be a good thing and superior to the stock warranty. You’ve tied it specifically to the item the customer is purchasing and without using a fear statement. This sets you up much better for a close when the moment of truth arrives at the cash:
Salesperson: “Alright, so we have the laptop bag, wireless keyboard and mouse, anti-virus, laptop and did you want to go with the maintenance plan I mentioned earlier, as I said it’s a much more comprehensive plan then the factory warranty and the turn around is far quicker on any issues that could arise”
Customer: “How much does it cost?”
Salesperson: “Well the one year plan is $129.99 but we offer a comprehensive 2 year plan at $199 that is our best value. To put it in perspective, the average laptop repair is over $300. If you ever need it for anything over the next 2 years it will pay for itself and the turnaround will be much quicker. I typically don’t buy these plans on most purchases, but with laptops I feel better knowing I’m covered if anything happens.”
In my opinion, this a very effective sales technique for what is traditionally a difficult sale in retail. It starts with planting a seed, presenting the value, empowering the customer to make a decision and feel good about it, explain why the alternative to buying an extended plan presents a potential risk and of course empathize with the customer (I typically don’t buy these plans on most purchases, but…). At the end of it, the customer made the decision, is leaving with peace of mind and feels good about their experience with you the salesperson.
Thanks Matt, great comments. Thinking back on my experiences as a customer, the one time I did buy an extended warranty the pitch was laid out in much the same way as you’ve described.
When I consider an extended warranty, I generally evaluate 3 things: the cost of the plan, the cost of servicing, and my ability to fix it myself.
I think Matt hit the nail on the head. One of the key points I address when training sales folks on selling extended warranties is to be soft about it. If you come across with a hard nosed tactic such as fear you may convince the customer that the item they are purchasing is not the level of quality they were looking for. It is a very dangerous tactic to tell the customer that their brand new widget is such poor quality that something will surely break within the extended warranty period. Great post thanks!
I definitely was left with that feeling, and it’s hard to shake! Not the kind of lasting impression you want to leave with your customers 🙂