2016®

®

“Secrets to Increasing The Sale of

Extended Warranties”

Michael R. Blumberg CMC

President, Blumberg Advisory Group

®What we do…

• Blumberg Advisory Group is a full service management consulting firm specializing in the Aftermarket & Reverse Logistics Service Industry

• Our capabilities include:• Strategic & Business Planning

• Market Research & Customer Satisfaction

• Benchmarks & Best Practices

• Productivity & Efficiency Improvement

• Systems Design, Evaluation, & Recommendation

• Mergers & Acquisitions

• Expert Witness

• Founded in 1969 & Headquartered In Suburb of Philadelphia

• We posses broad industry expertise

®Experience & Credentials…

• Over 25 years Industry Experience

• Worked in all aspects of Aftermarket Service & Support • Warranty Management• Reverse Logistics &

Returns Management• Depot Repair & Field

Service • Service Logistics• Tech Support• Asset Recovery &

Liquidation• E-Waste & E-recycling

• Broad Industry Focus• IT/Telecom• Consumer Electronics &

Appliances• Medical/Scientific

Instrumentation• Process Control & Plant

Automation• Building Controls &

Automation

• Vertical Market Experience• Healthcare• Retail• Manufacturing• Banking

®

Reasons for lackluster sales of Extended Warranties

• Sales people don’t ask

• Sales people are not properly trained on how to sell them

• Sales people are not property incentivized

• Value proposition is not clear

• Warranty coverage doesn’t meet customers needs

• Not priced properly

• Customers don’t think they need them

®Keys to Improving Sales

• Design warranty to meet customer needs

• Utilize Market Research

• Employ conjoint/Trade-off Analysis

• Consider Value In Use

• Provide options

• Basic Package

• Upsells

• Develop Optimal Pricing strategy

• Cost plus vs Competitive vs Value in Use

• Consider billing periods – monthly or annual

®Keys to Improving Sales (cont.)

• Remember that it’s a sale – upsell

• Follow a structured & disciplined approach to marketing & selling extended warranty

• Promotion to customers through marketing collateral & direct communications

• Sell beyond point of purchase

• Align with entitlement process

• Frequently & timely communication on value proposition & benefits

®Keys to Improving Sales (cont.)

• Position product sales & service people for success

• Train them on value proposition & sales process

• Provide rewards & incentives

• Utilize gamification if possible

• Implement robust CRM and Analytics

• Track and measure sales effectiveness

• Spot trends and patterns with attachment rates

• Correlate service events with attachment rates

• Re-evaluate pricing and coverage

• Report usage to customers to reinforce value

• Maintain warranty expiration dates

• Launch renewal campaigns

®

KPIs associated with Selling Extended Warranties

Attachment Rates

Renewal Rates

Percentage of Service Revenue

Year over year

Revenue Growth

®

Performance Improvements from Implementing Best Practices

KPI Percent

Improvement

Attachment

Rate

53.6%

Renewal

Rate

76.5%

% of Service Revenue

From Extended Warranty

37.5%

Year over Year

Revenue Growth

50.0%

®How do you measure up?

Benchmarkingis the key to understanding

Performance

&

Areas of Improvement.

®Benchmarking Methodology

• Specify Targets

• Create action plan

• Implement

• Review

Improve

• Problem Areas

• Processes

• Peer Group

Identify

• Compare

• Define Gaps

• Specify differences

Analyze

• Internal Metrics

• Industry Data

Collect

®

®

For more information about our services contact

500 Office Center Drive Suite 400Fort Washington, PA 19034

Email: michaelb@blumberg-advisor.com

Phone: 1 (855) 643-9060

Website. www.blumberg-advisor.com