Service Contract renewals are vital for a steady stream of service revenues. Renewal Rate is also a key performance indicator for service revenues, customer satisfaction, and customer loyalty.
Your product install base provides a huge opportunity to grow service contract revenues and profits, but attach and renewal rates for extended warranty and service programs (EW/ES) stay below the desired levels.
The sale of extended service programs and warranties can be lucrative. It also provides customers with peace of mind and the feeling that we work in their best interest. In those companies who sell these warranties, opportunities to make that connection are often missed.
Here are five times during the customer service lifecycle where the sale of extended service warranties can be easily promoted:
Given the enormous attention that field service organizations (FSOs) are placing on growing topline service revenue, Blumberg Advisory Group and Giuntini and Company recently partnered to conduct a study among service executive about best practices involved in selling extended warranty and/or extended service programs. A key finding of the survey is that the configuration of extended warranty and extended service programs has a tremendous impact on the sale of these programs. In other words, the length of coverage, level of customization, processes engaged and resources employed in delivering the warranty, and entitlement levels offered play a key role in driving sales. These findings suggest that the more distinctions a company can make about its service program, as defined through the configuration, the more effective the company will be at getting customers to purchase it.
Recently, Blumberg Advisory Group and Giuntini and Company conducted a study about the Extended Warranty/Extended Service Market. We looked at various aspects of sales process and specifically evaluated the Warranty Attachment rate (i.e., customers signing up for these programs) and Renewal rate (i.e., customers renewing their agreement during the warranty or at the end of the term) as they are Key Performance Indicators (KPIs) that measure how successful a company is in marketing and selling extended warranties and extended service programs. Best in class performance would equate to companies achieving an attachment rate of 50% or higher and renewal rates of 75% or better.
Let's say you buy a refrigerator. Buying an appliance like that is a big investment that should last a long time, but there are many reasons you might need support.