Extending the ‘Market Basket’
How service plans are used to increase sales overall
By Brian Ploskina
You hear it all the time:
Step 1. Sell more warranties with every purchase.
Step 2. Profit.
But in between these two unmistakable maxims lies a laundry list of critical steps that often get missed; and not because you and your sales associates don’t know what they are, and certainly not because you’re not ready and willing to employ them. They get missed because you don’t have the right tools at your disposal to complete the warranty sale.
And that’s where a company like Value Added Services (VAS) hopes to make your life a little easier. Based in Southlake, Texas, VAS offers a lot of different answers to the question of how to make the warranty sale easier and more consistent.
“We developed this tangible solution and then we combined that with a truly comprehensive strategy on how to employ that on the floor and promote it,” says Rob Dean, president of VAS. “Step one is developing a robust custom branded solution. But then you have to learn how to implement it in your operation. How do you merchandise it? How do you market it so your customers know about it. That’s all turn-key for us.”
VAS’ background comes from the extended warranty industry, as well as the retail space. The team there has had the opportunity to work for underwriters, retailers, and run service contracts. Dean felt there was a good opportunity to help retailers and manufacturers do a better job selling the programs.
“Everyone that works for us comes from the contract and retail space so we have incredible knowledge on promotional and marketing strategies,” Dean says. “All the typical challenges a retailer faces, we have some credible experience and some first hand knowledge how to navigate those waters.”
To be clear, VAS doesn’t administer service contracts. Instead it works with the GEs, AONs, NEWs, et. al. and makes the process better. One of the things VAS does is make the offers more palitable to the consumer. It gives the associate more confidence when he’s making the offer.
Trifold be gone
The typical warranty sale on big-ticket items usually involves a trifold brochure with a lot of legal jargon in it. To that end, VAS developed a solution that offers reasons to buy the service plan, as well as coupons and bounceback offers to purchase additonal services and accessories. Inside the fulfillment kit is a 10 percent coupon off installation, and 15 percent insant coupon off a remote control or a flat-panel mount.
Dean refers to these offers as “building the market basket,” or expanding the sale of one item into an entire roomful.
And now VAS is taking it even further, selling credit card offers as well, where dealers see 15 to 50 percent returns.
Another improvement to the overall warranty sale that VAS offers is a leather portfolio that includes discounts on associated items. For instance, if someone was purchasing a PC, they would receive a leather-bound portfolio with offers for anti-virus software, PC PhoneHome, a digital printer, gaming sofltware trials, and a year’s subscription to PC World.
Dean compares the leather-bound portfolio to the experience when purchasing a new car. “If you buy a nice quality car and you open the glove box, you’ll see the owners manual in a nice portfolio,” he says. “That’s not just a sales tool. Those are the materials the customer should expect to need in addition to this purchase so you’re delivering a service.”
VAS has producing these services for eight years, including extended service plan programs at Office Depot, Sears and Circuit City.
Extending a hand
“We sit down with a retail partner and address their challenges,” Dean says. The dealer indentifies the categories of products they want to sell extended service plans for and VAS comes up with the offer, including materials that address a retailer’s specific needs. “We had a client that wanted to sell more ESPs but they also wanted to sell more services, like installation,” Dean said. “There were more things they could do for the customer and they weren’t selling them.”