Revenue Growth

Maximize Aftermarket Revenue Through Extended Warranties

aftermarket service extended warranty exteneded warranty management revenue growth service revenue May 04, 2022

Optimizing Aftermarket Success

Every company wants to increase its revenue. After all, that is what determines the health and success of a business. There is one strategy that has been growing rapidly over the last few decades as a solid tactic for generating more profits. What was once a passing notion or after-thought is now a strategic method to increase revenue after the sale. It's not only great for business, but it's also essential for customer satisfaction. 

 

Sales growth and product sales go together and are essential to the overall success of any business. Aftermarket service plans such as extended warranties have become a vital part of overall sales. As a matter of fact, they have become increasingly popular as more and more companies begin to see the advantages of implementing this strategy. 

 

As a matter of fact, it is becoming so widely used that software, vital to tracking sales and sales opportunities, now offers after-sales service management features as well. It's no secret that the reports from trusted sources have been able to accurately collect data involving the revenue generated from aftermarket services, and those numbers are significant. Typically, this strategy accounts for 25% or more of a company’s revenue while also contributing 40% or more to the company’s total profit! 

Increasing Revenue

When you think about increasing profits, you should consider the impact on future revenue. It is not only about the point-of-sale. This money-generating method reaches far beyond the POS. By implementing extended warranties, a company is securing a more profitable future. It’s an investment that is going to provide a solid return.

Customer Service

What builds loyalty between a customer and the business they purchase from? The answer, a great customer experience! Service, service, service!

 

Example:

A customer buys a product and receives excellent customer service as well as after-purchase support for that product. Regardless of how the product functions, the customer will be happy with the fact that they have someone to turn to if/when the product lets them down. 

 

Each person is different. Every consumer has a different lifestyle with different needs. The trick is to offer an array of extended warranties, and add-ons, to fit your customer’s specific needs. Having a variety of options available that can fit into different budgets, offer various durations and specialized plans can all promote flexibility and diversity.  Also, don't be afraid to propose incentives to customers if they sign up for extended warranties. Everyone wants a valuable deal, so be sure to appeal to what is important to them. These are strong tips for optimizing efficiency when implementing a successful after-market service plan. 

 

The fact is that 40% to 50% of buyers will repurchase from a company that offers a warranty. They know that they are going to be taken care of if anything should happen to the product. This offers a sense of security to the buyer and portrays an image that the company is one that will stand by the purchaser to make sure their experience is the best that it can be.  

The Benefits of Implementing an Extended Warranty Strategy

It really doesn't matter what type of business you have.  Whether your company is in retail, a manufacturer, or a service provider, there are advantages to having extended warranty service options.  

 

Retail: 

  • Additional Revenue beyond the sale of the product.
  • Opportunities to ensure recurring revenue.
  • Beneficial opportunities to collect vital data for future marketing strategies. 

 

Service Providers:

  • The ability to extend your service and coverages not only boosts profits but also builds that customer loyalty through exceptional service.

 

Manufacturers:

  • Opportunities that will allow the collection of essential data to not only build a better-quality product but also build better customer relations. 
  • Standing by your product by using extended warranties, shows the customer that you value their business and hold your company to a higher standard than that of your competition. 

 

Virtually every type of business can benefit from having an aftermarket service strategy. By implementing extended warranty programs, a company benefits from recurring revenue bookings. This method is highly advantageous because it not only generates an impressive profit but also creates a better brand quality as well as customer loyalty. For more information please download our FREE Ultimate Guide to Best Practices in Extended Warranty Management.

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