Make Extended Service Contracts Worthwhile

Extended service contracts are a profitable add-on sale for you. They also can add to customer satisfaction, since if a product fails to function properly, a good ESC avoids the customer having to exchange or discard the item. However, most consumer advocates recommend against ESCs. They say the average cost of an ESC is much higher than the average cost of making necessary repairs to the product. They also say that when customers purchase ESCs, they're telling the store it's okay to carry merchandise which breaks down.
     Never leave a customer believing you've encouraged them to make a bad decision, so never pressure your customers into purchasing an Extended Service Contract. But researchers at University of Maryland, Rice University, and Carnegie Mellon University find that there are situations where an ESC is a worthwhile escape for the purchaser. In these cases, you'll want to describe the advantages:

• Purchasers who operate on a limited budget can find it very difficult to pay for replacing the product if it breaks or in handling any unexpected costs for repairs. They'll appreciate you pointing out to them that in buying the ESC now, they're making a fixed payment, removing lots of unpredictability.
• Purchasers of pleasure-related technology products, such as video game controllers, don't want to be deprived of use of the item. They're willing to pay for an ESC that offers prompt replacement of the product if the defect can't be fixed immediately.
• Purchasers who are expected to repair every broken product in the home—maybe a husband being viewed this way by his wife—may be happy to pay a fee to avoid the time and trouble of repairing at least this one product.     

     When you see the opportunity, point out the value added by an Extended Service Contract.