Offer the Escape of an ESC

Fulcrum Analytics found that people are more likely to buy certain items when an extended service contract (ESC) is available. This was the case with 60% of digital camera purchasers and 65% of purchasers of major appliances. Strengthening the notion that it is the availability of the ESC which matters in the decision to buy, 56% of respondents to the Fulcrum survey said they’d prefer to buy the ESC at the time of item purchase, while only 23% said they’d opt for doing it shortly after purchase.
     ESCs are a profitable add-on sale for you. They also help ensure customer satisfaction, since if a product fails to function properly, a good ESC avoids the customer having to exchange or discard the item.
     Many 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, describe the advantages:

• Purchasers operating 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—perhaps 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. 

     Keep in mind that in the Fulcrum study, it was the availability of the ESC which influenced the purchase decision. Even if the customer doesn’t buy one, you offering it can help make the sale.

Click below for more: 
Make Extended Service Contracts Worthwhile 
Present Warranties as Insurance, not Assurance 
Implement Tactics Strategically