Simple Service Agreement Packaging Means More Sales And Less Confusion

So you think selling Service Contracts is an important part of your business?  Have you made it easy for your customers to pick the best contract for their needs? If you haven't, you may be pushing potential customers away without even knowing it. It is very easy to overwhelm your potential customers when trying to sell them a Service Contract. I have seen many website offering four, five and sometimes even six different Service Contracts to their visitors expecting them to read through each and every one of them to find the one that best fits their needs. However, people these days don't have the time or the desire to look through one option let alone five or six, especially when it comes to Service Agreements/Contracts. I don't know about you, but I can find better things to do with my time and I want the selection of a Service Contract to be as easy and painless as possible. So what is a good rule of thumb for making it easy for your customers? Let's take a look at one of the most successful companies in the world and how their model for making choices easy makes them the biggest cash cow on the stock market.

Apple Inc. offers products from iPods to Macintosh computers. Have you ever noticed that when they offer a product that there is only three options to choose from? Apple does this on purpose to stay with their consumer goal of keeping things as simple as possible. There options are fairly straight forward and based upon storage size. They offer iPods, iPads, and iPhones that are Small (16Gb), Medium (32Gb), and Large (64GB). Three options to help make the decision of which product to buy quick and easy. If Apple can make their buying process easy for millions of consumers and be successful, it stands to reason that all product choices should follow the same model. Let me explain how this applies to the way you offer your Service Contracts to your customers.

How To Offer Your Contracts The Right Way

Service Contracts can quickly become very cumbersome in what they cover. So, the best way to make them easy to choose is to put together packages much the same as Apple does with storage size. Start with a basic package that may cover common items. For example, if you are selling contracts to repair home appliances, a basic appliance repair contract would cover the basic appliances found in the home like a stove, refrigerator, dishwasher, and maybe a garbage disposal. If you are selling Contracts for home/office computer equipment, a basic Repair Contract may cover one Personal Computer, a printer, and one DSL modem.

Once you have the basic package built, you can add other items in a tiered format and/or add other coverages to create the next two levels of contract packages. For example, using the basic Appliance Repair Contract package above, maybe you want to provide a Contract package that adds repair services for a washer and dryer for the advanced package. For a premium package, you may want to add replacement coverage to all items covered under the advanced package. You can mix and match the coverages as you see fit, the key is to keep your contract packages to a maximum of three making the selection process very easy for your customers. Another way to make it easier for your customers is to name and price your packages using the hierarchy method (i.e. Bronze, Silver, and Gold or Basic, Advanced, and Premium). This makes it easy for your customers to quickly pick out the package that will best fit their needs. For example, some customers may go straight to the Bronze package because they know it is the cheapest, where others may go for the Gold package because they know it will provide the maximum amount of coverage.

Contract Add-Ons

Once you have created your three contract packages, the next step is to offer coverage on the items that may not be included in those packages. Continuing with our appliance repair example above, maybe you want to offer coverage on a per item basis for items such as a microwave oven and/or a water heater. You would simply add any Add-On items you may feel are profitable to your business and beneficial to your customers to an Add-On section of your contract. Each item would have a coverage price associated with it that is added to the total of the chosen contract package. Allowing your customers to choose Add-On items makes it easy for them to customize one of your packages to meet their needs exactly. Give them as much flexibility as you can here by adding any/all items that they may be looking for coverage on and that your technicians have the ability to service.

Other Optional Products or Services

While you have your customers attention, you can take the opportunity to inform them on other products or services that your company may be offering. Using the appliance repair example above, maybe you have other products like stainless steel hoses or ice makers that your customers might be interested in. Now is a good time to offer such retail items and add them to the total bill. The same principle applies to other optional services such as dryer duct cleaning. If your customer does not need any of your optional products or services now, that's OK because they now know that you offer such items and will know where to come to get them if/when they need them in the future.

Service Contracts should be an important part of your business. If you sell them already, remember to keep the selection process as simple as possible for your customers. If you are getting ready to sell them in the near future check out our blog post: On The Fence About Selling Service Agreements? for some more good information and other tips on how to get started. Remember your customers are just as busy as you are. Making the buying process an easy one will make them appreciate your business and keep them coming back. Also keep in mind that if Apple can be successful using a simple selection criteria, then so can your business.

Does your company make it easy for your customers to buy service contracts? Tell us what works best for you below!