Finance Manager 101: Selling an Extended Warranty

It occurs to me that some finance managers may not quite get the whole concept of customer—centric selling and there may be no better example of this than how they present and sell an extended service contract, or warranty.

Customer-centric selling, what the heck is that? Well, in short it means all the answers lie with the customer. What to sell. How to sell. When to sell. And even why to sell a product are questions all answered by communicating with and knowing your customer.

In the business office, more often than not, most of the focus is spent on the presentation. That could be anything from showing some wrinkled copy of an old brochure to a very slick digital presentation, but before all that happens there is a whole bunch of information you need, especially when you’re selling an extended service contract.

Tell me if this sounds familiar. A customer buys a car and gets turned into the business office. The finance manager introduces themselves, takes a credit application if it’s a finance deal, then gets right into presenting a whole bunch of products, including extended service contracts. Likely a whole host of different ones trying to narrow it down to the one the customer may need or be interested in.

Why are you trying to sell a warranty product before you even have spent the time qualifying the customer?

The mistake. They are presenting the products and trying to obtain selection at the same time. The sales process goes like this: introduction, qualify, then selection. Why are you trying to sell a warranty product before you even have spent the time qualifying the customer? All those years as a car salesperson, did you forget how to qualify? Did you forget that before you go and start showing cars you spend the time to get to know the needs and wants of the client, to make your vehicle selection process easier, more professional, more personal?

If you want to drive your warranty penetration, or sales volume, you need to spend more time getting to know your client, and less time trying to jam a warranty down their throat. How can you tell a client why they need a product if you don’t know their needs? These are questions you need to know the answers to before you can properly select and present the one or two options for warranties to a client. How many miles do they drive a year? What was their previous experience with vehicle breakdown or repairs? How important is budget or monthly budget? Who else is driving the vehicle? How long are they going to own the vehicle? Just because someone is financing a vehicle for 84 months doesn’t mean they plan to keep it that long.

Spend time getting to know your client. A casual conversation that gives you insight into the person in front of you, if done correctly, will tell you everything you need to know in order to discover what product they need, and why they need it.

A casual conversation that gives you insight into the person in front of you will tell you everything you need to know in order to discover what product they need.

“Well Mrs. Smith, the right extended service contract for you is the 4-year, 50,000 mile Gold warranty or the 5-year 60,000 mile gold warranty. Based on the fact that you are going to keep the vehicle four to five years." Then you would go into all the details of the coverage, the features and benefits, how it would protect them, the vehicle and their family members.

The key element is that the choice is personal. You’re selling a limited amount of warranty options based on customer circumstance, not presenting a list of options and then trying to land on a selection.

Here’s the bottom line. Selling products in the business office, like extended service contracts is all about focusing on, and presenting products based on the needs of the specific customer. Time. Time spent talking with and getting to know your client. Time spent letting the client get to know you and gain confidence in you. More time spent getting to know your client means less time closing, and definitely means more closes. So the next time you take a turnover in the business office, slow down, take the time to really get to know your client before you hit them with a barrage of products. Show them products that are right for them based on what you’ve learned, and why they are right for them. That is how you’ll sell more extended service contracts and a bunch of other stuff along the way. So good luck and good selling!