Here’s The Right Way To Do Extended Warranties

Aaron Hoos

Extended warranties.

They suck, right?

I should know, I sold ’em too. (Well, I sold a type of them when I was doing leases.)

Look, we all what the deal is: extended warranties are high dollar gambles that most often sit as piles of cash in a giant vault and the Scrooge McDucks that sell extended warranties just swim around in the money.

Last time I bought a laptop, I knew exactly what I wanted before going into the store. I went in, got a clerk to get me the laptop, and then braced myself for the silliness that would follow.

It was a dance: The clerk gave all the lines and I tried not to roll my eyes while I heard things like, “My customers are always glad to have it,” and “You just never know,” and my personal favorite: “more and more computers are breaking down these days.” Then I say no. Then they ostensibly go talk to their manager and come back with a slightly lower quote because they like me. Then I say no again and they wish me well and send me to the cashier.

Same thing happens when I rent a car. And when I buy one. And when I buy any major electronic equipment or appliance.

Sure, the money is good for the companies selling them but let’s face it, extended warranties are silly:

  • They are rarely needed
  • If a circumstance arises where they are needed, they are often forgotten

… they’re basically cash. And customers know it. So you either end up with a customer who begrudgingly pays, or you end up with a customer who chooses not to pay but is still annoyed anyway because they have to put up with the BS of the extended warranty sale pitch.

Every knows it’s just a bump in the price of whatever product you’re selling.

And if ever there was an opportunity for a company to innovate on the financial side of their products, extended warranties is the opportunity.

So, when I was bought a new freezer recently, I was pleasantly surprised…

I chose the freezer and braced myself for the inevitable extended warranty pitch.

I got ready to say “no” until the salesperson added: “If you don’t use it, you get 100% of it back.

That changed everything.

… If I don’t use the extended warranty, I get 100% of it back.

It works like this: I pay now for the extended warranty coverage. The freezer is covered for 3 years from all the various things that the extended warranty covers. And at the end of 3 years, if I didn’t use it, I get the money back. (Mind you, I get them money back as a store credit.)

This is a small change but it’s huge. I think it’s smart. And I think more and more companies should adopt it as a strategy to sell their extended warranties.

  • It’s still pure cash that piles up in your Scrooge McDuck vault so you can swim in it.
  • A few people will use the warranty, most won’t.
  • Those that don’t use the warranty feel like the store owes them money and will make a purchase at that store in three years.

So, this small change in extended warranties is a simple play to increase your income now but also lock in customers who will likely come back and purchase more. Because, chances are, if they have $50 or $100 or $500 that they think is owed to them by the store, they’ll purchase far more than that amount in a future purchase.

I’ve written before about how most guarantees are weak and I wished companies would give their guarantees some teeth. And this is a powerful extended warranty strategy that more companies should adopt.

 


Aaron Hoos, writerAaron Hoos is a writer, strategist, and investor who builds and optimizes profitable sales funnels. He’s the author of several books, including The Sales Funnel Bible.

7 Ways That Real Estate Agents Can Turn Sellers Into Life-Long Clients

In the work I do as a writer/consultant/strategist, I get to work with a lot of real estate agents to help them grow their businesses. And I just recently sold my house so I got another glimpse into the business from a slightly different angle.

I think real estate agents are missing out some on some key opportunities to get more clients. They may THINK they’re doing everything they can but there are several ways they can do more. If you’re a real estate agent, I want to share with you 7 simple things you can do to turn sellers into life-long clients.

Aaron Hoos

Here’s what I mean…

When a seller signs a contract with you, you get to work to sell their house. In your mind, the home sale is the ultimate measurement of your success. However, your seller needs something more from you if you want to lock them in as a lifetime client and get referrals from them.

Your seller wants you to spend 24 hours a day, 7 days a week pouring over lists of potential buyers who might be interested in their house. They want to believe that you are rolling up your sleeves and working ONLY on their unique situation.

While that’s obviously asking more of you than you can realistically give, there are ways that you can appear to be prepared and hard working, which will create a more positive experience for your client, which will lock YOUR NAME in their minds for the future.

7 Ways That Agents Can Turn Sellers Into Life-Long Clients

#1. Give A Clear Timeline.

As a real estate agent, you are the expert, not your client. Clients have weird, broken ideas about how long it will take to sell or buy a house. I think their view is often skewed by unrealistically short timelines on those house-buying TV shows, as well as by optimistic word-of-mouth reports given by family and friends who bought or sold recently.

s the professional, you should come in with a clear timeline that says, “many houses in this price range are on the market for X days.” Yes, you’ll need to include a disclaimer that there’s no guarantee but you should give your clients an idea of what others are experiencing, if only to dampen expectations slightly.

#2. Give Clear Steps.

Again, you’re the expert. When you tell your client “we’re going to list your house and show it and maybe do an open house,” the client doesn’t really know what that means.

Give them a clear breakdown of the expectations, how often you do an open house, when you’ll revisit the price, how they’ll know when you get an offer, etc. These are things you deal with every day so you take them for granted, but your clients have no clue and if you don’t hold their hand, they’ll get worried. But if you do walk them through the process up-front, you’ll put them at ease and give them positive feelings about the service you provide.

#3. Checklists.

I wish my real estate agent gave me some checklists! I could have used some for before he showed up to take pictures, then for what to do before a showing, what to do before an open house, what to do when an offer is made, and what to do if I accept the offer.

These simple checklist documents would have alleviated many questions and reduced the number of times I called or texted my agent with follow-up questions.

#4. Market Analysis.

People who have lived in their house for years, as my wife and I did, are not really dialed into what the local market is like. Is it hot? Is it cold? All I had to go by was what my neighbor sold his house for (more than I thought he would) and how long it took (longer than I thought it would).

If your clients are hiring you to sell their house (or even to help them buy), a short one-page Market Analysis report will help them understand what to expect. For example, mine might have said: “we’ve finished the busy spring season and are entering a slightly slower summer season when many potential buyers are on summer vacation. There are still plenty of buyers and there are not a lot of houses in your price range right now so that’s a plus.” Like the timeline (see #1, above), you don’t have to make any commitments or promises but you can manage expectations and help the client know that you have everything under control.

#5. Regular check-ins.

This was probably my biggest complaint with my real estate agent. He was a good guy and he sold my house so that’s awesome but I occasionally felt like I needed to follow up with him because I hadn’t heard from him in a couple of weeks. We had a lot of showings, so I heard from his assistant a lot as she was setting up the showings, but I want to feel like my agent is working hard for me, and the only way I know he’s doing that is with a quick text that says, “Checking in; hope you’re doing great. We’ve had several showings but no offers this week but keep your chin up… we’ll keep pushing!

#6. Contingencies.

Sellers want to sell now for top dollar (of course). As an agent, you want that too (of course) but you’re also experienced enough to know that it might not always happen that way. When you talk to your client about listing their property, you should assure them that you are prepared for contingencies, such as lowering the selling the price or making some other adjustment to the offer.

Telling your clients this might seem like you are admitting defeat and already thinking of lowering the price but if you do it right you’ll assure them that you are prepared for every eventuality and you understand how important it is to sell the house… plus you’ll also address any skittishness they might feel if they get discouraged after not receiving offers after the first couple of showings. (Guilty as charged.)

#7. Acknowledgement of the significance of the event.

When the property sells, you’ve done your job and you deserve to get paid. Your client is probably relieved and excited as well. But remember: chances are, they’ve just sold their HOME… a place of memories and love that they are now moving away from. This is a significant event with many mixed emotions. If you really want to connect with a client and lock them in long-term, the best thing you can do is acknowledge the significance and experience it with them.

Summary

As a real estate agent, your job is to serve your seller by listing the house and trying to find a buyer for it. But in reality, you have a much bigger responsibility than that: you need to make them feel like they are at the top of your mind and you are doing everything in your power to sell their house. These 7 tips can help you create a loyal, lifetime client from every seller you serve.

How to create more effective calls to action

Any interaction you have with a lead, a prospect, or a customer will likely have some kind of call to action or desired outcome attached to it. Those calls to action or desired outcomes are key to how well your business runs today and how successful it will be in the future.

Here are some desired outcome examples: It might be about educating them about your amazing product or service so they them further down your sales funnel. As they get closer to buying something, your desired outcomes might be to take action and buy now. Once they are customers, you might interact with them and end with desired outcomes of deepening your understanding of them or perhaps asking them to refer you to someone else.

Calls to action help to propel your prospects and customers forward and, ultimately, they help to propel your business forward. So doesn’t it make sense to improve your ability to create better calls to action? In doing so, you’ll improve how your marketing and selling abilities, your networking, your copywriting, and more!

Creating an effective call to action is about understanding what your audience is looking for and showing them how the desired action you’re describing will help them find it. (This is really basic sales stuff and you probably know this part already).

But there’s another aspect to creating effective calls to action that I never really thought about before now: You also need to understand exactly what you are asking the person to do — what behaviors you are asking them to change. Are you asking them to take action once (“buy now!”)? Are you asking them to hire you for some service (“let’s work together!”)? Are you asking them to make a permanent change (“stop smoking!”)?

I stumbled across a really useful tool about this. The tool is called the “Behavior Grid” and it was created by BJ Fogg of Stanford University. The behavior grid is useful for many applications (and I first noticed it in an article about improving the user experience in web design). But I realized that this tool is really useful to help you create powerful calls to action in your marketing and sales efforts (including interactions and copywriting).

Click here to check out BJ Fogg’s Behavior Grid (opens in a new window).

Screenshot of Behavior Grid websiteThe Behavior Grid shows the 15 different types of behavior changes someone could make. Down the side of the grid are the three possible scopes of change — one-time, over a period of time, or permanent (from now, on). Across the top of the grid are the 5 possible types of change — do a new behavior, do a familiar behavior, increase behavior intensity, decrease behavior intensity, and stop existing behavior.

So when you are thinking about the call to action you want to ask your lead, prospect, or customer to do, you would figure out the scope of the change you are asking them to do and then you would figure out the type of change you are asking them to do. “Buy now”, for example, is a one-time new behavior if you are asking a prospect who has never bought from you before.

Once you’ve figured out the scope and type of behavior then click on the intersecting square in the grid to get more information about the change and tips about triggers and motivation to help you compel the action.

Click here to check out BJ Fogg’s Behavior Grid.

One step all sellers need to take before discussing pain points with prospects

In this post, as in most of my posts, I’m using the term “sellers” somewhat generically. When I say “seller” I mean anyone who markets or sells — whether you own an online business or an offline one, whether you’re a copywriter or a door-to-door fundraiser.

One of the basics of “selling 101” is the need for sellers to identify and discuss pain points with prospects. It’s in just about every sales book I’ve ever read and every sales training course I’ve ever attended. It’s an essential step in the path to a successful sale because once you’ve uncovered those pain points, you can describe how they can be solved by your product or service.

As important as this “highlight-the-pain” concept is, there is a component missing from the concept and I have only recently read a great explanation about the missing link.

I recently cleaned out my bookshelf (to make room for some great new books!) and dusted off a book called Solution Selling by Michael Bosworth, written in the 1990’s. It’s been years since I skimmed the book (I’m not sure I’ve ever read, to be honest) so I thought I should actually sit down and go through it.

Early in his book, Bosworth discusses pain points and the importance to sellers of highlighting the pain. Classic. But he goes a step further and discusses the concept of “latent pain”. Latent pain, Bosworth says, is the pain that a prospect feels but…

  • Either doesn’t realize it’s a pain
  • Or has failed to find a solution so they have just grown to accept or accommodate the pain

Some examples (these are my own, not Bosworth’s) might include: Someone who has come to accept a low rate of return on their investments because they don’t know of a safe alternative that provides better returns; someone who keeps dumping oil into their leaky engine because they think the repair will be more than they can afford; or in the case of the target market for my Real Estate Investing Copywriter brand, a real estate investor who isn’t aware of the impact that copywriting might have on their ability to do more deals.

In the examples above, we see the lack of awareness of the pain or the accommodation of the pain as two factors contributing to a situation where someone simply doesn’t “feel the pain”. And as Bosworth suggests, a salesperson who goes to sell to these people will encounter resistance and even confusion because the person is not aware (or have become immune to) the pain point.

So the first step before talking about pain points with prospects — and especially before making assumptions about what pain points might exist — is to transition the prospect’s mindset from latent pain to felt pain. That is: To use the conversation (or the copywriting or however you sell) to first help the prospect discover that there is indeed pain. Then, and only then, should a seller turn the conversation to discussing the cost of the pain (and ultimately the solution).

This concept of latent pain can help to renew old prospects who didn’t seem interested in your product or service in the past, and it can increase your potential target market to people who might have latent pain, rather than just those for whom the pain is a pressing concern.

How to benefit from prospects who DON’T become clients

Imagine tracing a line along the path that someone takes in becoming your client. You might think of it as your sales funnel but let’s just simplify it into a single line that is easy to trace.

It starts with them having never heard of you before…

It follows them along a path as they learn about who you are and what you do…

It reaches a point where the prospect decides to become your client…

And then the line continues for as long as your client/professional relationship continues.

There is one big decision point in the relationship (noted by the star) when they decide to become your client for the first time.

But there are many more decision points along the way. These are moments in your developing relationship in which the prospect chooses to continue listening to you.

(As financial or real estate professionals, we don’t always know when these moments are, but they might be times in the relationship when the prospect meets us for the first time or visits our website or picks up the phone to call us or even hears from a competitor). I’ve drawn them below as red dots…

What we’ve drawn so far is the preferred path – only for the scenario when the prospect continues listening to the professional through the burgeoning relationship and then agrees to become a client.

But we both know that every prospect DOESN’T say “yes”. Some prospects say “Yes” but don’t mean “Yes, let’s work together right now”. In fact, there are many times when prospects choose to leave this path and go in a different direction – maybe they decide to find another professional to sell them insurance or maybe they decide to list their home themselves.

This can be frustrating for a financial or real estate professional to hear – you work so hard and want to help everyone but some prospects don’t have a reciprocal enthusiasm for you. It’s easy to despair when you call up a prospect who you THOUGHT was going to become a client only to hear them tell you that they decided to work with someone else or do it themselves.

But don’t despair. All is not lost. When you hear about your prospects diverging from the preferred path, take note of when they leave and why. Ask if there was something you could have done differently that might have convinced them to stay. (Note: You’re not necessarily offering to do whatever it is they say, but you know for next time.)
If you hear a lot of people giving the same reasons for leaving, you know it might be time to revisit how you sell your services.

Don’t just assume that it was because of a price issue or that a competitor swooped in on the right day when your prospect was in a good mood. There are other reasons that might drive someone away:

  • Perhaps there isn’t enough alignment between what you say in person and what is expressed on your website.
  • Perhaps they have doubts about your level of expertise.
  • Perhaps you haven’t yet described (in a way they understand) all of the value that you can provide them.
  • Perhaps you haven’t hit on the pickaxe factor.
  • Perhaps they are going through your sales funnel at a different speed than you think they are (so the messages they are hearing do not match what they are ready to hear).

When someone diverges from the preferred path of becoming a client, find out why and grow from what you learn. You’ll end up with a sales funnel that gets increasingly effective… and ultimately you’ll end up with a stronger business.