Extended service contracts are a popular option for customers who want peace of mind when purchasing a product. For businesses that offer extended service contracts, measuring the success of these programs, and adjusting them as needed, is essential.
“We understand how difficult it is to build and grow a successful retail business. Our fully customizable service contracts allow retailers the freedom to piece together what works best for them and their customers,” said Bob Kilinski, Chief Sales & Marketing officer at Centricity. “We work every day to ensure our partners have the tools they need to retain customers, gain new patrons, maximize their productivity and increase their profit margins.”
Here is a list of five key metrics you can use to evaluate the success of your extended service contract program:
- Attachment Rate: Measuring attachment rates for extended service contracts provides valuable information for revenue generation, profitability analysis, understanding customer behavior, risk mitigation, competitive positioning, and evaluating your sales staff performance. This enables your businesses to make informed decisions to optimize your extended service contract program, identify areas for improvement and ensure salespeople are provided the tools they need for success.
- Sales Volume: One of the most straightforward metrics to track is sales volume. This metric measures the number of extended service contracts sold over a period. By tracking this metric, you can determine how successful your program is at generating revenue. You can also use this metric to identify trends and determine which products and contract types are most popular among your customers. In many cases, you’ll find that a store’s sales revenue increases due to offering product protection. Consumers are more likely to complete purchases when they have the peace of mind knowing their investment will be protected.
- Renewal Rate: This metric measures the percentage of customers who renew their service contracts after the initial coverage period has expired. A high renewal rate indicates that customers are satisfied with the service provided under their contract, which can lead to increased revenue and customer loyalty.
- Customer Satisfaction: By surveying customers who have purchased your service contracts, you can determine how satisfied they are with the service provided. This information can help you identify areas for improvement and make changes to your program that will increase customer satisfaction.
- Profit Margin: This metric measures the percentage of revenue that is retained as profit after deducting the cost of goods sold. By tracking this metric, you can determine if your program is priced appropriately and is generating enough profit to be sustainable over the long term. This metric can also reveal positive or negative trends that need to be addressed.
By evaluating these key metrics, your business can gain valuable insights into the performance and effectiveness of your programs, products and people. Keeping a sharp eye out for subtle shifts in the direction or progress of these metrics can help retailers head off potential problems as well as capitalize on successful strategies over both the long and short term.
At Centricity, we have more than 40 years of experience working with retailers to help them not just reach, but exceed their revenue, attachment and customer satisfaction goals. Along with our industry-leading product protection services, Centricity provides its partners with robust reporting capabilities to ensure your ability to track all of the key metrics needed to ensure your plans are dialed in to provide the best performance for you and your customers.