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When purchasing a new product, one of the choices your customer has is whether to opt for an extended service contract or rely on the manufacturer’s warranty. It’s a decision that can significantly impact customer satisfaction and long-term loyalty.

What is an extended service contract?

An extended service contract, also known as product protection or service agreement, is a contract that is purchased separately from the manufacturer’s warranty. It provides additional coverage, typically for a specified time period, such as two years, three years or five years. Extended service contracts can be purchased from the retailer where a product is purchased and are usually administered by a third-party provider.

Extended service contracts vary in coverage and price, depending on the product and the provider. They can cover a wide range of repairs and services, such as mechanical and electrical breakdowns, parts replacement, and labor costs, giving customers extra protection against unexpected repair costs.

Extended service contracts usually are transferable to subsequent owners, adding value and prolonging the lifespan of a product. In many cases, the extended service contract offers the option to renew coverage beyond the initial contract period, providing additional peace of mind for customers.

What is a manufacturer’s warranty?

A manufacturer’s warranty, also known as a factory warranty, is a promise from the manufacturer to repair or replace any defects in materials or workmanship that occur within a specified time period. Manufacturer warranties are typically included in the purchase price of the product and are valid for a limited period of time, usually a year or less.

Manufacturer’s warranties usually have limited coverage and may come with certain restrictions or exclusions. They may cover repairs for mechanical and electrical failures, but not wear and tear or damage caused by accidents, misuse, or neglect.

Is an extended service contract program right for your customers?

Retailers can offer their customers more comprehensive coverage, flexibility and additional benefits like laundry reimbursements or food loss coverage by offering worry-free extended service contract programs.

Deciding whether to purchase an extended service plan depends on the customer’s personal preferences, budget, and the product being purchased.

Especially when purchasing a product that’s known for its potential mechanical or electrical issues, such as a high-end electronic device, an extended service contract is usually a good investment.

Your customers will have peace of mind knowing they’re protected against unexpected repair costs and will avoid the hassle of finding a reputable repair vendor. Extended service contract providers specialize in service contracts, employing dedicated support teams and networks of authorized service centers to handle repairs and replacements.

Further, a customer who stays satisfied with their purchases over the long term tends to stay loyal to the retailer with whom they associate the positive experience.

Centricity offers product protection that puts your customers in control, so you can focus on growing your business. Our services cover:

  • Appliances
  • Mobile Devices
  • Electronics
  • Power Tools
  • Sporting Goods
  • Musical Instruments
  • Luggage
  • Jewelry

For retailers, offering extended service contracts can boost their average ticket sales, increasing revenue and margins, which is especially important during times like these where inflation is shrinking consumer spending on large ticket items.

Centricity allows for complete program customization, putting product protection design plans in the hands of our channel partners to decide what is right to offer their customer base – from the number of years to benefits and protections provided.