I recently started to train a team of salespeople, at a medium sized yard, in a major metropolitan area. During an initial analysis of untapped profit centers, I was surprised to find zero warranty sales from the previous 90 days. Most of us know the importance of taking advantage of these sales, here are some things that all sales managers should take into consideration as they try and lead their team to capture more warranty sales.
After training hundreds of auto parts salespeople, the most common factor I see causing poor warranty sales is simply that the salespeople do not offer the warranty. The first step to improve these sales should be to ensure your team is simply offering warranty options. The second most common mistake is that salespeople are offering warranties as menu options — “Would you like this engine with our standard 30-day, one-year, or lifetime warranty?” Better than offering the customer options, is making sure that your team is simply rolling a mid-tier warranty into the price every time they quote a price. Before your team begins including a warranty rolled into their pricing, you should make sure that they are properly prepared.
All salespeople on your team will need a thorough understanding of the warranty policies. Not knowing these policies is what typically leads to not offering the warranty at all. Do they know the caps on labor payouts? Are labor payouts different for engines, transmissions, or rear ends? What is the price percentage increase for each tier of coverage? Are there other specific yard policies that might influence a warranty sale? Usually, I’ll entrust veteran salespeople to put these details to memory and have less experienced team members create a quick-reference cheat sheet that stays on their desk. Once all the policy specifics are known, the next step in the process is to create a value statement.
Sometimes sales trainees misinterpret the idea of “rolling the warranty into the price” as a deceptive technique to pull a fast one on the customer, this isn’t the idea at all. A step, that can’t be skipped, is to let our customers know about the value we are providing by including a value statement. The explanation of the value the warranty provides should be delivered before giving the customer a price, it should be a succinct summary of the warranty details, and it should adapt easily to describe all of the warranty tiers. It could sound something like, “With our one year, parts and labor warranty, that will replace the engine should there be any mechanical failure, and pay up to $500 in labor to have it reinstalled, it will be $1200…”
Once salespeople know the warranty policy details and have crafted a solid value proposition, the final step is putting it into action. I encourage salespeople to shoot for the stars and then come down — warranty options should always be offered highest to lowest. When the warranty is offered, it must be accompanied by an ask for the sale. This ask for the sale is key, as it will catch the customer before they can end the conversation — ““With our one year, parts and labor warranty, that will replace the engine should there be any mechanical failure, and pay up to $500 in labor to have it reinstalled, it will be $1200. Does that fit your budget? Is that where you need to be?” These types of asks for the sale allow your customer to choose a more cost-effective warranty tier and it allows the salesperson to be the hero that offers a cheaper option.
If warranty sales are a pain point for your team, are they being incentivized enough to sell more in this profit center? Are they being coached in effective and practical techniques? Do you need help aiming them in the right direction? Let us know!
Robert Counts Chad Counts Rich Tyler Emily Kirk Johnny Logel
Robert Counts, robert@countsbusinessconsulting.com; 512-693-6915
Chad Counts, crcounts@countsbusinessconsulting.com; 512-963-4626