3-Step Value Proposition to Service Contracts.


Do a quick Google search of “should I buy a service contract” and you’re likely to see about 480 million results. Quite mind-boggling when one thinks about the decision whether or not to purchase a service contract.

Of course, there’s myriad of different service contract products but for the purposes of this article we’re going to reference those products that cover repairs on automobiles. There’s a wide-variety of opinions on the value of service contracts and the return on the investments. Rather than create debate over the validity of the products (author endorses/recommends extended coverage) instead this article will focus on the product presentation from a sales persons perspective.

The first critical element to offering service contracts is credibility. Do you believe in the value proposition the product provides the client?

Let’s address a few obvious value proposition questions:

  • Is the product likely to cover mechanical failures?
  • Does the service contract provide extra coverage for the client?
  • How are claims handled?
  • Who’s responsible for the contract?
  • Are there other options available to the client?
  • Does the product offer sense of security against unexpected repairs?

Product credibility is essential during the sales process. If a sales transaction was completed successfully the client must like, trust and respect the salesperson. That trust is easily abandoned if the client perceives the product is unworthy.

The sales persons role in the presentation of this intangible product is elementary. Three steps to help deliver the value proposition:

  1. Present the products. The product offering should be initiated at presentation stage to enhance the factory coverage. Present the product to every client during every presentation, every time without exception. Don’t prejudge whether the client will say yes or no. Simply present the product without prejudice so the client can make an intelligent and informed decision.
  2. Endorse the product. The salesperson has the relationship with the client and through the process of a sale there’s a transference of trust. Endorsement through product needs identification is key for value proposition. If the salesperson understands the product and identifies genuine value in the offering, than endorsing the product is natural.
  3. Speak intelligently about the product. Proper education is essential for this part of the process. Understand what the questions/objections are and how to properly address those concerns with facts and historical data. The sales persons depth of knowledge is key to being able to speak intelligently about the value proposition.

In closing, it should be said that nothing replaces good sales processes. If training is the foundation than practice is the framework. Practice is essential for skills to progress and for real learning to take hold. Practice is the preparation and provides the right environment to ask productive questions, listen intently and gain perspective.

Leverage the analytics. Measure the performance expectations and understand where the buy-in gaps are and how to properly address those specific voids.

“Measure what you intend to improve and let everyone know the score” – unknown.


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