What Every Retailer Needs to Know About Service Contracts
A checklist helps you form the best partnership possibleNovember 3, 2013 By Rick Gavino, president and COO of New Leaf Service Contracts, LLC
As the holidays approach, stores will fill with customers snapping up appliances, consumer electronics and other products for gifts and personal use. Savvy retailers promote extended service contracts as a way to assure ongoing product performance, promote customer loyalty, provide peace of mind to consumers, and boost store profits. While most understand the benefits of service contracts, there are some key points to keep in mind when implementing a new program or changing administrators or underwriters.
Knowledge is Everything: Trust but Verify
Gather information on the administrators of various service contract programs. Knowledge is everything when it comes to doing business with any provider. Consider the reputation of the firm along with the reliability and experience of the management team. Trust in the information uncovered but verify the authenticity of the data. Also make sure that the facts gathered are based on current information.
Over the years, a number of administrators and underwriters have come and gone. There are also other firms that offer programs without being compliant with the rules and regulations that govern the industry, which destroys the opportunity to build beneficial business relationships between top-tier service contract providers and the retailers they serve. By conducting thorough due diligence, retailers can effectively sift through readily available information to help them identify the most reliable administrators.
Protection for Businesses and Customers
The truth is that a retailer is only as good as the product he sells. The right service contract administrator can be an important ally in helping to build, support and maintain customer relationships. Carefully vetting the program of any service contract administrator protects the retailer and the consumer, and can add significant cash to the retailer’s bottom line.
To identify and evaluate top-tier administrators, follow the PRIME Provider Principle outlined below when considering any new service contract program.
P = Protection
Consider the level of protection the retailer has in the event that an administrator fails to pay claims or goes out of business. The reputation and financial backing of a top-tier administrator are also important factors to keep in mind when evaluating anadministrator. Make sure a valid insurance policy is in place to protect the retailer and customer. Always ask to view a copy of the insurance policy, and address issues that are unclear regarding the various levels of protection