Top 3 Reasons You HAVEN’T Purchased an Extended Warranty | Part 1

You’re a small dealership selling, renting – and maybe even servicing – construction equipment & heavy-duty machines. You have an established clientele and, fortunately, business is pretty good. But, of course, that doesn’t stop you from worrying about our sluggish economy and the losses your company has had to endure in the last half-decade (or more) as a result of our nation’s historical recession. Nor does a major sale here and there keep you from remaining apprehensive about the fact that the already-below-average construction and infrastructure industries are preparing to slow way down as their peak seasons end and winter begins. And the continual effort to cut costs wherever and whenever possible is something that will never go away, as it is crucial in keeping your dealership financially balanced. And then, of course, there’s the day-to-day smorgasbord of “hiccups” that come up as a result of running a fast-paced, flourishing dealership. So when you combine all of these factors that ultimately sum up the “organized chaos” that defines your dealership’s success, it’s a no-brainer why you’ve obviously overlooked, and ignored even, any extended warranty contracts or options for your machines.

We know your company. We understand your goals. We recognize your hardships. We get it.

You’ve covered all of the bases – almost. The only key player keeping you from scoring a home run is an extended warranty program established within your business. And we know why you’ve decided to leave this key player sitting on the bench.

Reason #1: You love fighting with your OEM! And what do you love more than fighting with the OEM? Fighting with your customer, of course! Every good salesman knows that although it takes a long time to find a customer, it only takes a moment to lose one. So why not get your customer fired up, leave a bad taste in their mouth and become almost certain that they’ll never take their business to you again, and will likely tell their friends and colleagues to do the same. You have nothing to lose, except for the loyal customers that keep your business afloat.

So, for example, when you sell a major customer a brand new one-hundred-thousand-something-dollar piece of equipment, and it experiences mechanical issues not too far down the road, you, understandably so, have a frustrated customer on your hands. You know what they’re going to say – in fact, you can hear the words coming out of their mouth before they even say it.

“I’m not paying for this!” With a few choice words mixed in too, perhaps. And then comes in the Warranty card.

“Warranty is going to cover this! Because I’m not paying for it!”

And you know just as well as we do that warranty is not going to cover it, or at least all of it. And if you stick your customer with a giant bill on a brand new machine that cost them six-figures, they’re likely never coming back.

So this is when you make a phone call to the OEM and argue with them over what they’re going to cover. Then you get interrupted by your customer calling with an argument. You hang up and call the OEM again. Then, hang up and call the customer, again. And so on and so forth. Which is no big deal, because in your busy career, you have all the time in the world!

So “x” amount of phone calls, 4 hours and one headache later, the most the OEM will negotiate is an offer to pay one-third of the cost via their warranty, but only if you pay a third and the customer pays a third. Of course, the last thing the customer wants to do is pay a third and the last thing you want to do is ask your customer to do so, knowing they just dropped six figures at your dealership not too long ago. So, you end up paying two-thirds, the OEM pays the final third and, although your customer is hopefully satisfied, you’ve just racked up a pretty hefty and unexpected expense.

View tomorrow’s “Proving Ground” Blog Post for Part 2 of 2 of “Reasons You Haven’t Purchased an Extended Warranty” where you’ll find 2 more reasons you’re still without an Extended Warranty Contract and why you should start thinking about one…