It is often said – by manufacturers of notebook cases, at least – that resellers can make more money on those items than they do on the notebooks themselves.
And for sure you’ll also find ‘service’ on the list. As a subset of service. the canny reseller will list extended warranties as a highly beneficial profit generator.
For many years the PCA has recommended that system builders and resellers offer extended warranties on the kit that they sell – there’s a good margin to be had.
On the other hand, we’ve also been saying to customers that whilst it’s a good idea to buy an extended warranty, it only works if it is covered by third-party underwritten insurance and that they will feel extra ripped off if the supplier of their kit goes bust and it’s the same company that’s also promised to maintain it through thick and thin.
We still have correspondence from customers upset that the original warranties they took out with the supplier – at considerable additional cost – are worthless!
As any insurance salesman will tell you, there is a knack to selling insurance. The emphasis is on ‘sell’. Car insurance is mandatory these days, and whilst there is currently quite a notable subset of people who avoid buying motor insurance, one wonders how many more would skip it if it were not illegal to do so. Insurance needs to be sold. It’s not a walk-in sale like hardware often is.
Most of us, when buying a new piece of kit, seldom ask the "What if?" questions. The two key ones being "What if it breaks?" and "What if you (Mr Reseller) aren’t in business any more when it does?" The correct, potentially profitable way to manage this is to build it into every sales process.
For example: "Right then, Mr Customer, that’s your new laptop sorted out. Now then, what are you going to do if you drop it or break it while you are carrying it around? Not all domestic insurance policies will cover it.
"The first thing to do is make sure you have a good case for it, like this ‘ExtraTuff’ which will protect it from most knocks and scrapes, and we can also help you with an extended warranty, third-party insured, of course, and it carries the brand of the highly respected Professional Computing Association so you can be sure it’s been well thought out."
Build this process into every sale and you’re bound to convert some of them into highly profitable business.
By the time you read this, Channel Expo will be done and dusted for another year. I hope you managed to get to the show and that you were able to go to our stand and enjoy your visit there. At the time of writing we have a number of sponsoring partners supporting us on the stand and hope that you took the opportunity to meet with them.
By the way, following on from last month’s column as to whether it would be possible to implement industry standard RMA procedures, the PCA’s directors felt that this was primarily a commercial and competitive issue, best left to contractual negotiation.
However, I did take the opportunity to raise the matter with some of the leading credit and finance managers in the IT sector at the recent European Credit and Finance Congress. Nothing concrete came of it in the short term, but the seeds have been sown. I’ll keep you posted if there are any developments.
The European Commission has issued a consultation paper on the Review of the WEEE Directive. UK stakeholders such as the PCA were able to respond directly to the European Commission. The final deadline for this was June 5th. The PCA was going to circulate further details to its members, collate their views and then represent them to the EC.