Extended Warranty Market To Generate Massive Revenue By 2027
Extended warranties do precisely what they say on the tin. They prolong the standard editions of a warranty that companies typically offer for a certain amount of time. A warranty covers depends on a range of factors, including the products themselves – their quality and lifespan – the cost of maintenance, should the product break down during the warranty period, and many other considerations. As a result, these extended warranties benefit both the customer and the company – a win-win for all concerned!
According to recent reports, the Global Extended Warranty Market was valued at approximately $121 billion in 2019. This number is anticipated to steadily grow by over 7.4% annually between now and 2027, reaching almost $170 billion ($169.82). Companies can start to take full advantage of this by investing in extended warranties. But how exactly will you see all of this come to fruition? There are several things you need to note.
Firstly, you decide the terms.
Considering it is your product and your company, it is wholly down to you what terms and conditions are to be applied. This allows for unprecedented freedom, but it is crucial to be fair. The wiser customers out there will pick up on the small print relating to your warranty and, if deemed unfair, will result in them opting out of the exchange. Therefore, a balance must be at the top of the agenda.
Extended warranties can also have different terms and conditions from the original product’s as well as the standard warranty or guarantee. For instance, they may not cover anything other than mechanical failure. If the owner maliciously abuses the product in any way, then the company should be in their right not to provide economical repair or a replacement.
A strategy can be implemented that takes into consideration every single aspect relating to the product. Therefore, from the projected life cycle of the product to any accidental damage, you make the rules.
There is profit to be made.
As has been previously discussed, the Global Extended Warranty Market is set to thrive year on year between now and 2027. This increase presents an opportunity for companies new and old to get more heavily involved. Simply setting out and offering extended warranties on your products will result in extra upfront profits rather than sales on future replacement products.
In addition, it incentivises your customers to keep hold of their products for longer, too. With extended warranties, the customer has the guarantee that they will be covered for certain types of breakdowns; therefore, the product’s lifespan is also extended.
If your product is well built and tends not to break easily, then the chances are your company will not have to pay out to repair or replace many products anyway. As a result, you can stand to make good profits without the need to actually do anything, only offer your promise of upkeeping the product if damaged at all.
The better the quality of your goods, the more extended warranties you can offer, which is a great selling point for a customer. All customers look for peace of mind, and an extended warranty is a relatively easy way for you to offer them confidence and reassurance in your brand. What’s more, your extended warranty could be what sets you apart from a competitor, bringing in more sales.
Overall Customer Satisfaction
Giving people the option of adding an extended warranty is a fantastic approach to converting them into loyal customers. It shows that you have enough faith in your products while also signifying their quality and worth. In addition, it results in financial savings in the long term, delaying the customer’s need to buy a replacement.
Moreover, if there is no extended warranty provided, you are clearly indicating what the company thinks of their own product. Without the guarantee of repairs and replacements, there is the suggestion that perhaps it is not durable. Maybe the materials used are more inferior? It may even be built with planned obsolescence at the forefront. Sales are put higher than the customers in this scenario, which shows a complete disregard as a business.
‘The customer is always right.’ Companies should always have the prime goal of selling an honest and fair service. By cheating or deceiving the customer, you may face bad reviews online or by word of mouth, leading to fewer sales as a result and, therefore, less profit.
The Environmental Impact
Last month, we identified the environmental benefits of repairing products rather than replacing them. We found that consumers are more interested than ever in ‘green’ businesses, with nearly one in three UK people claiming to have stopped purchasing certain brands or products because of ethical or sustainability-related concerns. Solid warranties in place will ensure that fewer products are scrapped and more are repaired.
Extended versions are designed to replace or provide a cash compensation if the appliance is ‘beyond economic repair’ – that is, if the repair costs exceed the value of a ‘used’ appliance. Insurance aims to put the policyholder back in the same position as they were before the failure.
As long as the product’s life is extended due to the warranty, there will be less environmental damage. So by offering them, you will be actively impacting the planet with your policies. Not only that, but you will also be building a better brand image and therefore gain more customers.
Consumers will always need convincing when it comes to purchasing a product. After all, it is their money, and they will want to know they are getting their money’s worth. That is why you should be offering extended warranties. They act as a buffer, allowing customers to have peace of mind knowing what will be covered following an incident leading to damage.
Say you are selling an expensive product – one which is costly to replace. For a fraction of the price of buying a brand new product, they can receive the convenience of your warranty service.
How We Can Help
Victis Corp is designed to aid you in crafting warranties of any sort, be it standard or extended.
We use our expertise to make sure you go about your business the right way. It’s hard having to do it all by yourself, so let us eliminate any problems you may be experiencing.
Our fully comprehensive MI package will manage and feedback valuable information relating to your product’s reliability. This set-up would completely cover the service, call centre and administration costs deriving from one contact source for a seamless journey.
Contact us today by calling 0844 967 2600 or emailing firstname.lastname@example.org. We are there to help your business grow in all areas, so be sure to make use of our quality services today.