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How Extended Warranties Can Boost Retail Sales This Holiday Season

person with laptop shopping for holidays

The holiday season is upon us, and it's a crucial time for retailers to maximize sales before the end-of-year. One effective strategy to stand out from the competition is offering extended warranties to customers as a valuable upsell during holiday shopping.

November and December are a bustling time in the retail world, with the holiday season in full swing. From the frenzy of shopping events like Black Friday and Cyber Monday, to the winter holiday gift season, these two months contribute a substantial portion of annual retail revenue. The holiday shopping season is notorious for helping retailers get out of the red - some retail verticals show a nearly 10% increase in sales during this time of year.

To stand out from the competition, it's crucial to find ways to enhance your business appeal. One effective strategy is to offer extended warranties to your customers. This can significantly boost sales without changing your business model, all while providing a meaningful value-add to your customers.

How Warranties Boost Your Retail Sales

Offering warranties can translate into boosting your retail sales, confirmed in our retail consumer research study. Customers reported that they were 47% more likely to choose a brand that offers extended warranty product protection. Read on to learn how offering extended warranties can boost your sales this holiday shopping season and create loyal shoppers throughout the year.

Warranties Create Customer Loyalty

Warranties are key to building brand and company loyalty among consumers. In a research study conducted by Zhecho Dobrev, emotional attachment is the biggest driver of business value, product quality, price and ease of use. When an emotional connects exists between service contract buyers and the products, they're attached to their purchase and feel a need to protect it.

Loyal customers become vocal advocates for your brand. The Assurant Solutions’ Consumer Profile and Interest Study found that those who purchase extended warranties are more than twice as likely to recommend the retail store where they shop to others. In today’s online shopping environment, word of mouth is absolutely critical. A shopper’s praise or complaint can go viral in an instant. This can have a significant impact on the reputation of a business.

Endorsements from customers help retailers differentiate themselves from their competitors. This is a huge advantage for leading the industry, achieving repeat customers, and improving customer satisfaction. Retailers that don’t take the opportunity to offer product protection often miss out on making a valuable connection. Customers who feel as though you have their best interests at heart are more likely to be loyal, return shoppers. 

Warranties Add Value by Extending Product Life

During the holiday season, many customers are purchasing items as gifts. It is standard to send a gift receipt with the gift so that the recipient can exchange the item if there are any issues.  An extended warranty offers similar peace of mind: it gives the gift recipient the chance to resolve any issues that come up within the product lifetime.

Offering an extended warranty on top of an existing manufacturer’s warranty at the point of sale is the best way to maximize the opportunity to sell an extended warranty without a second post-sale effort. Product protection plans give the customer coverage from day one, directly impacting their financial worries by protecting their investment in the event that their purchase is damaged or broken.

A gift-giver wants to make sure their investment in the gift is protected so the item can be used for a long time. A warranty is important to guarantee the product to last for at least the length of the warranty. You can boost sales by increasing the value of your products through giving customers the assurance of a longer use time for their gifted product through unlimited accident protection against drops and spills.

Warranties Are a Valuable Cross-sell

Shoppers are more likely to have a larger spending budget during the holiday season. In fact, a RetailMeNot survey found that holiday budgets have increased with an average of $932 this year, vs an average of $725 in 2022. During this time of additional browsing, customers are often open to making purchases they may not make any other time of the year. You can take the opportunity of additional shopping to sell an extended warranty and any additional products to the customer. 

Cross-sells are an easy way to help customers add on items and offers that complete their purchase. This is a great help to shoppers when they’re purchasing a gift, especially if it’s going directly to the customer.

Warranties are a very relevant cross-sell to offer for a purchase because they are always applicable to the product and customer. Warranties are important to customers, and offering them is a cross-sell opportunity that is both helpful for customers and boosts your bottom line.

Amazon Offers Warranties, Too

Amazon is offering warranties on top of the product’s manufacturer warranties. If the retail giant is giving customers this add-on, it’s clear that they’ve identified not only the sales and AOV benefits from warranties, but also that they know it’s an offering customers want.

Amazon’s prominence also means that they’ve helped create an expectation for customers that they should be offered extended warranty options. You can piggy-back off of Amazon’s success while creating a more compelling offering for your customers: better plan coverage at a lower cost. By working with a product protection company, you can rival Amazon’s coverage options to boost your own business’s bottom line through increased sales.

Boost Your Retail Sales During the Holidays and Beyond

When optimized, a warranty strategy can boost sales in your retail business. So for a truly happy holiday season, incorporate warranties to give you an increase in sales before the first snowfall and well into the New Year.

This article was originally published September 2018 and updated October 2023.

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We are on a mission to help consumers protect everything they buy. Mulberry is an innovative product protection platform that enables businesses to seamlessly embed a customized protection program, delivering a unique user benefit for customers.

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