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How Extended Warranties Can Boost Retail Sales This Holiday Season

Shopping cart with retail gifts for sale next to a holiday season stocking

Although it may seem like beach season was just yesterday, the holiday retail season will be here before we know it. 

The holiday retail season, from November through December, is a packed time. Starting with Black Friday, Cyber Monday, and going into the winter holiday gift season, these two months represent a significant percentage of annual retail revenue.

The holiday shopping season is notorious for helping retailers get out of the red and into the black. Some retail verticals show a nearly 10% increase in sales during the winter quarter. 

You can maximize your business appeal with something that sets you apart from the competition. Offering extended service programs and warranties to your customers during this time can be particularly lucrative in increasing your sales.

How Warranties Boost Your Retail Sales

Offering warranties translates into boosting your retail sales, as we found in our retail consumer research study. Customers reported that they were 47% more likely to choose a brand that offers extended warranty product protection.

A study done by Ipsos suggests that extended warranties provide customers with peace of mind and helps them feel that you have their best interest in mind. 

Here are some of the ways that selling 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 research presented at the Warranty Chain Management Conference, retailers felt a stronger emotional attachment between service contract buyers and their products than was seen with non-buyers. Linda Mortensen, The Warranty Group's Market Research & Competitive Intelligence Manager, said, “There were more attitudinal statements about how attached they were to their products and felt 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 environment, this 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 sell warranties often miss out on making a valuable connection. Customers who feel as though you are thinking about them are more likely to be return shoppers. 

Warranties Add Value by Extending Product Lifetime

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 that same option: 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 time of sale is one of the best ways to maximize the opportunity to offer an extended warranty without a second sales effort. Product protection plans give the customer coverage from day one. 

According to a North American Technolographics Marketing and Mobile Internet Online Survey, consumers’ interest in extended warranties directly addresses 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.

Warranties Are a Relevant Cross-sell

The holiday season is when shoppers are more likely to have a larger spending budget. In fact, online holiday sales in 2020 went up nearly 24% despite the financial and business strains of the pandemic. 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.

Retailers can strengthen their relationship with their customers by directly interacting with customers and letting them know your extended warranty offers complete protection. Give customers the confidence they are looking for by showing you care enough to sell them your own warranty, and not a third party warranty through Amazon. 

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 November 2021.

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Janessa McQuivey

About the author

Janessa McQuivey is the Content Marketing Manager at Mulberry. Her degree in Human Development fueled a love of understanding customer experience. She has been in research and writing for 3 years and has covered everything from AI technology to her own dating life. Janessa has published across blogs, newspapers, and academic journals.

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