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Peter Cannella: The Peace of Mind Add-on

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Retailer: The Peace of Mind Add-on

Service plans can be a win for your store and your customers.

BY PETER CANELLA

Published in the July 2013 issue.

You don’t carry insurance on your BMW because you’ve never had an accident. You have it in case you do. The same is true of service plans. When you believe in a service plan yourself and you sell it as a true value, you will serve your customers more effectively. And you’ll earn some significant extra cash by doing so.

 Let me share with you one of the most powerful closes I have developed and used to build desire in my customers to want both my jewelry and my service plan. I was pulling some pieces out of a case one day when a woman came over. Before I could say a word to her, she told me she was just looking.

Let me share with you one of the most powerful closes I have developed and used to build desire in my customers to want both my jewelry and my service plan. I was pulling some pieces out of a case one day when a woman came over. Before I could say a word to her, she told me she was just looking.

“Great,” I said, smiling. “I’m just moving a few fine necklaces of ours into our clearance area.” Her curiosity antennae came up. “Oh?” she said, “Let me see your clearance then. I just love a bargain.”

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At the clearance selection, I brought out an item that was one of our best values, and which also matched two pieces of jewelry she was wearing. I told her, “This necklace was $1,295. It’s marked down to $607.99 and this includes our two-year service plan that protects you from paying for most repairs.” Then came my clincher: “You know, other women are walking around town and they had to pay $1,295 for this — you get to wear the same wonderful necklace for $607.99.”

My closing line solidifies the value of the necklace because my customer now understands other clients paid $1,295 for it, she can visualize other women seeing a $1,295 necklace on her neck for which she paid a fraction of the original price, and the concession is so significant that the additional expense of the service plan is acceptable.

Once I finished ringing up the transaction, I gave her the paperwork for the plan and informed her that it also covered free restoration.

Like most people, she never asked how much the plan was. The key is the price of the item and service plan must be given as the sum total, not separately.

I know I am doing my clients a favor when they invest in my service plan. It’s not a gimmick.

Now, do some quick math with me. Say you sell 1,250 pieces of jewelry a year. If you sell service plans to just 40 percent of your clients, this amounts to 500 service plans. If your average commission on each plan is $6 (often it is more), you put an additional $3,000 in your pocket.

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Another benefit to service plans is they diminish returns. If a customer breaks her item, she knows you will fix it for free. This doesn’t mean she can throw it down a sink disposer with impunity, but if she snags her pendant on her cashmere sweater and breaks the chain, her perceived value of the jewelry you sold her doesn’t decrease. Rather, her confidence rises when you hand her pendant back repaired, cleaned and like new. A win-win for everyone.

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