You know the old saying “A bird in the hand is worth two in the bush.”
But do you actually apply its wisdom?
If not, the following stats say you should probably amp up your extended home warranty renewal strategy:
- Companies lose almost $137 billion a year from avoidable cancellations
- Acquiring new customers is 5X more expensive than keeping your existing clients
- Increasing retention by 5% can increase profits by 95%
So, what can you do to dig into that treasure trove of potentially recurring revenue?
Let’s find out.
Arm Yourself with Numbers
Let’s be honest. Some customers are going to cancel, no matter what.
But there is a silver lining when they do: Finding out why.
- Did they find your service to be less useful than they thought?
- Did it turn out to be too expensive?
- Did they go to a competitor?
- If so, which one?
Those are just a few potential reasons, but the reasons exist. Your job is to get data and find patterns—and if you already have data, then getting more granular by asking the why behind the how.
Once you have enough to work from, you can run cancellation reports (and create whatever special report you want) in our CRM to see what the numbers are saying. Then, you’ll know how to improve.
Set the Stage During the Sale
Way to go! You’ve made the pitch. You overcame their objections. And now the prospect is a client.
Whether you make the sale online or over the phone, you need to be as proactive as possible to head off any cause they might have for cancelling down the road.
- Ask if they have any final questions
- Tell them when their extended warranty will renew
- Inform them what their renewal cost will be
- Confirm who will oversee renewing (and make sure to get that person’s contact info)
Bottom line: You’re more in control of the relationship when you take initiative. And that means a better bottom line for your company.
Educate Them Whenever You Can
Replacing a blown condenser fan or fixing a heat exchanger is a major benefit of extended home warranties—and it’s pretty obvious when those types of claims will be made.
Even if one of your customers has a fairly new unit, remind them why they have a service contract.
Send an email at the end of April or beginning of October to tell them the average cost to repair their AC or furnace is $X and—thanks to your coverage—they could save $Y if something happens.
Or, you could send them a short list of seasonal maintenance tips so their appliances are in tip-top shape.
The more you try to help your customers—especially when they aren’t asking for it—builds their trust. And 81% of customers say trust influences their behaviors.
Prove Your Worth
People want to feel like they made a good choice. They crave validation for their decisions.
Here’s proof: Using testimonials can generate 62% more revenue!
So, turn customers who use your service contracts into social proof: Glowing reviews, testimonials, mini case studies. Use any chance you can to put a face with figures showing how your service saved a homeowner from budget-breaking expenses.
Blast it on social media or a review section of your website. The more you can demonstrate how you help real people, the more likely your customers will renew.
Use “Why Stay” Messaging
Is your renewal messaging different from your acquisition messaging?
More importantly, have you even thought about changing your messaging based on customer type?
A recent survey found the answer for most people is a resounding “No.” to both!
Here’s why that line of thinking is a mistake: Prospects in the consideration step of their journey need to be told something different than existing customers.
This is the crux of the “Why Change” vs. “Why Stay” funnel. Your company is no longer the challenger fighting for business. You’re the status quo fighting to keep business.
Now, you could pitch a new idea for your services to current clients, or reinforce why your customers chose you in the first place.
Which avenue performs better?
Studies show reinforcing the status quo works better.
So, what should you do when renewal time rolls around?
You could send materials to extended home warranty customers using our mail merge solution saying houses in their neighborhood are X% more likely to need a repair, or the cost of materials for their appliances is expected to rise by Y% over the next year.
What would it mean if they didn’t renew?
Tell them, and they’ll be more inclined to act.
Want to renew more extended home warranties?
Schedule a demo of our CRM and you’ll have the data, reports and technology to renew more customers—and keep their revenue coming in.