RETAILOBSERVER.COM NOVEMBER 2020
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MAXIMIZING RETAIL MARGINS AND CUSTOMER LOYALTY
IN A POST COVID-19 WORLD
As retailers emerge from COVID-19 isolation, many will find their
business models turned upside down. Gone are the days (for now)
of showrooms crowded with customers testing gadgets, impulse
buyers, and long checkout lines. Instead, expect to see social
distancing measures like scheduled appointments, contactless
buying, and curbside pickups become the norm. The impact will be
a reduction in overall transactions resulting in declining gross
revenues. Now more than ever, maximizing retailer margins on each
customer transaction is critical.
In order to maximize margins and ensure sustainability, retailers
should be served well if they use this time to reset and reconsider
every aspect of their operations. Everything from floor planning,
staff training, vendor management, and customer engagement
strategies must be re-evaluated. More than ever, retailers must find
new ways to attract and convert every potential customer while
continuing to service and retain them for years to come.
We all remember the financial crisis of 2008-2009 and marvel at
the resiliency of our retail partners. Few retailers would dispute the
impact that their extended warranty program had on their ability to
recover from the brink of bankruptcy.
RISK MANAGEMENT STRUCTURES CAN IMPACT RETAILER
PROFITS
Similar to the recovery from the 2008-2009 financial crisis,
retailers today could and should use extended warranty sales as a
tool for recovery. After all, social distancing measures will provide
sales associates with the opportunity to employ the consultative
sales approach that they have always longed for. At CPS, we believe
that a consultative sales approach together with an increased focus
on training will lead to increased extended warranty attachment rates.
Attachment rates have long been an important KPI for every retailer
and extended warranty provider, but how often do retailers consider
if they are paying too much to their provider? And could they do
better? The answers to these questions are found in the risk
management structure of the retailer's extended warranty program.
Let's examine these structures to see what we can find out.
ARE RETAILERS PAYING TOO MUCH
FOR YOUR EXTENDED WARRANTY PROGRAM?
B U S I N E S S T R E N D S
