Product protection.

It certainly isn’t the most popular topic for retailers or customers. After all, no one wants to go into a transaction already assuming what they purchase will break. And no salesperson wants to emphasize that it might.

Yet, life happens, and peace of mind is not only valuable in the short-term but can save customers hundreds, if not thousands of dollars in the long-term.

The team at Howard’s Appliance, TV & Mattress understands this well. Founded in Southern California in 1946, Howard’s now has five retail stores and seven interactive product “experience centers” in the SoCal area. As a Nationwide Member, Howard’s has also partnered with EPIC Protect to offer its customers that coveted peace of mind to build relationships rooted in trust.

Howard’s in Murrieta, CA

Howard’s Experience Center

Mike Sanchez, Senior Vice President and Chief Operating Officer for Howard’s, gives us a peek into the success behind Howard’s business and his team’s product protection strategy. With 35 years under his belt at Howard’s, Mike has experienced every facet of the business — the warehouse, general management and service, head of the builder sales division and now SVP and COO.

And in over three decades, he’s seen Big Box chains transition to make appliances an increasingly bigger deal, which has certainly put pressure on Independent appliance retailers. Yet Howard’s remains resilient.

A REPLACEMENT MARKET IN 2024

Appliance dealers today are experiencing a replacement market, according to Mike. While the multi-channel builder business continues to thrive, and luxury appliances are still in demand — albeit at a much slower rate — high interest rates have drastically reduced the number of purchases made from want vs. Need.

This significant shift to most customers being in duress has led Howard’s to rethink its marketing strategy to include more promotions featuring replacement scenarios and hot buys available now. From TV ads to general awareness campaigns, Mike and team are positioning Howard’s as a retailer that can meet those unexpected needs. And that’s where product protection comes in.

Customers in duress don’t want to be in the same situation again anytime soon and warranties and product protection plans are a safeguard against that happening. As an Independent retailer, having the opportunity to even offer such plans is important, which is why Howard’s decided to partner with EPIC Protection.

Mike admits that, after having success with EPIC, his team decided to take product protection in house to increase the bottom line; however, this proved to be much more work than anticipated, and within about twelve months, they were back with EPIC.

WHY EPIC PROTECTION?

When asked this question, Mike shared two reasons:

1. The EPIC team trains in person, not over Zoom calls. They invest in the businesses they serve.
2. EPIC provides marketing materials, which Mike calls “ammunition to sell” to Howard’s customers.

EPIC also offers simplified plans that clearly state what is covered and what isn’t. With three- or five-year options to choose from, customers can decide if they want to be covered past the typical “breaking point” or up to the point when they might be ready to upgrade to something new anyway. And the cost of the plan is a percentage of the cost of the product itself.

Howard’s in Tustin, CA

SELLING PRODUCT PROTECTION PLANS

The way Mike sees it, product protection should not be an afterthought — not to the customer or the salesperson doing the selling. Product protection needs to be incorporated into the sales pitch from the start, because that is when customers begin calculating and budgeting. By the time the pitch is complete, they want that final price to be the final price with no surprises — like an additional product protection plan.

Product protection shouldn’t be hidden in the cost. It should be clearly presented as a wise investment from the get-go. Here’s a summary of Mike’s pitch:

As a customer, you would be disappointed if an appliance you purchased from Howard’s broke in only one or two years, right? And Howard’s still wants to be your friend five years from now. Of course, Howard’s didn’t make the product, but they also don’t want it to break and leave you with buyer’s remorse. With product protection, the customer is covered in a worst-case scenario, and the relationship with Howard’s remains intact.

But perfecting that relatable pitch is only one side of the coin when it comes to Howard’s success with selling plans. The other side requires motivating the sales team.

Howard’s in Laguna Hills, CA

Mike knows that two Cs are important: COMPETITION and COMMISSION.

Howard’s leverages the competitive nature of its sales team by ranking employees by number of product protection plans sold weekly and monthly. Mike noted that he is always looking for new incentives and contests to generate more excitement and purpose around these rankings.

As for commission, Mike has worked hard to find the right level of commission that both motivates his team and still leaves margin for Howard’s bottom line. Currently, all Howard’s sales team members earn 10 percent commission off the gross sale when they sell a product protection plan. And it seems to be working. Today, 3 to 4 percent of Howard’s sales include a product protection plan, with the next goal being 6 percent. Getting there will require more creativity, new incentives and working together as a team — and Mike remains confident.

While plans don’t exactly sell themselves, Howard’s sales team is equipped and encouraged to sell the plan first. As Mike describes it, “[The customer] already came in for the product. You’re not a salesperson till you sell them what they don’t know they need.”

Listen to the full interview with Mike Sanchez, Senior Vice President and Chief Operating Officer for Howard’s.