Why Warranties Matter: 3 Reasons Pawnbrokers Should Provide Product Protection
By Tally Mack
Extended warranties and product protection plans get a bad rap. A customer’s first reaction is usually to turn down any additional cost on the (usually expensive) items they’re purchasing, so why should pawnbrokers go through the trouble of offering them in the first place?
First, let’s talk about what these warranty services actually do.
What is Product Protection?
Product protection is an industry going back over a century, starting with insuring real estate and eventually covering service contracts across a host of different retail categories. These days, it’s almost expected to purchase some form of protection plan or extended warranty for expensive electronics and jewelry, like AppleCare.
There are two major types of service contracts offered to consumers:
- Extended warranties: These service contacts cover mechanical or electrical malfunctions for an additional, specified amount of time beyond the original manufacturer warranty coverage. This type of plan is usually offered on new items like electronics, jewelry, household items, or tool, and can be purchased for a specific coverage period and amount.
- Protection plans: Like warranties, these service contracts protect products (usually pre-owned items) from specified damages or accidents. Like warranties, the terms of these contracts can be customized. Common plans include accidental damage from handling (ADH), which covers damage caused by accidents like drops, breaks and spills. With product protection, pawnbrokers can provide customers with more comprehensive coverage and help them feel confident in their purchase.
Contrary to popular belief, product protection plans can mutually benefit pawnbrokers, retailers and their customers. Here are some reasons why every pawnbroker should consider offering some form of product protection plan in their shop:
1. Demand for product protection plans is growing!
Customers are buying pre-owned more than ever. And they’re more likely to choose brands that offer some form of product protection.
Thrifting and consumption of used luxury items is experiencing a renaissance as YouTube and TikTok influencers encourage consumers to hunt for treasures offered at a fraction of their market price. According to ThredUp’s 2021 Resale Report, the secondhand apparel market alone is projected to double in the next 5 years, reaching $77B by 2026.
That’s great news for pawnbrokers, but that also means that customers are getting savvier about their purchases and needing more reassurance if they’re going to purchase from you versus a competitor.
2. Warranties and protection plans are cost effective for the customer...
An extended warranty or protection plan is simply a contract between a customer and another party (a pawnshop, for example) that guarantees certain protections on an item for a pre-defined price. That means that what’s covered, for how much and for how long can be customized.
Customers still hold a lot of negative impressions of warranties, but it’s a small price for them to pay compared to repairs or a total loss of value on their pre-owned item. The key to changing their mindsets is to treat warranties like a product at your store and include them in your sales processes and promotions. Talking to customers about product protection earlier can help them see it as a critical part of their purchase decision. Make sure your sales associates understand the cost of each plan so they can effectively incorporate it into their regular activities.
3. ...And it’s more money in your pocket, too.
As a retailer or pawnbroker, you take great care of your inventory and your customers, so you’d never want to suggest that there’s anything wrong with your item. But the risk with pre-owned items is that you can never know what happened before the item arrived at your store, or if there’s a manufacturer’s defect that outlasted its original warranty. There will always be situations no one can foresee!
In the best case scenario, the customer goes home happy and never needs to redeem their warranty. That’s extra money in your pocket and peace-of-mind for the customer. But in the event that the item disappoints the customer, you can still ensure that their next visit to your store is a good one. After all, they’re protected by the warranty they purchased. It’s an investment in your long-term customer experience.
Offering product protection plans is a win-win for pawnbrokers and their customers
That’s why Bravo built Warranties, which requires almost zero out-of-pocket cost, training or time to install with your Bravo point-of-sale.Watch the video below to see how easy it is to use, and get a free 14-day trial to test it out!
About the Author:
Tally Mack is a fifth-generation pawnbroker and eCommerce enthusiast. She loves traveling, being outside, and working out.
Before taking the reins as CEO, Tally served as Bravo's Vice President of Business Development, leading the company's sales and marketing organization. She's been instrumental in leading and executing many of the company's strategic shifts, including the acquisition of CompuPawn and the recent launch of UsedGuns.com.
Tally earned her Doctorate of Law (J.D.) from DePaul University College of Law in 2013 after attending the University of Colorado at Boulder, where she earned her B.A. in Communication Studies. She also completed the Key Executives Program from Harvard Business School in 2013.
Tally is a pawnshop lover and eCommerce enthusiast—dedicated to the success of both her employees and customers!