There are a few “no-brainer” programs in the pawn world, and I believe the Product Protection Plan to be one of them.
I know a few things.
I know that the average discount, industry wide, is about 20%.
I know that most brokers, offer “some” kind of guarantee on the items that they sell.
I know that we are all focused on loan growth.
And finally, I know that we are all looking for ways to increase revenue.
This single program, may be the most profitable program that I have ever seen, while providing structure to a program that already exists in your shop, and increasing revenue!
Here’s the basic outline:
You sell a TV. Normally, you would discount the item, and if it didn’t work after a week or two, when the customer brought it back, you would replace it, and go about your business. Now, instead of the discount of 20% or more, you would sell at full price, include the protection plan ( now an additional revenue with ZERO, cost of goods!) and, after a week or two, if the customer brings it back, you would do the same thing, except now you have the additional revenue of the protection plan sales to cover the cost of the replacement.
There are literally hundreds of ways to implement this program, limited only by your own creativity. However, as with anything, it has to be implemented. We talk about how we win or lose at the counter, and the fact is that any program, regardless of what it is, will only be successful if you sell it at the counter.
My goal has always been to make money! And in this business, there are so many ways that you can get dizzy, but there are very few that can offer the revenue stream that the product protection plan offers. It tracks and builds structure to a program that frustrates many brokers, while providing revenue and reducing discounts. It can help grow loan balance in a responsible way, as one of the benefits for your customers can be that when they need a loan on the current item that they are buying, you can guarantee more money than the typical 50% of the purchase price. Now you can guarantee perhaps 75% or whatever number you feel comfortable with. You can also guarantee 100% of the purchase price if they want to trade up to something bigger or more expensive.
In the end, this is one of those programs that simply makes sense.