We’re all looking for ways to combat the encroachment of e-tailers and big box stores into our sales territory. One way that we’ve done this at Hansen Lighting is to offer a unique No-Questions-Asked Lifetime Warranty on the products we sell.

When I first considered this, it made me very nervous. I worried that I’d get stung with returns on expensive items that would erode away our profits. It’s had the exact opposite impact (increasing our profits)… here’s why:

1. IMPROVED MARGINS
   When it’s all about cost, margins go down. Adding another value-point for customers to consider allows us to have higher pricing than others (though not too high) and frequently customers will purchase a higher-quality item from us at a higher price because they know that it’s covered under our warranty.
   
   For example, you can now find LED recessed trims on Amazon for around $6.00 each… but we sell LED trims to customers by the container-loads every month for $12.00 or more even when the customer KNOWS that there is a cheaper option online.
   
   Bringing up the lifetime warranty opens the door to talk with customers about why it’s risky to buy cheap LED technology (especially from online vendors like Amazon) and why we’re comfortable giving such a powerful warranty on items we sell*. This reduces their confidence in just buying cheap-o stuff online.
   
   *Note: next week’s post will be a deeper-dive into LED technology and what makes a quality LED worth paying more for.
   
   The fact that we’re willing to be so bold with our warranty generally tells customers that our products are superior and that they can have greater trust in our recommendations. That influence gives us a better margins because we can sell better products and aren’t forced to scrape the bottom with only low-price, low-quality products.
   
2. REFERRALS & POSITIVE REVIEWS
   It’s very rare (maybe 2 to 3 per year from four stores), but on the occasion that a customer uses their warranty we take great care of them and then ask them to go online and leave us a review based upon the service they’ve received. They always leave a glowing 5-star review.
   
   On average, a 5-star review on Google will bring three new customers. So in the big picture it’s actually a profit-boost to have a warranty request!
   
   Most people expect to be treated poorly when they have a warranty issue. Giving a refreshingly-different experience brings referrals and big time loyalty. If you read some of the reviews for lighting showrooms on Google, if you find people saying things like “I’ll be a lifetime customer”… take note and you’ll likely find that those were instances where a customer had a warranty problem and received great service.

Here are some tips on how to offer a lifetime warranty:

• Give preference to vendors who give you the best return policy. I ask our core vendors for an automatic “field destroy” on any RGA items below $1,000 for example.
• Ask vendors for a no time-limit and a no-fault return policy (doesn’t matter who’s fault, if it’s broken replace it free) on glass replacements… which are by FAR the most common warranty issue.
• When you honor a warranty claim, always ask that customer to give you a Google and Facebook review.
• Be bold and ask your vendors to support your warranty, and for those that do, ask your customer to go leave online feedback for your vendor too. (this is a big-time benefit that very few showrooms offer to their most supportive vendors).
• Make it clear in your warranty terms that it does not apply to non-standard vendors, custom or specialty-shipped items, clearance, etc.
• Give in-store credit if there is a return that warrants a refund.
• Make sure you’re not selling items that have a high probability for warranty claims. Track item failure issues and if you see a problem on a particular item or with a vendor, find an alternate.
• Bring the warranty up early… especially if a customer isn’t ready to confirm their order right away. Don’t let them get out the door without a big reason NOT to price match and buy online.
• Know your stuff and be able to explain the difference between high quality and low quality. Let customers know that with lighting – like anything else – you get what you pay for, and let the lifetime warranty signal that you’re confident that they’ll be thrilled in what we’re recommending and the service we offer.

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