Do low crop prices, higher interest rates, inflation and an uncertain political landscape have you looking for a JG Wentworth-like solution?
“I have valuable inventory, but I need cash now!”
What if there was a tool that could help sell your inventory faster and increase its value with no added cost to you? That would be good to have, right?
In 2017, Matt Miner from Quality Equipment wrote an excellent article for Farm Equipment titled “7 Tactics for Used Equipment Management.” It is a wonderful outline of the common wisdom for dealing with used inventory. However, it fails to mention a trick that is a game-changer. The trick is to use an extended service contract to enhance the value of a machine. This tactic works with a manufacturer’s extended coverage products or a third-party contract like Ag Guard. Let’s look at how:
- Zero Upfront Cost: Unlike most merchandising tactics, an extended service contract has no cost until after the customer pays the dealer. This feature is important for managing stale inventory because you want to avoid more expenses.
- Faster Sales: Research reveals that machines with coverage sell more than twice as fast. Customers perceive them as superior, even if they’re pricier than comparable machines. Consider adding coverage before resorting to wholesaleing or auctions.
- Negotiation Leverage: Selling a machine with coverage gives you more margin for pricing negotiations. In a tough negotiation, you can offer to remove the coverage to lower the price and then haggle using the added margin. Dealers report instances when they got to a break-even amount on the machine and only profited on the extended service contract.
- Strategic Marketing: Including coverage on a machine requires an inspection, which could lead to a repair expense. You may want to avoid these costs if you plan to wholesale the machine or send it to auction. In this case, instead of including an extended plan, get a provisional quote to ensure the machine qualifies for coverage pending an inspection. Then, market the machine as “Qualified for an Ag Guard extended service contract.” This tactic creates opportunities when the machine is sold. Once purchased, the new owner could pay you to inspect the machine, make any needed repairs and purchase coverage. At the very least, you have added some value to the machine simply by inserting a phrase in the marketing, and you have created an opportunity for more income after the sale.
In today’s competitive market, many salespeople will make the mistake of trying to win deals with lower pricing. Avoid a race to the bottom with lost profit margins that will never be recovered. A wise salesperson embraces value-driven sales. When customers perceive added value, they’re willing to pay more. In an inflationary market, adding value reduces the sticker shock. Look for tools like an extended service contract, where a customer’s perception of the benefit outweighs the additional cost.
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