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Extended Service Providers Expand Customer Ranks

11/05/2001 02:00:00 AM Eastern


Despite the soft economy — or perhaps because of it — three of CE's leading extended service providers have forged new agreements with dealers.

The expanded client rosters at Warrantech, N.E.W. Customer Service Companies and VAC Service Corp. support the warranty industry's contention that demand for their products increases during downturns. As GE Warranty Management president Chris Smith noted, "People become more risk averse during recessions, and we've seen strength during tough economic times." (See TWICE, Oct. 8, p. 16, and table of recent attachment rates, right.)

For Warrantech, that means a new extended coverage pact with United Wireless, a 15-store mobile communications chain based in Cleveland, Ohio, that has signed a three-year agreement to carry Warrantech's Xchange card. The program provides consumers with a new, factory fresh product if their original purchase fails, allowing retailers to service customers rather than refer them to manufacturers.

"We are certain that the Xchange Card will be a great addition to our product offerings and will set us apart from our competition while upholding our mission to amaze our customers," said United Wireless president/CEO Mo Saedi.

Meanwhile, N.E.W. has signed agreements with five member dealers of the MARTA Cooperative of America as part of its "core vendor" partnership with the buying group. The merchants — Lehman Electronics, Routzahn's, A-1 Appliance, G. Heath King and Nielsen's Tire — are participating in the company's MARTA Peformance Guarantee, which is a group-based approach to extended service plans. Established last March, the program provides simplified pricing and efficient management of dealers' contracts and accounts, and is linked to MARTA's specialized member Web site.

For VAC, the latest addition to its customer ranks is London Drugs, a Canadian pharmacy and CE retailer with 54 stores throughout Alberta and British Columbia. The 56-year-old, Richmond, B.C.-based business has been selling CE since 1970, and its stores feature full-service computer departments and sound rooms for auditioning high-end A/V systems.

According to business unit manager John Vasconcelos, the chain "decided to make a change in the administration of our service program when we realized we needed more features for the program than we were getting." After a successful trial run administering the retailer's computer products program, VAC was selected to administer London Drugs' entire service program.

In other extended service plan news, a coalition of majap manufacturers and service repair firms has formed a new group that is pursuing a one-step process for warranty claims filing. Dubbed the Major Appliance Service Coalition (MASC), the group seeks to establish an industry-standard warranty claim form that would give vendors and repair services a single format for filing claims online. MASC has enlisted the North American Retail Dealers Association (NARDA) to lead the project.

Extended Warranty Attachment Rates

Product Category Estimated Average
Camcorders 78%
TVs 57%
PCs 56%
VCRs 52%
Car audio 46%
Home audio 51%
Personal CE 37%
Source: Investrend Research Division

©TWICE 2001