Extended-Warranty Providers Enhancing Programs, Support Services
By Alan Wolf On Feb 8 2010 - 7:00am
Extended-warranty providers are rolling out a host of new services and programs for clients and end users to help lower costs and raise attachment rates during the slow economic recovery.
AMT Service, for one, is placing greater emphasis on extended-service plan (ESP) bundles that provide a value-add for consumers. “You can boost sales by providing extended warranties with a different twist,” said president Bruce Saulnier, such as an identity-theft protection offer included free with the purchase of a plan, or 15 months of coverage for the price of 12.
“We're giving the consumer a more robust offering so they feel they're getting more for their money,” he explained.
AMT is also maintaining “an intense focus” on account management through enhanced training, point-of-sale material and sales techniques. “Sales people need a different dialogue today,” Saulnier said, as hard-pressed consumers question an extra ESP outlay in a tough economy. “Clients welcome a different message for different times.”
That, plus the addition of 25 new accounts last year, including Microsoft's new retail stores, helped boost business by some 50 percent for AMT, which provides both administration and underwriting services through parent company AmTrust Financial Services.
For Service Net Warranty, growth has come from multiple channels, including OEM aftermarket programs; subscription-based coverage for notebooks and wireless devices that can be extended from month to month; and an early entry into the burgeoning e-book reader business, which has given it a dominant position in that category.
For manufacturers, Service Net is providing a stepped-up marketing program that reaches out to consumers both during and at the conclusion of their extended-service contracts through email, direct calls, social networking and direct mail pieces. The company is also now offering factory service programs on Amazon.com for a wider array of clients including Panasonic, Sharp and the recently signed LG Electronics.
Elsewhere, Service Net is launching an online customer portal this week with Newegg.com where end users can register their contracts and book claims; recently acquired leading heating, ventilation and air conditioning (HVAC) plan provider Equiguard; and is planning its first ventures in Europe and possibly Asia.
To support the growth, new staff additions include Equiguard president Craig Funke; national service manager Chet Baker; and chief financial officer Kelly Duncan, succeeding Jim Mostofi who was promoted to COO.
“2009 was the busiest year of my career,” said president Christopher Smith — which paid off for Service Net in solid year-over-year growth in a down economy.
The Warranty Group (TWG) has also seen significant growth in the OEM channel, which it attributes in part to its single-source solution as an administrator, marketer and underwriter through its Virginia Surety insurance unit. The company recently began providing factory and aftermarket warranty programs for two of the industry's leading flat-panel TV vendors, and continues to expand its extended-warranty offering with current manufacturer clients.
TWG has also enjoyed a significant expansion in the fitness category as that business extends into the CE space, and has upped its profile with furniture dealers, where CE is also playing an increasingly significant role.
“Innovation drives everything,” said Michael Frosch, president of TWG's North America consumer products division. “We're always asking, 'What can we do that's new?'”
For NEW Customer Service Companies, the answer is a new suite of interactive plug-and-play Web tools that can help optimize sales of extended-service plans and other premium services for retailers by providing an appealing and convenient online interface for consumers.
“As online retailing has grown, and as services are continually being added to support product offerings such as extended-service plans, NEW identified a need for tools to manage that system and provide a more engaging experience for customers,” said NEW CEO Tony Nader.
The plug-and-play services, which won the company praise as a 2010 Design and Engineering Awards honoree at International CES, can be easily and seamlessly integrated into a retailer's Web site. Then, when a visitor purchases a product online, these tools identify services related to the product offering and display a dynamic multimedia sales pitch on the benefits of those services. The technology displays a message when customers view or add products to their carts, ensuring that they can easily learn about extended-service contracts, delivery, installation and other services related to their purchases. Chat capability is also available through this tool, allowing consumers to ask questions about the services and receive responses from customer care reps in real time.
Online services are also crucial to Warrantech Consumer Product Services, which has added a range of dealer-centric service enhancements to WCPSOnline, its Internet-based reporting and processing system. The site's latest service contract administration tools provide dealers with real-time information that can impact the profitability of their businesses, including loss experience analysis, streamlined sales and claims reports, and automated repair orders.
The loss experience feature, for example, targeted for release this month, analyzes specific dealer portfolio loss history, allowing retailers to understand the key drivers of their programs' profitability. Working in conjunction with their Warrantech account manager, dealers can then take needed actions to minimize problem areas and maximize long-term profitability.
“Having access to up-to-the minute information gives dealers a strategic advantage over their competition while the customer receives fast, courteous service, making the administration and repair process a win-win for all parties,” said Joel San Antonio, president/CEO of Warrantech Corp.
To underwriter Matt Frankel, president of the warranty division of Chartis Insurance, the “biggest obstacle” for the CE, appliance and ESP industries remains price erosion. “I don't see that changing,” he said, which will compel underwriters and administrators to develop new products, such as replacement plans, to compensate for falling price points while still providing value to the consumer.
“Everything has to be looked at,” Frankel said. “Length of contract, in-home repair vs. exchange or replacement — it's a juggling exercise, but innovation is key.”
Chartis is presently putting together a new product that will address the issue of price deflation, he said. In the meantime, Frankel takes solace in the fact that lower retail prices also mean “more boxes — and more contracts — moving out the door.”
For Bankers Warranty Group (BWG), an important new value-add is a carbon offset feature that can be bundled with the company's ESPs to provide a monetary contribution to a range of clean energy and carbon-emissions reduction projects such as wind power and landfill gas capture. The contribution, administered by San Francisco-based TerraPass, is based on the amount of carbon dioxide that is produced after generating sufficient energy to run the covered CE or appliance product over the life of the service plan.
“This concept is revolutionary in the extended-warranty industry,” said BWG marketing executive VP Frank Trigo. “We realize we all have a responsibility to the environment, and we've figured out a way to make an impact while making it attractive to the consumer and driving higher attachment rates.”
The program should be of particular interest to retailers with a strong environmental focus, Trigo said, and dealers can either absorb the nominal cost of the carbon offset or wrap it into the retail price of the ESP. Consumers can also download a certificate indicating their carbon offset contribution.
Like Service Net, subscription-based coverage is also playing a major role for Assurant Solutions, which is providing coverage of low-priced netbooks through a monthly protection program. The effort, launched late last year by wireless carriers in all 50 states, includes accidental damage, theft, loss, mechanical breakdown, virus protection and technical support.
With netbook growth pegged at 127 percent in 2009, “We saw a need for a comprehensive protection program designed specifically for mini-computers,” said Manny Becerra, president of Assurant Solutions' wireless business. “We are continually searching for new services and products that will enhance the customer-carrier relationship.”
Assurant's role in the wireless industry was underscored by the recent election of president/CEO S. Craig Lemasters to the 2010 board of directors of the CTIA – The Wireless Association.