By Lisa Johnston
New products on display at the American International Toy Fair, held in N
New product introductions at last month's Consumer Electronics Show were not limited to digital doodads.
Among exhibitors presenting innovations were extended service contract providers, who used the forum to announce new programs, services and, in the case of N.E.W. Customer Service Companies (NEW), a new strategy.
According to the Dulles, Va.-based business, the new approach, dubbed E=CRM², is based on the premise that commitment to customer service above and beyond merely administering extended service plans increases satisfaction, long-term loyalty and, ultimately, earnings for its retail clients.
The philosophy is reflected in the formula, in which "E" stands for higher earnings, and CRM² represents a higher level of customer relationship management. NEW argues that the company's customer-centric approach can create long-term revenues for its clients by enhancing consumers' experience during the service claims process. To underscore the point, NEW cited a study by the United States Office of Consumer Affairs, which showed that 70 percent of households would maintain their brand loyalty if a repair problem costing less than $100 was satisfactorily resolved.
"The current extended service business is basically find 'em and forget 'em," said NEW president/COO Tony Nader. "Clients make a small profit every time a plan is sold, but when it comes time for a consumer to file a claim, some service plan companies make the claim process unduly complicated for the consumer with red tape, long waits and third-rate service."
By contrast, he continued, "We can lock in future sales for our clients after the up-front profit is made by keeping the customer who needs service and support satisfied." Nader noted that according to NEW research, 98 percent of its satisfied consumers would recommend the client retailer to friends, and that nearly 100 percent say they are satisfied with their experiences with the merchant following a service claim.
To support the new consumer-centric philosophy, the company is implementing a multi-million-dollar upgraded of its IT system and is launching a customized CRM package that seamlessly links all customer, product and service provider information together. This, NEW says, will enable its customer service representatives to provide faster, more efficient responses to customer needs.
Other E=CRM² initiatives include:
A complete assessment of all 25,000 current service providers in the NEW network to further fulfill stringent customer service requirements;
Continual monitoring and measurement of customers' service experience, with rapid-response programs that help deliver total satisfaction;
Post-service customer contacts on behalf of NEW clients to "close the loop" and encourage repeat purchases.
"It's all about customer satisfaction," added chairman/CEO Fred Schaufeld. "We strive to make sure every buyer is happy, no matter what. We guide them to self-help sites, hold their hand over the phone and connect them with the right service provider in the right location right away. Why? Because happy customers become loyal customers. If we make them happy, they are more likely to keep buying from our clients."
Enhanced customer service — as well as greater back-end efficiency — was also the goal of Warrantech Corp.'s Consumer Products Services division in developing its new Web-based platform, WCPS Online. The platform, launched at CES, provides real-time capabilities to meet the needs of dealers, service providers and consumers. Specifically, the platform is designed to reduce paperwork and cut the time and costs of administering warranties for dealers and service providers, while providing a better experience and faster service for their customers.
Ron Glime, VP and president of U.S. operations, noted that WCPS was inspired by the success of its automotive division counterpart, which now serves as the conduit for upwards of 20 percent of incoming claims and fully 70 percent of new business. "It's working so well in automotive, we decided to bring it over to this side and leapfrog the competition," he said. Although the platform is still a month away from full claims functionality, and the sales element won't be fully operational until the end of May, client response so far "has been terrific," Glime said. Moreover, two major retail chains, both potential clients, have requested appointments based on demonstrations of WCPS Online during CES, he added.
For dealers, benefits include password-protected online access to critical customer and business management data, such as real-time warranty sales analysis, service contract profitability and customer contact and warranty registration information.
Similarly, service centers have access to real-time management of the complete service process, including contract and coverage verification, repair authorization, claims management and electronic billing.
Consumers, meanwhile, can access WCPS Online to register products and warranties, verify warranty coverage and obtain repair authorization and nationwide service locations, thereby reducing the time required to repair or replace failed products. The platform also has an e-commerce component that allows consumer electronics and appliance OEMs to offer private-label service contracts directly to consumers.
In other Warrantech news, the company recently announced a five-year renewal of its service contract sales agreement with Ultimate Electronics, extending a 10-year relationship. Noted Ultimate president/COO Dave Workman, Warrantech has been a valued partner in helping us provide full and complete service to Ultimate customers on a wide range of complex technical products. We see Warrantech as an important resource, and anticipate a long and profitable relationship for many years to come."
Also announcing a service enhancement is Warranty Corp. of America (WaCA), which recently debuted an Internet-based service solution for PC customers called Digital LifeLine. Previously, WaCA addressed PC-related problems via traditional call centers that could be accessed by a toll-free number. The new online platform allows PC users to click an icon on the desktop whereupon they are immediately directed to a relevant answer, solution or expert without having to abandon tasks.
Developed by Motive Communications, Digital Lifeline "knows" who the customer is and what he is doing at the specific time the problem or question arises, and uses this contextual information to direct consumers to targeted self-service solutions without assistance. When necessary, the system will connect users to WaCA service personnel along with the contextual information, eliminating the need to troubleshoot the problem from scratch.
Elsewhere on the ESP landscape, VAC Service Corp. recently announced that JCPenney has turned over the administration of its entire extended service plan portfolio to the Middletown, N.Y.-based business.
VAC's relationship with Penney's goes back to 1987 when the service provider, then known as Video Aid Corp., was selected to administer a service program for the merchant's catalog and direct response customers. The new program includes all national brand products sold by Penney's, including all consumer electronics and major and household appliances. Penney's ranked No. 42 on the TWICE Top 100 CE Retail Registry with some $316 million in electronics sales in 2000, which were purchased mainly through the retailer's catalog and Web site.
"Earning the trust and respect of JCPenney, one of the revered, Blue Chip names in American retailing, makes this announcement a very rewarding one," said Vince Romano, VAC's senior VP/OEM. "It says a lot about VAC Service Corp. and its many employees who administer the JCPenney program."
Meanwhile, Aon Warranty Group, which describes itself as the largest service contract provider in the United States and one of the world's largest independent providers and administrators of consumer warranties, figured well in its corporate parent's full year 2001 results, released earlier this month.
According to the report, claims servicing was one of several businesses within AON's Insurance Brokerage and Other Services unit that "posted good operating results" last year. The warranty operation contributed to the segment's 7 percent revenue growth for the 12 months and 8 percent sales hike in the fourth quarter to $1.3 billion.
According to chairman/CEO Patrick Ryan, AON is undergoing a corporatewide business transformation designed to "enhance client service, accelerate organic revenue growth and reduce costs. We believe that clients have begun to realize some of the benefits of our new operating model."
Added AON president/COO Michael O'Halleran, "Our entire U.S. retail team is now refocused on new business growth and improved client retention. Our new platform [organized around Client Service Business Units (CSBU)] allows us to more effectively and efficiently serve existing and potential clients."
The company expects to complete its transition to a CSBU-based organization by the second quarter of this year, when the planned spin-off of its insurance underwriting operations is expected to occur.
Matt Frankel, VP of AIG's warranty division, is pleased with the industry's — and its own administrator partners'— renewed emphasis on customer service. "We support our retailers and their accounts. With their customer service enhancements, the end result is that our customers get the service they need and demand," he said.
Frankel noted that AIG's business received a big fourth-quarter boost from contract sales in CE, which he attributed in part to the events of Sept. 11. "People are still spending money, only differently," he said. "Instead of taking vacations, they're upgrading their homes and home entertainment systems. Where they may have purchased a 32-inch TV before, now they're buying a 50-inch projection set. And because they're spending more money, they want to protect their investments."
New on the ESP scene is CP&L, a Raleigh, N.C.-based power utility, which has teamed up with General Electric-Zurich Warranty Management to provide consumers with qualified, GE-authorized majap repair professionals as part of its Appliance Service Plus program. Launched last month, the program protects household refrigerators, ranges, ovens, built-in dishwashers and microwave ovens, and clothes washers and dryers regardless of age or brand for a minimum of $16.99 a month plus a flat fee of $50 for the service call. Coverage also includes replacement of the product if it can't be repaired
Meanwhile, Service Net is taking a new marketing tack by pitching its whole-home warranty program direct to companies that could offer the program as a benefit to employees.
The program provides 24-hour customer service and protection for up to 10 household appliances.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.