The release of the new iPad 2 on March 11 has many Apple fans craving its increased power, the dual camera feature and that cool magnetic cover. But the original iPad is less than a year old. It’s difficult to justify purchasing another iPad when you’re still recovering from the expense of the first one. That’s the dilemma that faces many early adopters of cutting-edge technology. And it’s that demographic that we expect to find tech-refresh programs most appealing. Tech-refresh programs allow retailers to offer a guaranteed repurchase price to the customer for their older gadget, saving consumer’s the time and energy required to broker their own deal on eBay or Craigslist. Funds from the program help early adopters offset the purchase of a new generation of their device, eliminating concerns that they are buying their gadget at the wrong time.
That’s great news for consumers, but these same early adopters can be more resistant to the idea of purchasing an extended-service plan for their new gadget when a tech-refresh program is offered as a stand-alone product. Given the choice between protection beyond the manufacturer’s warranty and guaranteed cash back, consumers might opt for tech refresh alone and leave service protection on the table. And that would be unfortunate, from both the retailer and the consumer perspective.
When tech-refresh protection is bundled with service protection, the consumer’s valuable purchase is safe from both equipment failure and obsolescence. Today’s consumers are increasingly dependent on technology, relying on it to stay connected to their families, their work and their world. An extended-service contract ensures that their gadget will continue to perform as expected for as long as they decide to keep it. Increasingly portable electronics are more vulnerable today than ever before. The slightest damage or loss of functionality can have a big impact on the value of expensive technology. Combining the tech-refresh feature with service protection can help keep a device in top condition until the consumer is ready to upgrade to the next generation, ensuring he gets top dollar for their trade-in.
When consumers talk about reasons they value protection plans, it often comes down to a belief of whether or not the device they are buying will fail. Adding a feature like tech refresh provides additional value to the equation, overcoming the objection of “I don’t think the product will fail.” A bundled product can provide another way for the consumer to use the plan even if the product never requires repair.
And should the consumer ever make a claim, the bundled program makes the process easy by providing a single point of contact for all services included in the product bundle.
From a retailer’s perspective, bundled programs can solve the “either-or” dilemma consumers face at the register that can negatively impact both stand-alone tech-refresh and service-protection sales. Research conducted by Assurant Solutions shows that bundling their trade and upgrade tech-refresh program with service protection doubled the consumer take rate for service plans. Bundled programs can be branded by the retailer with tiered terms, options and features designed to fit a range of customer needs and customized to the retailer’s own marketing strategy.
New features like tech refresh minimize the impression of risk and encourage shoppers to buy. But tech-refresh programs alone are not enough. Combining the appeal of new programs like tech refresh with tried and true extended-service protection products can offer added support to retailers in these challenging times. The flexibility to customize these plans provides retailers with options to help enhance their brand, increase revenue and provide the customer with features tailored to their needs. For the early adopters among us, the double appeal of service protection and tech refresh could be just the excuse we need to invest in the next big thing.
Joseph (Joe) E. Erdeman is an executive VP of Assurant Solutions and president of the Extended Protection Solutions business. Assurant Solutions develops, underwrites and markets specialty insurance, extended service contracts and other risk management solutions through collaborative relationships with leading financial institutions. With operations in 25 locations, including executive offices in Atlanta, Assurant Solutions serves clients and their customers in 12 countries throughout North America, the Caribbean, Latin America, Europe and Asia. www.assurantsolutions.com