SAN FRANCISCO – A key finding of the CEA/SquareTrade extended-warranty white paper is the importance of brand to millennials, who tend to research their purchases by scouring user and media reviews.
Unlike traditional extended-service providers, whose names are largely unknown to consumers or who brand their protection plans with the retailer’s logo, SquareTrade turned its name into a selling point by marketing direct to consumers, smashing tablets and smartphones in its popular YouTube “drop test” videos, and providing an uncommonly high level of service that garners rave reviews from customers and the press.
“We take pride in fixing things,” said chief merchandising officer Ty Shay. “It’s a crisis here when we don’t treat a customer well.”
SquareTrade further generated demand – and disrupted the warranty cart – by aggressively cutting prices for its service plans. As a third-party administrator backed by insurer Starr Companies, its business model dispenses with the high overhead of service centers by outsourcing to partners like Apple (for iPhone repairs), Ingram Micro (for replacement units), and a nationwide network of local servicers. Costs are further contained by encouraging customers to file their claims online.
The positive word of mouth, both spoken and digital, has turned Square- Trade into a desirable brand for retailers, and the company has since refocused on dealer partnerships while still maintaining its direct-sale heritage. Today, SquareTrade-branded protection plans are displayed and sold in-store by Costco, B&H Photo, Sam’s Club and Staples; over the airwaves by QVC; and online at Amazon.com and eBay.
“More than 90 percent of consumers want to buy protection plans where they buy their device,” Shay noted, “so we have to be where the products are sold.” The result, he said, is “increased attach rates at every partner across all categories.”
Still, the direct-sell model has since spawned at least two emulators – a consumer-facing insurance brand called Protect Your Bubble, a division of Assurant Solutions; and a webbased business from Global Warranty Group called WarrantyEdge. The latter, launched last summer, sells service plans directly to consumers that provide 100 percent coverage – including loss, theft and accidental damage – for both new and used products at prices that can save shoppers “hundreds vs. in-store warranties and service repair costs,” the company said.
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