Costco Expands SquareTrade Extended-Service Program

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ISSAQUAH, WASH. – Costco, the No. 1 warehouse club, recently added camera and tablet coverage to its exclusive protection plan program with SquareTrade.

The new categories join TVs, computers and cellphones among Costco’s handful of extended-service plan options.

The SquareTrade-branded programs are merchandised alongside their respective CE products via descriptive sales cards, and, according to Costco assistant general merchandise manager Steve Messmer, have proven very successful, even in the chain’s unaided sales environment.

“They sell well enough to earn a SKU on the floor,” he told TWICE. “Every product must earn its spot.”

Messmer said Costco had long resisted selling extended warranties and service contracts due to their “historically bad reputation for customer service. It was like pulling teeth to get something fixed.”

But three years ago, Costco co-founder and then-CEO Jim Senegal, despite his own reservations, responded to customer requests for add-on service plans after the company reduced its open-ended return policy to 90 days for TVs, cellphones, computers and cameras. Messmer, primarily Costco’s office supplies and office machines merchant, was tasked with finding a service provider that met the retailer’s stringent standards and “could hit the ground running.”

Messmer met with SquareTrade co-founders Steve Abernethy (president/CEO) and Ahmed Khaishgi (chief operating officer) at the 2011 International CES, and was impressed by the company’s customer care, brand recognition, plan pricing and the transparency of its website, which featured unscreened customer reviews. Six months later the new partners launched Costco’s first TV protection plan alongside its Concierge support program.

Costco waited two years for customer feedback, as the protection plans only go into effect after the expiration of the OEM warranty (generally one year) and Concierge’s free one-year extension. But soon thereafter the warehouse club introduced SquareTrade plans for computers and cellphones (the latter boast the highest attach rates), and late last year added tablets and cameras.

Costco’s service plan expansion will likely end there, Messmer said (“Four programs, four categories”), in order to cover those products with limited return windows.

SquareTrade launched in 1999 as a direct-to-consumer seller of competitively priced, post-purchase CE protection plans, and has since forged retail partnerships with Abt Electronics, Amazon.com, B&H Photo, Costco, eBay, Sam’s Club, QVC and Staples.

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