NEW YORK â€” Extended-service plan (ESP) providers are rolling out new programs and services to help retailers offset choppy demand and contracting price points on CE and appliance products.
Chief among those barreling into the New Year with a barrage of innovations is NEW. The nationâ€™s largest service- plan provider is leveraging the latest technologies â€” including in-store shopping tools and point-of-sale (POS) assortment searches â€” to help retailers increase attachment rates and build positive customer relationships.
â€œWe live in a connected world, and it is important that we leverage technology to reach the consumer along their path to purchase,â€ said NEW CEO Tony Nader. â€œWhether itâ€™s an entry in our blog [www.thesavvyshopperblog.com ], an article about the benefits of protecting purchases on our website, tips and tricks posted on our Facebook page or Twitter, a video on YouTube, or an SMS text dialogue with a consumer, we are dedicated to using technology to help consumers make informed purchase decisions.â€
In recent years, NEW has used a variety of online and social-media tools to educate consumers about the benefits of extended-service plans and to counter what the company described as â€œconfusion and misinformationâ€ stemming from some consumer media reports. This year NEW has extended that digital relationship with quick response (QR) code and SMS programs. The former allows in-store consumers to conveniently access key service plan details through their mobile devices, including pricing, promotions, features, and benefits, by taking a snapshot of the 2D barcodes displayed on targeted in-store signage and marketing materials.
Similarly, the texting initiative allows consumers to access additional service plan information through their mobile device by entering a key word displayed on in-store signage and texting it to a specific five-digit code.
â€œWith these technologies, we have increased our accessibility to consumers during the most crucial step of the buying cycle,â€ said sales, marketing and product development VP Rob DiRocco. Coupled with the companyâ€™s around-the-clock online and over-the-phone customer service, â€œWe continue to be able to provide consumers with outstanding customer service and product protection â€˜Anytime, Anyplace, Anywhere.â€™ â€
NEW has also introduced a proprietary audit application, or â€œspider,â€ for retailersâ€™ POS systems that recognizes products that qualify for service plans when they are scanned at the point of sale. The â€œspiderâ€ also performs an ongoing audit of dealersâ€™ product catalogs in order to keep current with inventory changes and fluctuating price points.
â€œUsing this tool, we have been able to identify up to 790 percent more SKUs that qualify for service plans,â€ said Brian David, VP and general manager of Internet services for NEW. â€œIf neither the cashier nor the customer knows that a service plan is an option, the consumer isnâ€™t going to buy it. This program allows us to catch those missed opportunities and ultimately increase sales.â€
NEW said the audit technology has been implemented against the product catalog databases of many of online clients, and recently has been implemented with in-store register systems at several additional partners.
Service Net is similarly leveraging innovation to drive further growth this year following an already heady 2010, when revenue rose 20 percent, the company earned an industry-leading A+ rating by the Better Business Bureau for a fifth year, and 39 new clients came aboard.
Service Net president Chris Smith attributed the achievements and historically high attachment rates to a sustained focus on the lifetime value of the customer relationship, the differentiation of clientsâ€™ programs to fit their unique needs, and the ability to engage the customer through marketing and provide a positive experience.
â€œItâ€™s critical to develop a clientâ€™s program around their unique needs,â€ Smith noted. â€œItâ€™s not just about providing a unique offer, but the flexibility to provide a customized structure and process that supports the offer.â€
Also driving growth was consumer demand for accidental damage coverage on mobile electronics; new products covering mobile phones, e-readers and tablet PCs; innovative services such as subscriptions, theft/loss and data back-up that add a new dimension to service contracts; and more frequent price optimizations to meet dynamic price changes in the marketplace.
Service Net also forged a new partnership with underwriter Chartis Warranty, and continues to improve the customer service experience as demonstrated by its customer portal, myserviceplan.com, a branded website where customers can, among other tasks, access or renew their service plans, update their personal information and make a claim.
Added Smith, â€œThis past year marked a major milestone of growth and provides a foundation as the service contract industry is redefined in the upcoming years. Retailers, service providers and OEMs will continue to change at a more rapid pace and demand more from warranty providers to customize their services and focus on the enhancing the lifetime value of the customer relationship.â€
Meanwhile, Chartisâ€™ U.S. warranty division is also starting off the New Year with a head of steam, beginning with a new president. Service Net veteran James Mostofi took the reins of the insurerâ€™s U.S. warranty and extended warranty insurance group in November following 10 years with the service plan administrator, where he variously served as general counsel, chief financial officer and most recently chief operating officer.
â€œWe are thrilled to welcome Jim to Chartis,â€ said Charles Williamson, president of Chartisâ€™ U.S. Consumer Lines segment. â€œHe brings the distinctive blend of a seasoned warranty professional and experienced business executive to lead our organization.â€
In his new role, Mostofi will have numerous tools at his disposal, including innovative new products such as customer loyalty warranties, product refresh coverage and a product buyback program introduced last month by Best Buy.
Mostofi will also have momentum in his favor, following the addition of more than 40 new and indirect clients in 2010. To date, Chartis has more than 75 million active service contracts in the U.S., and plans to up its worldwide operations from 50 to 60 countries this year.
Also coming off â€œa great year of growthâ€ is online service plan provider SquareTrade, whose roster of e-commerce clients includes Abt Electronics, Amazon.com, Buy.com, Crutchfield and Vannâ€™s. The 12-year-old company has also added its first OEM customer, launched with Citibank, Discover and Mint.com, and is working with educational institutions including Seton Hall University to provide coverage for iPads and other tablet PCs that are given to all students.
SquareTrade was also the top â€œWhatâ€™s Hotâ€ utility on the iPhone App Store, and now has specialized solutions for the iPad and Android platforms as well.
Whatâ€™s more, â€œMany of our online retailers are starting to have attach rates close to those that traditionally have only been achieved via a sales-person driven culture in a store environment,â€ president/CEO Steve Abernathy said, and data shows that SquareTrade increases warranty sales for direct and online retailers by over 500 percent.
The main driver behind the high attach rates is the SquareTrade brand, which was built upon a five-day service guarantee and has been garnering tens of thousands of positive online reviews by endusers. â€œOur consumer brand is based on amazing service,â€ Abernathy said, â€œand we have actually decreased the average time to handle a claim by 40 percent in the last year.â€
As a result, the company has earned consumer ratings of 4.5 to 5 stars on Amazon.com, Epinions, Google, the iPhone App Store, NexTag and Reseller Ratings, has won the Bizrate Circle of Excellence award, was named a Top 100 website by PC Magazine, and has amassed more than 74,000 â€œfansâ€ on Facebook.
More recently, SquareTrade was selected as a finalist in the e-Commerce Customer Service category in the 2010 Stevie Awards for sales and customer service, a sister awards program to the American Business Awards.
Last year also brought big changes to Warrantech, which was acquired by AmTrust Financial Services subsidiary AMT Warranty. Warrantech, which administers and markets service contracts and after-market warranties on CE and appliances for retailers, distributors and manufacturers, recently completed the consolidation of AMTâ€™s operations into its extended warranty and service contract administration business, including a 400-person, 24/7 call center, at its headquarters in Bedford, Texas.
As part of the AmTrust family of companies, Warrantech also has in-house access now to the AmTrust Group of insurance carriers for underwriting, which are all rated â€œAâ€ (Excellent), Financial Size IX by A.M. Best.
AmTrust said it will maintain the AMT Warranty brand for its existing consumer products segment clients, but all new marketing and sales activity will be done under the Warrantech brand. Indeed, since the acquisition in August, Warrantech has signed its first Top 20 CE retailer, citing AmTrustâ€™s and Warrantechâ€™s combined financial stability and security, and decades-long third-party administration expertise as the deciding factors in bringing in the new business.
â€œThe acquisition of Warrantech further diversified our business and allowed us to instantly become one of the larger warranty administrators in this highly competitive space,â€ said AMT Warranty president Bruce Saulnier.
â€œTogether, weâ€™re able to identify and implement best practices in order to become one of the most viable, efficient and innovative players in this market, and many consumer electronics retailers are already taking note,â€ added Sean Hicks, president of Warrantechâ€™s consumer products sector.
Elsewhere, Global Warranty Group (GWG), which this year celebrates its 10th anniversary, has begun offering coverage for Apple iPad and Samsung Galaxy tablets as part of its signature Wireless Protection Program. The company, which lays claim to being North Americaâ€™s largest dealer-based, thirdparty provider of insurance-backed handset-replacement programs to more than 7,000 independent wireless retail locations, said the programâ€™s fully insurance- backed and compliant coverage includes lost, stolen, broken, accidental and liquid damage protection. The programs, which cover all iPad and Galaxy models and will be available in two-year prepaid and monthly plans, can generate â€œsubstantial additional revenue and profits for the dealer base,â€ president Charles Pipia said.
â€œWe understand and recognize the explosive salability, appeal and growth of this dynamic new product segment,â€ Pipia noted, and introduced the comprehensive tablet coverage in response to dealers requests.
The company also recently launched a turnkey extended service program for CE dealers and manufacturers called RepairGuardian, which provides a comprehensive solution thatâ€™s easy to implement and affords superior customer service for increased attachment rates, GWG said.
The program is backed by an A.M. Best-rated insurer and is supported by an around-the-clock claims-and-customer support center and a network of over 25,000 independent service providers. The company also provides extensive sales training through a dealer services support team, plus state-of-the- art IT integration and interactive web tools for seamless program management, claims adjudication, tracking, dispatch and administration GWG said.
â€œWe drew on our decade-long success and experience in the ESP and OEM business and consolidated the most successful components to create RepairGuardian,â€ Pipia said. â€œWe incorporated and optimized our proprietary back-end systems and processes into the program, allowing retailers and OEMs to offer a comprehensive ESP as an attractive addition to their customerâ€™s product purchase,â€ resulting in additional sales revenue, increased profit margins and enhanced customer retention and satisfaction, he noted.
Recent developments at extended service contract provider Assurant Solutions include a new e-gift card replacement program that speeds reimbursement for gifts that become broken or damaged. Assurant is the first to offer this service to its CE and wireless retail clients and their customers, the company said. Under the program, participating retailers can issue electronic gift cards to customers who protect their purchases with an extended service plan. If a purchased item should become broken or damaged, the customer can redeem their e-card instantly online or in-store at their convenience, rather than waiting several days to receive a refund in order to purchase a replacement.
â€œExtended protection plans offer protection for popular holiday gifts, such as smart phones, laptops and flat-screen TVs,â€ said Joe Erdeman, president of Assurant Solutions extended service protection business. â€œNothing is quicker than an e-gift card to replace a broken gift, providing the customer with the funds needed to replace the item in hours instead of days.â€
Unlike some gift cards, Assurant Solutionsâ€™ product wonâ€™t expire, and there are no hidden fees or usage charges that will erode the value over time, the company said. The cards are also easy to replace if lost.
Separately, Assurant received two finalist nominations in the fifth annual Stevie Awards for sales and customer service. The company was nominated in the â€œInnovation in Customer Serviceâ€ category for the analytics-based contact routing technology known as RAMP (real time analytics matching platform), whose development was led by VP Cameron Hurst. Contact center operations VP Mark Davis was also selected as a finalist in the â€œCustomer Service Leader of the Yearâ€ category for implanting the â€œSHOEâ€ program (successfully helping others engage), which partners new employees with experienced ones. Winners will be announced at a gala event in Miami Beach on Feb. 21.