VAC Survives 20 Years In The Roiling Warranty Waters

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MIDDLETOWN, N.Y. -A 20th anniversary is a significant milestone for any business, but reaching it within the rough-and-tumble extended warranty sector, as VAC Service Corp. does this year, is a doubly mean feat.

As any student of consumer electronics retailing may recall, the service contract industry has hit its share of rough patches, including the dealer contraction of the 1990s and a dark period in which its financial practices and credibility were called into question.

Even after weaker and less reputable players were weeded out, the industry was then socked with a wave of consolidation, as banks and insurance brokerages bought their way into the business.

Yet VAC, under the leadership of president Jim Tucker, has not only survived the hurly-burly of the past two decades, but thrived while managing to maintain its independence.

So how'd they do it? According to Ed Hamowy, VAC's director of corporate communications, it all comes down to service and innovation, the basic blocking and tackling of the extended warranty trade.

"Why are we still in business-and independent-after 20 years?" he asked. "There are reasons. For a start, look at all the innovations in this industry, and then look at how many of those are on our list of firsts, like repair replacements, which we originated. We're always trying to run ahead of the pack."

Similarly, service, the second word in the company's title, remains paramount, Hamowy said. "We run the business like we're the consumer. We ask ourselves, 'What does the consumer want? What frustrates the consumer?' And we'll bend over backwards to support warranties in order to put the manufacturer in the best light.

"We set up our programs and train our people on that philosophy," he continued. "We ask them 'What makes you happy as a consumer?' and 'What makes for the best service experience?'"

Moreover, VAC understands that a satisfied customer requires a satisfied employee. To that end, the company is "run like a family business, unlike the other guys who are controlled by insurance companies and other major corporations," Hamowy observed.

VAC also provides its staff with awards and various other incentives and motivators, which contribute to the company's low employee turnover rate.

"High turnover makes for disgruntled employees and higher costs," he said. "It's all about how you get local people to do good repairs. It's a question of philosophy. Although we strive to come up with new and better programs, everyone does that. So it comes down to how you handle the customer, and how your operation reflects on the manufacturer and the retailer. We try to give the consumer service in the purest sense."

As part of that commitment, VAC is building a Web presence via VACService.com, which, Hamowy reported, is "currently being upgraded and is starting to process claims and take customer questions online. It cuts paperwork and time."

"Everyone is going to the Internet slowly," he continued, "but it's not what you do online as much as how you do it. As with every other aspect of our business, we're trying to step outside of the box. We try to be different by offering value-added elements."

Indeed, that credo, along with service, has been crucial in helping the company make it to the ripe old age of 20. "We don't take anything for granted," Hamowy noted. "We don't get complacent."

The difference between VAC and the competition, he concluded, is that "we live and die on service, while the insurance companies live and die on your not dying."

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