Aside from the surge in business brought on by the digital revolution, third-party service administrators also foresee a wellspring of new opportunities over the Internet.
According to extended service providers, cyberspace offers both a brand new font of clients and a medium that allows companies to communicate directly with consumers. This interactive dialogue, they argue, could help them more fully explain their products and services while providing end users with enhanced technical support.
"The Internet will insure that the consumer has all of the information to make the right choices," said Michael Frosch, senior VP of sales and marketing for Aon Innovative Solutions Inc. "And because this channel allows for a flow of information, it can also allow us to field technical and service questions."
What's more, the proliferation of online membership clubs, whose fees often include free extended warranties on all purchases, "presents a potentially very interesting model for us," added Dave McCalpin, general manager of GE Warranty Management.
Still, removing the traditional retail sales associate from the process means losing a persuasive communicator of extended warranties' benefits.
"The key will be finding effective ways to motivate the consumer to purchase the service contract," said Rich Turchon, senior VP of sales at Warrantech. "In traditional brick-and-mortar locations, the sales associate oftentimes is vital in the purchase decision."
The solution, he said, lies in content that can be added to the Internet site, "thereby increasing the likelihood that the consumer will purchase a service plan without the aid of a sales associate."
So far, reaching that goal largely remains a work in progress for service providers pursuing either pure play e-tailers or the online extensions of existing conventional stores.
"We're exploring how to do business in that sector, but I don't know that anyone knows how to work it," said Matt Frankel, VP of sales for AIG Warranty Group. "There are no live voices, so you'd have to build different screens to explain your products' benefits. The hurdles are difficult, but not insurmountable."
Kevin Rupkey, VP of sales and marketing for Federal Warranty Service, a subsidiary of American Bankers Insurance Group, agreed: "The only difficulty with e-commerce is that you need to have the ability to hyperlink to a retailer's web site, or have the consumer go to your own web site. So we've made substantial investments in the technology."
Federal is among those extended service providers who have already forged agreements with online merchants, although the company is precluded from making any announcements until sometime in the second half of the year, Rupkey said. "We've positioned ourselves with strategic alignments that we've made, and will be offering some unique products in the next six months. For us, e-commerce is a strategic initiative."
National Electronics Warranty (N.E.W.) is another third-party service administrator that's dipping its toes in the web's waters. Explained CEO Fred Schaufeld, "Many of our clients enable customers to correspond and purchase through the Internet, and we provide many support services that enable the retailer to provide superior customer service to Internet customers. As e-commerce grows, the opportunity to support Internet retailers as well as traditional brick-and-mortar retailers with fully functional web sites will also increase." - Alan Wolf