Extended Warranty Conference – Selling Protection Plans Online
Excerpt from Warranty Week by Eric Arnum
Several hundred professionals from the extended warranty and service contract industry are headed to Nashville to talk about how changes in technology and regulations will impact their businesses in the years ahead.
Selling Protection Plans Online
Later on, in the afternoon, Ashok Kartham, the CEO of Mize Inc., will lead a panel discussion on the topic of “Channel Disruption: Strategies to Drive Service Contract Sales on Digital and Direct Channels.”
Amazon’s David Gregory returns to the stage to join that discussion, along with Larry King, the General Manager of the Global Extended Service Business at Ford Motor Company, Joseph Pesce, the CEO and co-founder of Over the Edge Corp., and David Pryor, the Chief Marketing Officer of Safe-Guard Products International LLC.
Kartham said he sees at least three strategies that could help drive service contract sales online: configurable programs, enhanced customer experiences, and an improved ability to reach the customer.
“First, companies need to have a value-added configurable service contract offering,” he said, “because each industry is different, and customer needs are different. It’s not a one-size-fits all product. It’s the ability to configure and select not only the basic protection, but also more value-added services that help increase the attach rate.
Number two, Kartham said, is the ability to deliver a better customer experience to the buyer of a service contract. “If I have a service contract, versus another customer that doesn’t have one, do I get a preference of some sort? Do I get better access to online information, or something like that? Those things will convince the customer that there is an additional value,” he said, above and beyond the break/fix protection.
“Number three is being able to reach the customer at the right time. Even though the best time and place to sell the contract is at the point of product purchase, I think you could also reach the customer at different touch points, such as just before the standard warranty expires, or when they call in for support during the warranty period. It may take two or three tries to engage the customer about the value of the service contract, but that obviously increases the attach rate,” he added.
Everything from product registrations to dynamic pricing depends on a configurable platform, he said, and its presence or absence will have a direct impact on service contract sales. “Software plays an important role,” he said. If you can’t customize and innovate, you can’t expect attach rates to rise.
“I think there is a lot that software can do to enable the sales teams and the people that are managing the service contracts to provide for the customers. For example, more and more, customers are going to digital media — online, mobile, social channels, and customer portals — and obviously software has a lot to do with how you can connect with and engage that customer,” Kartham said.
For instance, he said companies will want to be able to control when email alerts are sent to customers, and what they see when they login to register their products or to request support. “Those are all software-driven,” Kartham said. “And we think these are the kinds of things that drive sales.”
Kartham noted that Amazon’s customer-centric approach lets buyers select which purchases they want covered by protection plans, and sometimes even allows them to select among multiple plan providers. And if they don’t buy initially, Amazon.com will ask them again later.
However, he also noted that the problem with online sales of service contracts, which is also becoming a problem with physical sales, is the low attachment rate. Simply put, consumers have learned how to say no to protection plans. But Kartham said he thinks online sales might be more successful in the future, after some fine-tuning of the sales pitches, because the offers will be more consistent and pervasive.
“A salesperson is probably more interested in selling the physical product,” he said, “versus the ability to present the value of the service contract. So I think digital can enhance it.”