The global pandemic has digitized consumers’ purchase patterns, as ordering online from the safety of one’s home suddenly feels a good deal safer from a public health viewpoint.
And as Extend CEO Woody Levin told Karen Webster in a recent discussion, customers aren’t only buying more online; they’re also changing where they’re going to purchase certain items.
“We’re not just seeing more and more purchases take place online,” he said. “We’re also seeing them take place outside of what I call the top 1 percent of merchants — the Amazons, Best Buys, [and] Walmarts. [Consumers] have started going directly to the OEMs [original equipment manufacturers]. … What we’ve seen throughout [this] pandemic with the companies that we work with is they are seeing 300 and 400 percent increases in their online orders. It’s wild.”
And with the wild and expansive rush of interest, Levin said the question now for all eCommerce players is: “How do we stand out in a crowded field and capture the consumer’s interest and attention?” What are the “bells and whistles” they can build into their eCommerce experience for consumers that both motivate them to make their first purchase and then keep coming back?
Levin said answering that question is the principle Extend was founded on when it entered the business of helping retailers and brands offer their own bespoke extended warranties. Even when customers don’t buy extended warranties, Levin told Webster, anecdotal evidence suggests that just offering one bolsters consumer confidence enough to push them to make a purchase.
“Intuitively, since our founding, we’ve believed that giving people an opportunity to add protection to their purchase would make them more likely to make it” in the first place, he said.
That’s a situation Levin said he believes the pandemic and attendant shift to digital commerce has only advanced — making an extended warranty a next-level feature that eCommerce players looking to compete in the market need to consider.
The Pandemic Push
Levin said an extended warranty’s appeal rests on consumers’ desires to protect their purchases and add extra piece of mind. He said he believes the pandemic has only made that desire more keenly felt.
“People are being more protective of the money to the end, right?” he said. “And they need — we all need — peace of mind [with] everything that’s going on in the world.”
He said an extended warranty can offer peace of mind at what’s often a fairly marginal cost to the consumer.
But Webster noted that even if an extended warranty can give peace of mind to a consumer, there’s no guarantee that it really protects them. She said a common complaint made with extended warranties is that while consumers think they’re protected, they often find out when they try to use their extended warranties that the agreements don’t actually cover their situation. Webster said that leads to something of a “yuck” consumer experience.
Levin agreed, saying that Extend’s main priority is building transparent, customer-friendly extended warranties to avoid “gotchas” that tend to dampen the experience. He said the firm also wants to make sure customers get the right level of protection.
For example, he said items like TVs and dishwashers tend to remain in the same spot and are at little risk of accidental damage. So, they’re generally best covered by an extension of the manufacturer’s warranty that covers against unexpected mechanical failure or malfunction.
By contrast, Extend offers much more robust coverage for personal electronics and other items people carry around all the time, like phones and laptops. Levin said the company’s Accidental Damage and Handling policy covers you “where you drop [something] in the full sink or your dog eats it, [or] you sit on it. It doesn’t matter — it has very few exclusions because literally it is built for that.”
On top of that, Extend is working on what Levin calls the “Just Say Yes” program, which is meant to help customers who’ve had something go drastically wrong within a few days of their coverage expiring. If the company believes the customer is acting in good faith, it will “just say yes” and extend the protection without trying to hide behind a narrowly missed cut-off.
The point is to help merchants offer extended warranties that actually ease consumers’ minds because they know an agreement will be easy to work with. That makes a merchant’s site “stickier” — and more likely to encourage return visits, he said.
The Expanding World Of Extended Coverage
When asked if there’s any item that an extended warranty wouldn’t work for, Levin said “consumable goods” are about the only things he couldn’t see covering.
He said the company can build an appealing, workable extended warranty for all kinds of things if it brings the right focus. That’s why Extend is expanding its deals with both massive enterprise-level merchants and the up-and-coming Shopify vendors.
It’s little surprise that Extend works extensively with electronics sellers, but the company also offers warranties in some areas you might not expect. For instance, Extend offers warranties for a company named Evolve, which specializes in electronic skateboards.
Levin said that required a lot of extra work for underwriters to calculate customized rates for a warranty that had never existed in the marketplace before. But in the not-too-distant future, Extend plans to branch out into backing furniture, while the company is already working with a retailer that specializes in high-end watches.
He said that with so much commerce migrating online, every retailer has to at least consider offering extended warranties as they rebuild consumer relationships and attempt to create a connection that lasts beyond the individual transaction.
“Extended warranties done right create that connective tissue between a customer and a brand after the transaction is completed in a way that just wasn’t there before,” Levin said.
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