As the weather turns colder across most of the U.S., people are reaching into their closets to pull out winter coats — or perhaps preparing to upgrade to a sleek battery-operated heated jacket to fight Jack Frost. But, as with any cutting-edge technology, consumers may be hesitant to lay out hundreds of dollars for a heated jacket.
By offering an accident protection plan, though, Gobi Heat chief marketing officer Kyle Jacobson said the company can take some of that uncertainty off the table and give consumers the confidence they need to make the purchase.
“It allows them to purchase it knowing that one, two, three years down the line, they’re still protected in the case of anything wearing out,” he said in a conversation with PYMNTS’ Karen Webster, Clyde CEO Brandon Gell and Hydrow chief product officer Amory Wakefield on PYMNTS TV.
Though some brands see extended warranties primarily as revenue drivers, Gell noted that they can be far more useful — helping companies engage customers for a longer period, providing additional touchpoints to communicate through and making “sure that [customers are] taken care of virtually indefinitely for when they use that product.”
“The revenue, that’s a cherry-on-top type of thing,” Gell said. “The way that we want to talk about it is, ‘How do we make your consumers love your brand more as a result of purchasing and having this piece of mind, this extended warranty?’”
According to PYMNTS research conducted in collaboration with Clyde, 47% of consumers who made a durable goods purchase of $500 or more in the past 12 months added a product protection plan compared to 30% who didn’t. Mattresses, luggage and consumer electronics were among the items most commonly purchased with product protection.
Read more: Consumers Show Preference For Buying Product Protection Plans From Retailers Over Manufacturers
Wakefield noted that for Hydrow, offering an extended warranty is part of building a long-term relationship with the customer. Thirty-eight percent of consumers who purchased exercise equipment in the past 12 months said they had purchased the accompanying product protection coverage.
“We really see it as giving people the confidence that the piece of equipment they have is going to continue working for them and we’re going to be there for them to keep it working through the lifetime of their relationship with Hydrow,” Wakefield said.
Building Trust
Five years ago, Gell said, “people were sort of uncertain of extended warranties and product protection” because they didn’t see or understand what value they were getting.
Thanks to the positioning of providers like Clyde, though, that’s changed: An extended warranty has become a vote of confidence in the brand and the item they’re buying.
“Like, ‘I buy this thing because I love this product and I can’t wait to use the hell out of it,’” Gell said. “People who buy Clyde buy it as a love letter to the product itself, and then we treat those customers when they have an issue like family so they can get right back to using their products.”
Jacobson said he was once one of the customers whose first reflex was to reject the offer of an extended warranty, so it surprised him that people were reaching out to the company to ask about extending the accident protection. And in Clyde, he said, Gobi Heat found a partner that makes the warranty transparent for consumers. He said it made the difference “between feeling like it was an extra thing that you didn’t need versus something that we were offering to benefit the customer.”
An extended warranty is something that’s expected by buyers of luxury electronics, Wakefield said. So, for Hydrow, it was a matter of finding the right company to work with.
“Our key was finding a partner that saw it as a relationship instead of just a way to make money, which is certainly not how we approached it,” Wakefield said. “It was very much about building a stronger relationship of trust.”
Jacobson said Gobi Heat has seen a lot of customers wanting to gift a heated jacket but being wary about giving something new and innovative. “You don’t want to push onto your loved one a product that’s going to give them more trouble than it’s worth,” he said.
For some, this means gifting the product protection alongside the jacket itself to give both the giver and the receiver assurance that the product will work.
What’s in a Name?
Beyond the actual features of the protect protection program, consumers can also be swayed by what the retailer calls their plans. Half of Generation Z shoppers, for example, would be “very” or “extremely” interested in purchasing an “extended warranty,” PYMNTS researchers found, but only 37% say the same for a “product protection plan.” Baby boomers are the least likely to purchase either, with 13% interested in purchasing a “product protection plan” and 8.6% interested in an “extended warranty.”
Related: New Study: Understanding Consumer Desire for Product Protection and Extended Warranties
The preferences for different terms also extends to specific product categories. Consumers much prefer the term “extended warranty” for jewelry over “product protection plan,” for example, but would prefer a “product protection plan” for their exercise equipment rather than an “extended warranty.”
Jacobson said for Gobi Heat, calling their offering “accident protection” was a matter of differentiating between a basic warranty out of the box “and also just being very upfront and clear as to what it covers.”
“I didn’t want any assumption of what it covers versus what it doesn’t cover,” he said. “I wanted it to be a very pure decision for our customer.”
Similarly, Wakefield said Hydrow chose “extra protection” in order to build off existing messaging for the built-in one-year warranty. The company did “an immense amount of testing,” she said, to figure out at what point in the checkout process to offer the extended warranty and how to deliver the message to improve customer retention and satisfaction.
“The best thing is testing,” Gell said. “Every brand is different. Every consumer is different.”
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