Warranty Innovations Conference, 12 September 2013
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ISSN1550-9214
September 12, 2013
Warranty Innovations Conference:
Next week, the fourth annual edition of the
Extended Warranty & Service Contract Innovations
conference moves out of Chicago, site of the first
three events, and into Nashville. Here are some of
the expected highlights.
At the Fourth Annual Extended Warranty & Service Contract Innovations
conference on September 17 & 18 in Nashville, something on the order of two
dozen speakers are going to focus on innovations in technology, and innovations
in marketing.
Traditionally, an extended warranty or service contract isn't something the
consumer has given much thought beforehand. But then while they're buying a
product, a clever salesman convinces them they need to protect their product
and buy a service contract that gives them peace of mind.
However, many purchases are now made online, with the big box retail sites
becoming a new kind of showroom. Customers come in to look and feel, but not
to buy. Instead, they use an app on their smartphones to make the actual
purchase, after researching the lowest prices with another app.
As the customer changes their buying patterns, the sellers of service contracts
also have to change. Speakers at the conference next week will make some
suggestions how, and also will offer some examples of companies that are
making the change. Basically, it involves a change of approach where there is
less emphasis on the revenue and profit from service contracts and more
emphasis on the way they can improve and strengthen the connection to the
customer.
Competitive Advantage Through Service Contracts
After an opening address by Warranty Week editor Eric Arnum, Terry Hawkins,
the president of the Global Warranty and Service Contract Association will deliver
the keynote address: "Maintaining the Competitive Advantage: Critical Topics
Impacting the Service Contract Industry."
Hawkins said he will first revisit comments
and predictions he made during the past two
Warranty Innovations conferences, about how
technology is impacting the service contract
industry.
"Essentially, it's looking at how people have
migrated from traditional buying decisions to
online, and now to mobile," he said. "So, no
matter how you're trying to reach these folks,
selling either service plans, accessories,
aftermarket parts -- trying to sell them the
next product -- you've got to be able to do it
http://www.warrantyweek.com/archive/ww20130912.html[9/13/2013 9:17:30 AM]
Warranty Innovations Conference, 12 September 2013
from a mobile platform. Because retail and
the dealer relationships have radically
changed."
The problem is, the successful sale of a
service contract usually involves a persuasive
salesperson. Consumers are trained to say
"no" to the extended warranty, and
salespeople are trained to make them change
their minds. It's hard to say "no" to a persuasive pitch. But to a click box on a
webpage or an option button on a mobile phone? Saying "no" is easy.
Hawkins said some people will still buy, even when the salesman is absent.
"Historically, the salesperson has been pivotal," he said. "We always felt that you
had some chance of closing the transaction if you just ask, even if you ask
poorly."
Raising Customer Loyalty Levels
There's a brief coffee break immediately
following Hawkins' keynote, and then a panel
discussion moderated by Jimmy Bynum, the
global marketing manager at Cat Financial
Insurance Services, part of Caterpillar Inc.
The topic of that first panel discussion is
"Promoting Service Excellence to Attract and
Retain Customers."
Bynum said he thinks customers are getting
smarter about what they're buying. "And I
think the ability to deliver value in the form of
helping a consumer manage the risk is really
important," he said, "but the value of it has to
be crystal-clear to the consumer. And I think
online makes that easier, because you can
have a much more consistent delivery of the
value message through an online platform
than trying to train a fleet of salespeople to
say the same thing."
In other words, a multimedia webpage may be even better than a salesman,
Bynum suggests, because an online video clip can demonstrate the value of a
service contract in a way that a person could not. "I think it's a better
mechanism for selling than trying to do it across the counter," he added.
Social media makes it even easier for consumers to do their research, Bynum
said. "You can find topics about extended service contracts on LinkedIn and
Facebook," he said.
And because extended service contracts form a bond between the buyer and
seller, they can easily impact customer loyalty and customer satisfaction rates.
Bynum said he's going to urge the other panel members to provide specific
examples of that.
http://www.warrantyweek.com/archive/ww20130912.html[9/13/2013 9:17:30 AM]
Warranty Innovations Conference, 12 September 2013
Chris Carenza, the executive director of the Vehicle Protection Association, is on
that panel along with Darius Bullock of Lowe's Companies Inc. and Laurence King
of the Ford Motor Company.
How to Minimize Complaints
That encompasses a lot of territory, Carenza said. "My particular expertise is in
compliance with state and federal law, and in customer satisfaction," he said.
And one generally leads to the other, in that satisfied customers don't complain
to market regulators.
Carenza, who previously served for five years as an assistant attorney general in
Missouri, said he plans to explain to service contract professionals how to remain
as complaint-free as possible. Consumer complaints, he said, are at the root of
most enforcement actions, so rule number one is to keep the customer happy, or
at least not unhappy enough to file a formal complaint.
In fact, the VPA was formed five years ago by vehicle service contract
administrators, financiers and underwriters specifically to rein in the bad actors
in that industry who brought down the wrath of attorneys general in Missouri and
40 other states. (See Warranty Week, August 14, 2008.)
At the time, the leaders of US Fidelis and other companies were violating
telemarketing laws and conducting other illegal activities for which they were
ultimately convicted and imprisoned. The VPA, then called the Automotive
Warranty Services Association, published a code of conduct and began to
measure members' compliance with it.
Carenza said that all of the VPA's members who have gone through the
certification process are now free of pending legal actions from the attorneys
general. "So the association is moving forward and taking steps to be in
compliance with state and federal law," he said.
Warranty Survey Expected
This Week’s Warranty
Week Headlines:
National Auto Care Corp.
and Family First Dealer
Services LLC to merge.
Hawkins said the Global Warranty and Service Contract Association, in
conjunction with Fulcrum Analytics Inc., is launching a survey of warranty
professionals this fall, specifically to look at some of the key issues facing
warranty and service contract professionals.
Which? rates Currys and PC
World worst in extended
warranty mystery shopping.
Bynum, who is also the association's vice president, said the responses to the
survey will help determine the future direction of the GWSCA. "We've developed
training, which was in response to industry needs. We're in the process of
delivering training in San Francisco, and we're also working with a major
manufacturer to develop in-house training for them. So we're going back out
now and asking again, 'What else do you need that this organization can help
http://www.warrantyweek.com/archive/ww20130912.html[9/13/2013 9:17:30 AM]
Press Release, September 12,
2013
Daily Mail, September 12, 2013
SquareTrade launches
Protect My Phone mobile
application
Press Release, September 12,
2013
Warranty Innovations Conference, 12 September 2013
provide?'"
Before the main conference opens on Tuesday, Hawkins and Bynum will be
leading a GWSCA teleconference on Monday, September 16, during which the
actual wording of the questions on the survey will be discussed. Tara Piazza, the
senior vice president at Fulcrum who will be project managing the survey for the
GWSCA, said she will collect the comments, and draft the questionnaire based
upon that input.
Other members of the GWSCA also have
speaking slots. Paul Wojcicki, an attorney and
shareholder of the law firm Segal
McCambridge Singer & Mahoney Ltd. and the
current secretary of the GWSCA, speaks twice
on Tuesday: once in the morning and once in
the afternoon. First, he's a panelist on Jimmy
Bynum's discussion group, entitled "Innovative
Marketing & Sales Strategies (Social Media &
More!)."
On that panel, scheduled for just before lunch,
Wojcicki will be joined by Gary Mitzner, the
division vice president of service contracts at
Sears Holdings Corp.; by Mark LeClair, the
executive vice president of Alliance
iCommunications Inc., a Canadian and
American contact center; and by Terry
Hawkins from the GWSCA.
Plain English Language Sought
And then Wojcicki's afternoon presentation is entitled "Be Smart, Dumb Down
Your Documents by Using Plain, Easy-to-Understand English." His co-presenter
on this occasion is Jim Martinez, the managing consultant of the RightStoryGroup
LLC, a company he founded to help companies with their marketing and
positioning.
"It's all about telling a story, which is why it translates so neatly into this whole
warranty and service contract space," Martinez said. Companies spend a huge
amount of time and money developing an image for themselves and their
products, but they forget to extend that into the after-sale service area.
With warranties and service contracts,
Martinez said, "a lot of right-minded
companies seem to assume that their
customers are out to take advantage of
them." So they put up defenses against that,
and in the process they hurt their own brand
image. First they use confusing language in
their terms and conditions. Then they make it
hard to get a product repaired under warranty.
"American companies in particular have
invested an enormous amount of resources to
try to get close to their customers," he said.
"If you start creating barriers or putting up
insulation between you and your customers,
you've wasted some of that money."
For instance, with one PC company, he got all
sorts of help while configuring the computer
he wanted to purchase. That went very well.
But when he needed some help after making
the purchase, he was tossed around contact
centers "half a world away" where the staff didn't seem to know what to do.
http://www.warrantyweek.com/archive/ww20130912.html[9/13/2013 9:17:30 AM]
Truck warranty survival
guide.
Today's Trucking, September
12, 2013
Marne Martin appointed
CEO of ServicePower
Technologies plc.
Press Release, September 11,
2013
Apple raises AppleCare+
iPhone service charge from
$49 to $79.
Mac Rumors, September 10,
2013
Wichita City Council refuses
to endorse sewer and water
line warranty program.
Wichita KS Eagle, September
10, 2013
Seeking vital signs in a
lifetime warranty.
New York Times, September 7,
2013
Warranty determines how
to cool an electric car
battery.
Christian Science Monitor,
September 5, 2013
Soitec buys solar module
performance warranty
insurance from Munich Re.
Press Release, September 5,
2013
Staples to resell
SquareTrade's protection
plans for electronics and
furniture.
Press Release, September 5,
2013
Jennifer Convertibles
extended warranty excludes
cracking and peeling.
WRCB-TV Chattanooga TN,
September 5, 2013
Bonded Builders Warranty
Group appoints national
sales director.
Press Release, September 5,
2013
Rethinking high-end fly rod
warranties.
Field & Stream, September 5,
2013
4 best credit cards that
offer free extended
warranty in 2013.
Daily Markets, September 5,
2013
Study says computer
vendors are getting tougher
on warranty abuse.
Warranty Innovations Conference, 12 September 2013
"As a result of how I've been treated by some companies' help lines -- basically
warranty and service contract lines -- I won't do business with them again," he
said. "And I don't think I'm unique in that. I think a lot of people get so
frustrated by the experience [that they do the same thing]."
In contrast, companies that have simplified their warranties and service contracts
have been able to boost both their sales and their brand image as a result. For
instance, the Middleby Corp., a major manufacturer of commercial food handling
equipment, switched over to a "no quibble" warranty that offers customers a
choice of repairs, replacements or refunds. "As a result, their sales soared, in
part because they took the risk out of making the investment," Martinez said.
Hyundai Motor America is another great example of a company that used
warranties as an image-boosting device. The company's extra-lengthy powertrain
warranties, introduced to the U.S. market in 1998, helped the company build an
image of product quality, taking the worry out of a purchase, and giving buyers
peace-of-mind. "You can trust us; we stand by our product; and you're making
the right decision," he said.
"A good solid warranty or service contract agreement that doesn't try to be
furtive, that doesn't try to protect the company at all costs," Martinez said, is
going to boost a company's image, which in turn will lead to increased sales. In
contrast, a contract loaded with exceptions and asterisks that make it hard to
understand, will make consumers go elsewhere over time.
Edits vs. Rewrites
Wojcicki said that during his part of the discussion, he plans to highlight
additional benefits of plain English service contracts. And in particular, he
suggests that companies make sure that all the sections of the document are in
agreement.
"People make tweaks from time to time, as new legislation is passed and new
decisions are handed down by the courts," he said. "So the document becomes
kind of a hodgepodge -- put together by a number of writers over a number of
years -- and you start losing clarity."
Sometimes, one section contradicts another. The language was modified but the
document wasn't completely rewritten. "So what we're saying is 1) write your
documents in plain English, 2) treat the document as a whole, and 3) we're
looking at the benefits of doing this," Wojcicki said.
He said that easy-to-understand service contracts will be easier to sell, because
consumers will be more comfortable buying them. In addition, a plain language
contract will be easier to administer. "If I know what it means and my customer
knows what it means, we're less likely to get embroiled in disputes over what our
respective rights and obligations are," he said.
Also, plain language reduces the risk that the courts, regulators or arbitrators
are going to misinterpret the terms and conditions should there be a dispute,
Wojcicki added. And a well-written warranty is also going to boost the image of
the company. "That's one of the questions we lead our presentation with: What
does your service contract say about your company? What messages are you
sending through the language you use?"
Wednesday Morning: Beyond Loss Ratio
On the second day of the Warranty
Innovations conference, the proceedings begin
a little later and end a little sooner. Hawkins
opens the day with some brief comments at
8:30am, followed by a presentation from
Warren DeBardelaben, the director of dealer
support at Nissan North America Inc., entitled
"Beyond Loss Ratio."
In the insurance industry, the loss ratio is the
http://www.warrantyweek.com/archive/ww20130912.html[9/13/2013 9:17:30 AM]
CRN UK, September 4, 2013
UK judge says certain
collateral warranties are
covered by the Construction
Act.
Construction News, September
4, 2013
Man says home warranty
company hesitated in
reimbursement.
WSOC-TV Charlotte NC,
September 4, 2013
GWC Warranty named a
Motor Trend Magazine
Recommended Best Buy for
independent dealers.
Wilkes-Barre Times Leader,
September 1, 2013
Securranty offers zero
deductible extended
warranties for smartphones
and tablets.
Press Release, August 30, 2013
ServicePower Technologies
extends ServiceOperations
contract with leading
insurance co.
Press Release, August 29, 2013
iGen expects Apple to begin
selling AppleCare+ in
Europe soon.
Apple Insider, August 28, 2013
The Warranty Group
announces agreement with
Hermes/Compra Facil S.A.
Press Release, August 28, 2013
Thistle Insurance Services
acquires Risk Management
Support and eWarranty.
Insurance Age, August 28, 2013
American Residential
Warranty explains the
necessity of protecting
home appliances.
Press Release, August 28, 2013
Godfrey Hirst appeals High
Court ruling on carpet
warranties.
New Zealand Herald, August 28,
2013
Imprev survey finds 49% of
real estate executives offer
home warranty services.
Press Release, August 27, 2013
Alpha Warranty Services
gets the 2013 Alfred P.
Sloan Award for Excellence.
Press Release, August 26, 2013
Service Line Warranty sees
158 claims for sewer and
Warranty Innovations Conference, 12 September 2013
benchmark financial metric that tells an
analyst whether a given group of contracts is
making or losing money. Basically, it's a
percentage figure calculated by dividing claims
paid (or accrued) by premiums collected. With
a loss ratio of 60%, you're making a 40%
profit. With a loss ratio of 100%, you're
basically breaking even.
six for water line warranties
in a year.
DeBardelaben said he's not looking to replace
the loss ratio with some other metric. But he
said he will suggest that a high loss ratio isn't
necessarily a bad thing if it's buying customer loyalty and satisfaction.
Press Release, August 23, 2013
"Many times, people use the loss ratio to measure a dealer or any kind of
retailer's performance," he said. "But I see warranty as more of a marketing tool
as opposed to an expense that needs to be curtailed or controlled."
Fraud is always a concern, and in the past many companies simply assumed that
everybody was out to get them. So they made it hard for repair organizations to
go a little outside the rules, for instance by repairing something under warranty
a month after the warranty expired. Such a claim would not be paid, and the
repair organization would think twice the next time some goodwill was needed.
Empowering Most Dealers
DeBardelaben said he thinks at least 90% of the repair organizations are simply
trying to do right for the customer. "And then there's that 10% you need to
watch," he said. So what Nissan has done is to figure out which are the 10% to
watch, and which are the 90% to encourage to use warranty as a marketing
tool.
"I think it's given us some strong growth," he said. Not only have sales gone up,
but so has customer satisfaction measurements. "But we've also seen a marked
increase in what we call service retention, which is the number of customers who
are coming back to our dealers on a regular basis for normal maintenance and
customer-pay work."
Therefore, when the amount of claims paid is measured against the amount of
additional sales revenue generated, the cost of warranty could be very small. The
cost of vehicle service contracts could be lowered, because the amount of
customer loyalty they generate is offsetting some of the cost of repairs. A
dealer's repair organization might be encouraged to "do the customer a favor"
with some warranty goodwill if it raises customer loyalty and leads to repeat
purchases years from now.
"It hit home for us in 2009," DeBardelaben said. Back then, Nissan had a very
stringent system in place. "Quite frankly, it was designed to make claims as
difficult to get through as possible. It was as nit-picky as they come."
Dealers were afraid to bend the rules to help a customer, because they feared it
would get them onto the bad list, and would result in an audit. Now, the
company has changed its tack, making increases in customer loyalty, customer
satisfaction, and parts sales more important than increases in warranty expense.
And the vast majority of dealers have changed their behavior as well.
"We're much better than we were back in 2009," he said, "but we're nowhere
http://www.warrantyweek.com/archive/ww20130912.html[9/13/2013 9:17:30 AM]
El Dorado (KS) Times, August
24, 2013
American Home Shield is
part of special real estate
investment supplement in
USA Today.
Global Warranty Group wins
Bronze Stevie Award for
customer service.
Press Release, August 22, 2013
Indian Motorcycle unveils
the Indian Motorcycle
Assurance Program.
Press Release, August 22, 2013
American Home Shield
offers video advice for
common washing machine
problems.
Press Release, August 21, 2013
American Home Shield
wouldn't fix A/C noise
problem on first call.
KOVR-TV Sacramento CA,
August 21, 2013
Choice Home Warranty
denies claim for pipe leak.
WFTV-TV Orlando FL, August 19,
2013
Casio America launches
extended warranties for
LampFree projectors.
Press Release, August 15, 2013
Belden now certifies entire
industrial networks through
enhanced warranties.
Press Release, August 15, 2013
Tata Motors launches 3year warranties on
commercial vehicles.
Press Release, August 14, 2013
Securranty offers iPhone
extended warranties
without any deductibles or
fees.
Press Release, August 14, 2013
The Warranty Group
announces agreement with
Garbarino Group in
Warranty Innovations Conference, 12 September 2013
near where we want to be."
Michael Paczolt, a consulting actuary with Milliman Inc., will follow
DeBardelaben's presentation with an introduction to warranty analytics. "We will
discuss analytics from a business standpoint and the keys to making the
implementation of analytics successful," he wrote in his course description.
Service Contracts & Social Media
Brian Casey, an attorney and partner in the
Atlanta office of Locke Lord LLP and the cochairman of its Regulatory & Transactional
Insurance Practice Group, said his presentation
right after Paczolt's on Wednesday morning
will look at how social media is impacting
service contracts.
"It certainly hits the sales and marketing
side," he said. But it also impacts compliance
with employment law, in that there are rules
about how workers can and can't be
disciplined for expressing their views online.
And for public companies, there are additional
concerns about compliance with securities laws
that control how news must be released to the
public in a manner that doesn't give anyone
an unfair advantage.
His presentation, entitled "Social Media 101 –
What Works in the Warranty and Service
Contract Market -- and What's Legal?" will
detail how new laws in some states have explicitly prohibited employers from
obtaining passwords for their applicants' Facebook or LinkedIn accounts. But
while that's an example of a new law specific to social media, Casey said what's
more common is seeing old laws applied to the new technologies.
"There was one case involving Facebook as a plaintiff, and they sued another
company that was a lead generator/aggregator type of company," Casey said.
"Basically, the defendant had created these Facebook pages that were luring
consumers to become fans and get discounts on products and services. And it
was a total scam."
No new laws were needed, though. For instance, Facebook alleged not only a
trademark infringement, but also a violation of the existing anti-spam laws, even
though the solicitations weren't in the form of what we'd call classic email. "The
court found that the 'message' functionality on Facebook was within the CANSPAM Act," Casey said. Other courts have found that telemarketing text
messages must follow the same rules as calls placed to mobile phones.
"Social media kind of dovetails in with other marketing laws," Casey added. "It's
is an extension of e-commerce," he said, not something completely new.
Argentina.
Press Release, August 14, 2013
CVC Capital Partners buys
Domestic & General for
750m pounds.
Bloomberg News, August 13,
2013
Nissan Global Reinsurance
licenses PCMI's Policy Claim
and Reporting Solutions.
Press Release, August 13, 2013
Mike Sullivan of Take
Charge America says home
warranties are not for
everyone.
MarketWatch (audio), August 9,
2013
Microsoft disclaims implied
warranties in U.S. Navy
agreement.
Fierce Government IT, August 8,
2013
Global Warranty Group
offers lease to purchase
program for wireless
devices.
Press Release, August 8, 2013
How to clean iPhone 5
camera lens and void your
warranty.
ValueWalk, August 8, 2013
Residential Energy Services
Network offers 2-5-year
home energy usage
guarantees.
Press Release, August 7, 2013
Eby Exteriors offers 25-year
warranty on CertainTeed
roofing installations.
Press Release, August 7, 2013
Invacare sees increased
warranty expenses from
wheelchair "performance
issue."
Press Release, August 6, 2013
New Nexus 7 held up better
than iPad Mini in
SquareTrade durability
tests.
Computerworld Australia, August
6, 2013
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Headlines
http://www.warrantyweek.com/archive/ww20130912.html[9/13/2013 9:17:30 AM]
Warranty Innovations Conference, 12 September 2013
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