Co-Founder and CEO, Cover Genius.
Now more than ever, small- and medium-sized businesses are going digital. As expected, Covid-19 forced many retailers to move online, with 71% of SMBs saying digitization helped their business survive the pandemic. And they’re not just shifting their storefronts to e-commerce platforms; companies are also investing more in tech-driven, value-added services, including fintech offerings like BNPL, payments softwares and more.
However, one area that I believe smaller retailers should re-examine in order to create a truly holistic, digital customer experience is their protection programs. Product protection is a huge market—the Global Extended Warranty Market Size was valued at USD 126.79 billion in 2021 and is expected to reach USD 256.82 billion by 2030—but traditional plans often underdeliver, with unclear coverage and lengthy claims times. Customers not only want but expect personalized, embedded protection experiences, which can be delivered through a tech-forward approach.
The Importance Of Comprehensive Coverage
Oftentimes, the extended warranties customers purchase from larger marketplaces are fairly generic, which can lead to holes in the customer’s protection plan. In order to make them feel secure with their coverage and give them the confidence to make those big purchases, consider offering plans that protect your products from the moment they’re sent out to the end of their (hopefully) long lifespan.
Shipping protection that covers everything from damage during transit to package theft can help customers quickly recoup their losses should something happen to their items before they reach their doorstep. Porch piracy specifically poses a growing risk to retailers, especially smaller retailers that may find it more difficult to absorb the costs of having to send out a replacement item. Offering customers protection from these kinds of threats can not only protect the customer in the case of theft but also the business.
A whole new set of considerations comes into play once the customer actually opens their package. Offering them protection for accidental damage as well as loss and theft can enable them to repair or even replace their items when such issues occur. Other offerings, like return protection, can give customers even more peace of mind when purchasing from your site, and by bundling policies together, you can personalize coverage to suit their needs as well as the needs of your business.
Tailored Protection For Purchases
Protection is only worth adding when it’s relevant to the items being bought. According to a consumer-focused survey, 70% of customers globally are highly interested in embedded protection offers based on transaction data—in other words, they want their protection to match what’s in their cart. A college student buying a pair of headphones is likely going to need a different protection plan than a family of four investing in a new fridge. Platforms leveraging AI and machine learning to categorize products in real time and return the right plans will likely be more successful than one-size-fits-all warranties that end up being a headache.
Through a customized approach, you can leverage these protection programs to achieve your business goals, whether those be increasing customer lifetime value (CLTV), boosting revenue or others. For example, in my experience, an impactful protection experience should engage customers beyond the point of transaction. By meeting them at relevant touchpoints like order management, product registration and more, retailers can develop deeper customer relationships and encourage repeat purchases.
Helping SMBs Compete With Retail Giants
While businesses with the right tools and team can build and handle their protection programs in-house, another option for those without such resources in place is collaborating with an insurtech partner. (Full disclosure: My company offers these services, as do others.) This can be a scalable way for you to offer optimized protection to your customers. Pricing, customer support and more can all be handled by the partner, allowing you to focus your resources on your core offerings.
Value-added services like extended warranties can also enable SMBs to better compete with bigger retailers. Similar to how Apple offers AppleCare, a subscription-based protection plan, some insurtechs have the capability to offer auto-renewing warranties that can easily be managed in one place, unlocking recurring revenue opportunities for their retail partners.
By using these approaches to personalize your protection offerings to shoppers and focusing on a customer-centric approach, you can better maximize your checkout and post-purchase opportunities. Altogether, I have found that adopting a protection program suited to your unique business and customers can help establish stronger customer relationships, giving you more momentum to grow your business.
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