WCM Conference Keynotes

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WCM Conference Keynotes

• Sean Stapleton, president and CEO of
  Warrantech/AMT Warranty will be presenting at the
  2015 Warranty Chain Management Conference on
  March 11 in Miami. The following is an excerpt
  fromWarranty Week in anticipation of the event. 
• The technology is changing. The need for repairs
  is changing. Even the concept of ownership is
  changing. And the way people shop is changing.
  Two industry experts describe how they see these
  changes impacting warranty and service contracts.
• At this year's Warranty Chain Management
  Conference, attendees are immediately going to be
  challenged to face the changes that new
  technology is forcing upon our industry.It's
  going to be a bit upsetting, especially to those
  who like the status quo. Rather than hearing
  about the latest best practices in the break/fix
  business, and how everything is slowly going to
  get incrementally better, attendees are going to
  be told how driverless vehicles will challenge
  the whole idea of automobile ownership, and how
  comparison shopping apps that seek out the lowest
  prices have made it tough to earn a living in
  retail.

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A pair of warranty industry experts will deliver
a one-two punch of keynote presentations at the
WCM Conference on March 11 in Miami, about the
impact of disruptive technologies upon warranty.
We spoke with both of them this week about their
presentations.John Estrada opens the morning
session with a talk about how driverless
transportation will change warranty and service
contracts, followed by AMT Warranty's Sean
Stapleton talking about how warranty and service
contracts can help save retail from its downward
spiral, by making value and customer
relationships as important as low prices.WCM's
Morning ScheduleIn the WCM program, Stapleton's
45-minute presentation is called "Combating the
Retail Pandemic," a title he said he came up with
a few months ago when the Ebola scare reached the
United States. They're by no means the same
thing, but in economic terms, the current state
of the retail environment provokes a comparable
level of fear for many veteran merchants whose
iconic organizations are facing possible
extinction."I certainly wanted to grab
everyone's attention, but more importantly I felt
that the title set the stage for a discussion
about a very serious and widespread situation for
retailers and manufacturers," he said.
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"A pandemic is a disease that has a disastrous
impact felt both locally and globally." And he
said that many colleagues and friends in the
retail industry are dealing with a profound
change in both customers and the marketplace
where a low price seems to be the main
determining factor for product purchases. So
either they lose the sale, or they get the sale
but lose money anyway. In other words, the sales
slump that's hurting many of them comes not just
in terms of revenue but also in terms of
profitability. "Margin erosion has impacted
retailers in ways never seen before," he said.
Price will always be a factor when a product is
purchased, he added. This is nothing new the
modern difference is the ease by which customers
can obtain pricing comparisons and make purchases
through multiple sources.The Great
RecessionStapleton said some people blame the
current retail challenges on the lingering
effects of the Great Recession the decline of
household income, aging baby boomers, rising
unemployment, or falling home values. Others say
it's the lack of innovation, or the lack of
exciting new "must-have" products."The reality
is that there has been product innovation
smartphones, 4K and Ultra HD, wearables, advanced
car tech, and highly functional tablets.
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You look at the growth the CEA expects for these
segments, and it's tremendous. So the innovative
products do exist."Meanwhile, the economy may not
be as strong as we would all like, but it's not
as bad as some people make it out to be, he said.
The U.S. Census Bureau pegs the
January-to-January sales gain at 3.3, which
isn't great but also isn't dismal. Total retail
sales for the November-to-January holiday period
were up 3.8 from the same period a year ago. The
U.S. unemployment rate is now down to 5.7 and
the median price of existing home sales is up
6.2 since last year. So what is it?Ironically,
he said, in an era where retailers are perhaps
more connected with their customers than ever
before, thanks to social media and big data,
those connections are more superficial than
ever."The heart of what I'm going to discuss is
that many retailers and manufacturers are just
not achieving a high level of loyalty and
commitment from their customers," he said. "Part
of the problem is that we're living in the 'Age
of Like.' We see this play out on Facebook every
day, with users happily clicking the thumbs up
icon for just about anything they see. However,
that's where the customer commitment often ends.
'Like' should not be our collective goal. To be
successful we need to aspire to win the love of
our customers. The reality is that overall we
aren't seeing the same level of affinity for
brands that we used to enjoy."
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For instance, Stapleton said, his father always
bought Kenmore appliances. "He loved his Kenmore
appliances because, in his mind, they earned his
trust and loyalty year after year" he said. "He
wouldn't dare shop for another brand. Sadly, we
don't have that kind of an environment
anymore. "As warranty and service contract
professionals, we have a unique opportunity to
affect customer loyalty," he said. "We have the
ability to turn a negative experience into a
powerful trust building moment with customers.
Customers recognize and accept that product
breakdowns can happen to even the most reliable
products. The customer's perception of the
product issues are more often driven by our
responses."Stapleton further noted that one of
the greatest challenges with service contract
programs arises when a customer's claim isn't
covered under the contract, whether as a result
of an expired contract or other reasons. "In such
situations, there is still an opportunity to turn
a negative into a positive."He suggested that
there are plenty of instances when no coverage
exists, but accommodation can still be made to
assist the customer and provide them value.
Accommodations may take the shape of providing a
product replacement or repair outside the service
contract. However, there are other solutions that
are less frequently utilized that can have a
major positive effect with minimal financial
impact.
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For instance, Stapleton noted that broken
products not covered under a plan can be
purchased back from customers based on the
products core value. Additionally, discounts on
replacement products can be provided or even gift
cards with token values which can be applied to
future purchases can be offered to customers. The
actual cash value is less important than the act
of going the extra mile for a customer.Discount
Repair ServicesStapleton proposed another
low-cost marketing idea leveraging a claims
administrator's repair network by making it
available to customers who have a non-covered
product issue. Why not offer loyal customers
discounts on repairs for their customer-pay jobs
related to these types of product issues, or even
for other products they own?"Here's how I see
it Warranty and service contract programs are
developed by operations groups. However, the
marketing departments of the retailers or
manufacturers are rarely involved in the
development of these programs. And I think that
creates a level of disconnect. I see service
contracts and warranty programs as one of the
most powerful loyalty solutions out there. It
actually is a game changer," he
said.Manufacturers and retailers might not know
the name and address of every single customer,
but they certainly have that data for those who
needed warranty work or who made claims under
their service contracts.
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With this information, a critical segment of
their customer base can be identified and
hopefully saved. Stapleton suggests that
marketing departments utilize claims data to
establish a loyalty campaign tailored toward
these affected customers. "The fact is that some
of these customers may have been your best
customers in the past.  The data currently
residing in a company's system can provide them
the ability to know how and when a customer's
perception of them soured. Moreover, that data
combined with a strong retention plan can help
return the customer to their former loyalist
status. Further, this type of strategy can
prevent the impacted customers from becoming one
of your net detractors." He noted that with the
power of social media, disenfranchised have the
ability to shape an enormous population of
existing and potential customers' views of your
product or company.Ultimately, he said, when
structured and executed appropriately, warranty
programs build trust and loyalty. Stapleton said
it is inexcusable to allow one claim to impact a
lifetime relationship with an existing customer.
"Instead of spending the majority of available
marketing resources to bring in new customers,
let's keep the ones you have. Let's prevent them
from getting out into social media and destroying
your reputation based on one poor claim
event. The first step, Stapleton suggests, is
to change the whole image of warranty within the
retail industry.
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"If you want to change the perception of
warranties and service contracts for customers,
you have to change it internally first. We can't
allow warranties and service contracts claims to
be viewed as an unfortunate expense. We need to
view them as a marketing opportunity that can
potentially save a customer thereby leading to
countless future purchases and maybe even a means
to evoke positive customer emotions that go
beyond 'like.' Article Resource-
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