To Build a Category Defining Extended Warranty Company, You Need To Own the Entire Customer Journey
Companies that are not vertically integrated - able to manage offer presentment, brokerage, and plan administration - will not be able to compete with those who can.
The eCommerce landscape is going through constant innovation and maturation. And never has the pace of and pressure to change been greater than in recent months as the world adjusts to the COVID-19 pandemic. From 2009-2016 eCommerce sales went from 5.6% to 16% of total retail sales. In the last two months, eCommerce sales have exploded and eCommerce sales now represent 27% of total retail sales - 40% growth in the span of just 60 days (hat tip to Web Smith for posting the data). The next leap in the emergence of eCommerce is happening in real time, and companies all over the world are determining what tools and infrastructure they need to survive and hopefully thrive in the new normal.
We like to think of Extend as one of those essential tools. Extend provides customers with an elegant and modern extended warranty and protection plan offering they can trust. At the same time, Extend gives merchants a zero-cost way to increase margins and drive significant incremental revenue.
When we launched Extend we set out to address three main problems:
Solve the distribution problem - Extend allows any merchant to offer extended warranties and protection plans through pre-built eCommerce plugins and easy to integrate API’s.
Uplevel the customer experience from start to finish - Extend provides a digitally native, elegant, and easy to use protection plan offering that provides an AppleCare-like experience for all customers.
Increase merchant revenue - Extend drives customer purchase decisions by clearly communicating what plans cover, presenting visually appealing offers, and using machine learning to continually test and optimize the entire experience.
Solve the distribution problem - enable any merchant to offer extended warranties
Historically, extended warranties have only been offered by the top 1% of merchants - including Amazon, BestBuy, Walmart, Wayfair, and others - who enjoy the revenue and customer peace of mind that protection plans provide. This is because no one had built an easy to integrate (API-first) system that could serve all merchants across any eCommerce platform. From the very start our goal at Extend has been to level the playing field and enable all merchants to offer extended warranties protection plans to their customers.
So, Extend provides an easy to integrate platform that allows any merchant to offer extended warranties and protection plans on the products they sell with little to no code and no upfront cost. Extend has quickly become an essential tool for any company that is selling products online. Merchants that were once married to third-party retailers and distributors are realizing the benefits that direct-to-consumer sales provide for both their customers and their business. Merchants that were slowly making the transition to eCommerce and direct-to-consumer have been forced to immediately allocate resources to this transition to keep up with demand, and to fill the gaps left by the global shutdown.
Extend has enjoyed swift adoption from leading eCommerce merchants, and now we are seeing that uptake accelerate even more. Companies that had been interested in Extend, but did not make us a priority, have circled back and shared that the monetization and engagement of their eCommerce customers is now the priority for their business.
Extend, and the protection plans we offer, have quickly become an essential part of many eCommerce merchant’s short term roadmap.
Upleveling the customer experience from start to finish - get rid of the “gotchas”
Before we started Extend I had purchased extended warranties, but was consistently frustrated with the claims experience. You had to call someone to file a claim, wait on hold forever, and keep a copy of your receipt - who saves their receipts these days??? Even when I did buy the protection plan, I still wasn’t 100% sure what I was buying or what was covered. I knew that consumers wanted something, deserved something, better and that is what we set out to provide at Extend from the very beginning. Our customers' experience and satisfaction has been and always will be our North Star.
In order to deliver the outstanding customer experience that customers were starting to demand, we quickly realized that Extend needed to become a service contract administrator, and be in a position to design and control the customer experience from start to finish. Owning the technology platform for offer presentation is a good first step; however, that alone would not have given us the ability to communicate and serve our customers in a modern, digitally native manner when something goes wrong with their product. In November 2019, Extend acquired Aon Warranty Solutions - a division of Aon Plc which immediately gave us administration capabilities and added over 35 years of extended warranty and protection plan expertise to the team. Extend now owns and manages all aspects of the customer experience from offer, to sale, to claims, and finally to claim fulfillment. This is critical in order for Extend to be able to control our own destiny and to avoid the sub-optimal experience that legacy providers have been giving consumers for years and that even some new entrants provide.
Increasing merchant revenue - extended warranties drive high margin incremental revenue
Merchants who are selling extended warranties online typically see 4-5% attach rates. Extend is driving close to 3X the typical attach rate with our beautifully designed, modern, and optimized offers. Higher attach rates are important to merchants because they mean the program is driving more revenue, and more satisfied customers.
The revenue share that merchants receive from an extended warranty sale is 100% margin. There is no cost of goods sold (COGS) associated with extended warranties for the merchant, which makes protection plans an extremely attractive tool to increase profitability and overall net margins. A merchant can expect to increase their annual gross revenue by 1.5-2% by working with Extend.
Just 15 months ago we set out to transform a $50B industry by solving three main problems. Little did we know that eCommerce adoption would accelerate at the rate it has recently, making Extend an even more essential part of every merchant's online offering.
If you are interested in learning more about Extend and how we provide customers greater peace of mind when purchasing, and drive significant high margin revenue, please get in touch. Extend is also hiring for our San Francisco and Dallas offices, and we are happy to work with remote team members. You can check out current open roles here.
Until next time, thank you to all of our frontline / essential workers, and everyone please stay safe!