The way we sell things online and in-store has changed significantly over the past few years. Perhaps the most obvious reason is explained in a 2020 McKinsey study, which found that supply chain issues related to COVID-19 negatively impacted consumer behaviors. As a result, the report showed that more than a third of US consumers have been shopping with other brands or trying new products since the pandemic began.
The pandemic isn’t the only root cause of evolving consumer behaviors: with ample options available, consumers have higher expectations than ever before.
We’re seeing a new customer experience emerge, and consumers are looking for more than just a product when they make a purchase. That means retailers must work harder than ever to keep customers coming back.
Consumers want convenience and value with their purchases. They want things like free shipping, same-day delivery, and product protection plans.
These services build familiarity and loyalty by delighting customers throughout their purchase journey. But among them, only product protection drives the customer loyalty loop — because it keeps customers using products and coming back to a merchant’s e-commerce site.
What is product protection?
There are numerous benefits of offering protection plans to customers, but taking full advantage of those benefits hinges on the fundamentals. You need a solid understanding of what product protection actually is.
When a consumer buys a product protection plan along with their purchase, they can rest assured that their itemwill be repaired or replaced if something goes wrong. This gives customers the comfort and security they need in order to make smart spending decisions for themselves and their families. Protection plans cover the full range of issues customers may encounter.
In simple terms, there are two main types of coverage offered in product protection plans:
- An extended warranty extends the length of the manufacturer’s warranty beyond the term of coverage that is normally included with the product purchase. This coverage provides a consumer extended protection against mechanical and electrical failure that happens after the manufacturer’s warranty has expired. These are great for TVs, home appliances, auto parts, and other products that should last a long time.
- Accidental damage from handling (ADH) coverage covers things like dropping your computer, spilling wine on your new handheld gaming device, or sitting on your headphones. This is the type of coverage you get from AppleCare when they replace your cracked screen after an accident. ADH protection plans start on the date of delivery, and go above and beyond any coverage provided by a standard manufacturer’s warranty.
The benefits of protection in the new customer experience
Demonstrate commitment to your products
When consumers evaluate products with larger price tags, they want peace of mind knowing that their purchase is protected. Product protection can help put a customer at ease as they evaluate individual products and your brand as a whole. If people know that a third party will back your products, you’ll likely gain their confidence in the long term.
Take speakers, headphones, and other sound systems that are considered big purchases. If a customer is on the fence about buying expensive headphones, in addition to the manufacturer warranty, a product protection plan may convince them to go through with the purchase. They know the headphones are covered if anything happens to them during the coverage period because the merchant has offered them an option to protect their purchase with product protection.
Product protection shows consumers you’re looking out for them. In turn, you get their trust.
Build consumer trust at point of sale and post-purchase
These days, for a merchant to win a customer’s trust, they must exceed expectations at every stage of the customer journey. Customers will always consider their purchasing options before
evaluating a select few. Once a customer decides to purchase, the merchant then has an opportunity to deepen customer trust by servicing their post-purchase product needs.
Merchants who own the post-purchase experience build trust by offering value-added services like product protection at the point of sale. Product protection plans help customers protect the investment they make in their purchases.
A simple claim experience validates your brand
Customers invest in protection plans for added purchase protection — not to jump through hoops. Modern product protection makes customer claims processing fast and painless, further demonstrating a merchant’s commitment to their products. For example, Extend’s virtual claims specialist walks customers through the process, and in just a few steps, they can receive a decision about their claim. If approved, they’re taken care of with a repair or replacement.
Your once frustrated customer is now happy — and that positive claim experience reflects on your brand. The value customers receive through their protection plans will not only keep their business with you but will get them to recommend you to others, as well.
Product protection aligns the customer journey & drives loyalty
Demand is growing for product protection, and as such, the market is estimated to reach $169.82 billion by 2027. The reason is simple: when customers purchase a product, especially an expensive one, they want confidence that the merchant can safeguard their investment from unexpected issues or accidents.
Modern product protection plans are able to put the customer first like never before. They help merchants win the battle for customer loyalty because they turn customers into advocates.
1. Consideration: customers want product protection
A merchant may offer a high-quality product, but customers want assurance they’ll be able to enjoy their product for years to come. Take that away, and customers will look elsewhere. Product protection plans provide peace of mind.
2. Evaluation: product protection motivates purchase decisions
Assurant has found that product protection plans can motivate a purchase by about 25%. This is not surprising given that customers feel more confident in their purchase decisions if they know that a quick and easy resolution exists in the event of a mishap.
3. Purchase: frictionless purchases keep merchants and customers happy
A 2018 Statista survey found that 23% of US luxury brand buyers consider post-purchase services — including protection plans — relevant to their purchasing decisions, but the process must be smooth. Product protection can be integrated seamlessly and elegantly into a merchant’s e-commerce platform, maintaining a hassle-free checkout experience and reducing the likelihood of cart abandonment.
4. Advocacy: post-purchase customer service is the ultimate loyalty driver
A positive purchase experience creates a satisfied customer, and a positive post-purchase experience creates a loyal customer who will advocate for a brand. Extend’s data shows customers who purchase product protection repeat purchase at a rate 4.5% higher than customers who haven’t purchased a protection plan from that merchant.
Master the new customer experience with product protection from Extend
Product protection is no longer a nice-to-have but a must-have to meet evolving consumer expectations and instill a sense of confidence in a brand. It enhances the customer experience and offers benefits to merchants, including reduced cart abandonment, stronger consumer trust and loyalty, increased customer conversions, and incremental revenue.
Adding Extend product protection plans is one of the easiest ways for a merchant to remain relevant in the new customer experience. Request a demo here.