Branding of Product Protection Programs

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Branding of Product Protection Programs A recent
trend in the service contract industry is the
emergence of administrators attempting to create
a strong brand identity with consumers. Many
administrators are working diligently to create
brand recognition for their organizations by
branding the protection offerings they sell
through retail partners. The question is often
asked, "Is this new approach in the best interest
of the retailers?
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AMT Warranty and its subsidiary
Warrantech's view is that the recent "brand
building" business models employed by many
administrators in the industry serve only to
benefit the administrators and not their retail
partners. This belief is derived from our core
philosophy about the purpose of service contract
programs. It's indisputable that service contract
programs should provide important incremental
revenue for retailers. However, our view is that
a well-designed and maintained service contract
program should drive customer loyalty and
retention for the retailers selling the service
contracts. We view each service contract claim
as an opportunity to enhance the trust between a
customer and our retail partner who sold the
underlying product and associated service
contract. Product failures happen. When they do,
customers feel a level of frustration. While it's
true that the retailer is generally not the
manufacturer of the product, customers often
associate the product issue with the retailer who
sold it to them. We believe that the solution to
the product failure is best provided through a
retailer-branded service contract in order to
reestablish the trust that may have been
diminished by the product failure.
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As a result of the service contract, retailers
(through their administrator) are given the
opportunity to engage in a highly personalized
marketing campaign with a customer who at that
moment may be their biggest detractor. We view
this as micromarketing with macro effects. In the
emerging administrator-centric model, the
solution is provided to the customer under the
administrator's brand. The positive customer
interaction and goodwill generated from resolving
the customer's issue serves only to enhance the
value of the provider's brand. That goodwill is
retained by the provider, even after their
relationship with the provider has ended. Even
more problematic is that the administrator may
also be marketing service contracts directly to
consumers, including the customers of their
retail partners. In essence, by agreeing to
market service contracts under the
administrator's brand, retailers could be
promoting a competitor's offering to their
customers. Moreover, the retailer has established
a new relationship between their customers and a
potential competitor. We feel that the resulting
consequences for permitting administrator-branded
service contract programs will have long-term
financial implications for retailers as the
strength of their administrator's brands increase
in the eyes of the retailers' customers.  Article
Source http//warrantech.wordpress.com/2015/01/
08/branding-of-product-protection-programs/