As the world starts to return to in-person gatherings, it was exciting to attend this year’s Extended Warranty and Service Contract Innovations Conference in Nashville. It was my first time traveling since March of 2020. There was a time when I could pack for a trip the morning I was leaving. Not this time. I had to take the time to make sure I still had everything I needed for a business trip. I also had to make sure the suits that I’d previously worn still fit.
I was very much looking forward to connecting with my peers face-to-face. The conference brought together industry leaders for both an in-person and virtual event with insightful discussions and numerous networking opportunities. I live in Connecticut and most of my Registria colleagues are in Denver, so this was my first time meeting some of them in-person as well. Many of the conference attendees felt the same way I did, and you could feel the social energy amongst the attendees.
Registria was a Gold Sponsor of the event, and we opened the panel sessions with one of our partners, iFIT. Our panel sought to answer the critical question “What is the Future of Warranty?” Moderated by Registria Founder and CEO, Chris McDonald, the panel featured myself, Alison Parr, SVP of Consumer Durables and Electronics at Registria, and Nick Palmer, Director of Universal Technical Services at iFIT Health & Fitness. iFIT is the largest manufacturer of connected fitness equipment in the world and delivers patented interactive workout experiences through its industry-leading fitness brands such as NordicTrack, ProForm, Freemotion and Sweat.
Our panel wanted the audience to walk away with these key insights:
Brands must reimagine warranties and pivot toward care plans.
The focus should be on customers, not contracts.
Customer Care should be integrated across the stages of the Ownership Experience
iFIT was a brand that experienced tremendous growth during 2020. It was well set up for success in the stay-at-home fitness industry due to its decision to pivot the business model toward members. Nick shared insights on how iFIT has applied its membership mentality and focused all efforts throughout the company toward one success metric – member retention. With a focus on creating “members for life,” iFIT has evolved beyond simply fulfilling service obligations to seizing the opportunity to be in the consumers’ home and proactively service equipment.
Nick referred to traditional warranty KPIs as the “Old Way” and a membership focus as the “New Way” of measuring success. iFIT’s “Old Way” KPIs were Frequency, Severity, Attach Rate, ASP, Term, and Profit per Contract. Nick noted “All of these metrics are important indicators of our company’s financial health, but focusing on member retention first has caused favorable changes to all other KPIs.”
In preparation for the panel, I researched industry trends and how a few top brands are approaching warranty and service contracts. There are some interesting membership trends brands must pay attention to, regardless of industry. I found that many brands are also pivoting toward membership models, demonstrating that a shift to customer care is essential for long-term success. Companies like Apple and Best Buy are rapidly expanding membership programs, with an estimated 2-3X increase in the next few years. Other retailers like Bed, Bath & Beyond are following suit and offering membership programs centered around exceptional customer care.
My colleague Alison provided some perspective on why customers are responding so well to membership models. Service moments are make-or-break opportunities for brands, and it’s critical to get them right. Alison shared Registria research findings that show how product service experiences can affect both brand sentiment and future purchase intent.
Our research shows that:
Product and brand sentiment declines 10–13x for owners who report a service event.
Likelihood to repurchase from brands decreases by 38% if owner has a service moment.
Only 47% of owners are likely to repurchase after a service event.
Nick expressed how iFIT never wants to be in this position and loose a member because of a bad service experience. He explained how reimagining service moments as opportunities to connect with members has made the experience more enjoyable for everyone. He added that “Paid Care is the best thing ever. Your members are willing to pay you more, to take better care of them, so they will buy more of your products.”
While getting the service moment right is critical, it is also important to make sure your brand is offering product protection and services based on what consumers truly value and need. Alison shared more Registria market research on what consumers want from a protection plan and revealed:
85% want 100% coverage for AH&D
40+% want preventive maintenance
50+% want in-home, phone and digital support
30% want a product upgrade options every 2-3 years
35% want a subscription option
All of us panelists agreed that the bottom line is for brands to make sure that what they are offering is focused on customer satisfaction first and is in line with consumer expectations and needs. These themes were reiterated throughout the rest of the conference panels, showing other leaders are adopting a customer-focused mentality. If brands are unable to make this pivot successfully, they risk losing a competitive advantage and long-term growth.