Maximize eCom & Retail Sales with Value-Add Services

Aug 17, 2021 3:00 pm4:00 PM EST

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Key Discussion Takeaways

The extended warranties and product protection space holds significant revenue and customer experience potential, but many retailers fail to meet their customers’ expectations. Retailers struggle to offer their customers these services because of poor liability fulfillment, roadblocks with implementation, and a lack of improvement in their sales and retention.

Fortunately, all that is changing. You can now implement extended warranties quickly, process claims fast, increase sales and retention, all without increasing your workload. Also, you can deploy these value-added services at checkout, offline, and post-purchase seamlessly. Sound interesting?

In this virtual event, Aaron Conant sits down with Rohan Shah, Founder and Head of BD & Partnerships at Extend. They discuss how DTC brands use product protection and warranty programs to increase sales and improve customer relationships and lifetime value. They delve into the optimal way to implement it online, in-store, post-purchase, the eligible verticals, and more.

Here’s a glimpse of what you’ll learn:

 

  • Rohan Shah shares insights on how alternative payments and offers increase conversion at checkout
  • How do extended warranties increase customer lifetime value while improving customer experience?
  • What is the optimal way to sell customers on extended warranties online, in-store, and post-purchase?
  • How the warranty fulfillment works seamlessly
  • Rohan talks about how COVID-19 has impacted the uptake of extended warranties
  • New verticals adopting extended warranties, what’s covered, and the possibility of white labeling
  • How do you overlap extended warranties with manufacturer warranties?
  • What is the best way to roll out extended warranties?
  • The outlook for extended warranties for excellent post-purchase experiences that improve retention and loyalty
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Event Partners

Guest Speakers

Aaron Conant

Co-Founder & Managing Director at BWG Connect

Aaron Conant is Co-Founder and Chief Digital Strategist at BWG Connect, a networking and knowledge sharing group of thousands of brands who collectively grow their digital knowledge base and collaborate on partner selection. Speaking 1x1 with over 1200 brands a year and hosting over 250 in-person and virtual events, he has a real time pulse on the newest trends, strategies and partners shaping growth in the digital space.

Rohan Shah

Founder, Head of BD & Partnerships at Extend

Rohan Shah is the Founder and Head of BD and Partnerships at Extend, an LVT firm for merchants. Extend focuses on the post-purchase experience and solving customer pain points and touchpoints after the point-of-sale. The focus is on extended warranties and product protection.

Rohan has worked in many commerce positions, including strategic marketing, product management, business development, and partnerships. He holds a Bachelor of Science degree from Stanford University. In 2021, at age 28, Rohan was recognized in Forbes 30 Under 30 list.

Event Moderator

Aaron Conant

Co-Founder & Managing Director at BWG Connect

Aaron Conant is Co-Founder and Chief Digital Strategist at BWG Connect, a networking and knowledge sharing group of thousands of brands who collectively grow their digital knowledge base and collaborate on partner selection. Speaking 1x1 with over 1200 brands a year and hosting over 250 in-person and virtual events, he has a real time pulse on the newest trends, strategies and partners shaping growth in the digital space.

Rohan Shah

Founder, Head of BD & Partnerships at Extend

Rohan Shah is the Founder and Head of BD and Partnerships at Extend, an LVT firm for merchants. Extend focuses on the post-purchase experience and solving customer pain points and touchpoints after the point-of-sale. The focus is on extended warranties and product protection.

Rohan has worked in many commerce positions, including strategic marketing, product management, business development, and partnerships. He holds a Bachelor of Science degree from Stanford University. In 2021, at age 28, Rohan was recognized in Forbes 30 Under 30 list.

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Discussion Transcription

Aaron Conant 0:18

Happy Tuesday everybody. My name is Aaron Conant and the Co-Founder and Managing Director of BWG Connect. We're a networking and knowledge sharing group with 1000s of brands who do exactly that. We network and knowledge share together to stay on top of news trends, strategies, pain points, whatever it is that shaping the digital landscape today, I call the 30 to 40 brands a week would love to talk with anybody on the line today, just to pick your brain, I can also kind of give you an overview of what we're seeing across the network of those different things that are working that aren't, I do a lot of help with people with service provider selection. So at any point in time, if you're looking for any kind of help in the digital space, shoot me shoot me an email, we'll 30 minutes on the calendar. And I can kind of give you a rundown of who's the top recommended people from anything from Amazon address consumer drop shipping, international expansion, where all the brands thing and then that work and kind of consolidate down to a shortlist of who's working and who's not. Another just a quick housekeeping item. We want this to be as educational and informational as possible today. So at any point in time, if you have questions, just hit star five, I hate to go up on the screen here and we can bring you in just you can ask those questions. But if you can't, if you got background noise, and it's easier to just email me, you can always do that. Aaron, Aaron@BWGConnect.com will field questions that way as well, that includes an hour after the call tomorrow, next week, a question comes up and additional face, just shoot it over to me, I'm more than happy to get you an answer and usually 24 hours. So last weekend, it's really a sponsor connecting with somebody in the network and other brands do the same thing to try to help walk you through it. So don't hesitate to use us that way as well. And with that, we're going to go ahead and kick it off, you know, we get these ideas, like I say I'm talking to 30 or 40 brands a week to stay on top of the trends. And I think what a lot of people are thinking about with, you know, the iOS 14.5 update, you know, I have a lot of people, you know, reaching out because of things that have happened with Facebook not being as effective Now, first party data zero party or declare data, how do we actually maximize the actual value of the customers we currently have? How do we increase conversion? How do we increase retention? How do we add another touch point, and there's just been a variety of conversations on this, you know, I think we've covered direct mail, we've covered SMS, we also have some, you know, great friends, great partners, that network over Extend, they come recommended from a ton of different brands in the network, and they have a row over there just you know, different really cool and interesting view around a you know, customer retention and different ways to grab, grab them and keep them in. And they also have a service in that area as well. So anyways, we came up over and over again, we just said, Hey, you know, for a different perspective here, you know, we're on VHF on the phone and kind of you know, walk through what's going on. Again, any point in time you have questions or comments, don't don't hesitate to hit star five, and we can bring you in. But Rohan, if you want to jump in, you know mind if you give a brief intro on yourself, the company that would be awesome. And then we can kind of jump into some some questions and comments to come up. pretty ingenious.

Rohan Shah 3:35

Yeah, absolutely. First and foremost, appreciate you, Aaron and your entire team organizing this. I know it's no easy task. So thanks for having me a quick background on myself. I am a technology geek by trade. So I've started a couple of venture backed technology companies. And now most recently started, Extend. And so here at extend I had a ball of our business development, partnerships, enterprise sales, as well as the product strategy. So a couple of different areas, all sort of under how are we bringing the most innovative solutions around product protection post purchase experiences to the market, and then commercializing that with a really strong go to market and implementation and success motion with our partners. But really in a nutshell, what extend does is bring offerings and services that have existed for many years primarily only served at the top 1% of retailers. For large merchants like big box, big box retailers like Best Buy and Walmart Costco around extended warranties and protection plans. Extended warranties and protection plans, as I said have been offered for you know, 5060 years. It's about a $75 billion market in the United States to states today in premiums. But the programs themselves are only accessible at the top of the market. You know, Best Buy in 2017 did 52% of their profit margin and extended warranties. So these can be wildly valuable programs from a bottom line perspective. for retailers, the problem statement that we identified was that they weren't accessible to everyone, there was no easy to integrate or, you know, in my nerdy parlance API first solution to offer extended warranties and protection plans. Now all of us have seen companies like stripe, and the firm and current and afterpay really solve problem points and pain points in the payment space. In the consumer point of sale financing space, no one was doing this for extended warranties and protection plans. So today extend has an easy to integrate solution can get merchants live in very, very quick timelines, and work with over 450 partners in the market, including folks like Peloton iRobot, Advanced Autoparts. So we have omni channel capabilities, One Kings Lane v gallery, and many more. So it's been really amazing to see the reception in the market and not that long a period of time, given the bottom line impact that these programs can have, and the customer retention, loyalty and LTV driving aspects of the program downstream.

Aaron Conant 5:59

Awesome. Love it. And just a quick reminder, you know, to everybody who has joined, you have any questions along the way, don't hesitate to hit star five, and we can bring you in. I want to go through a bunch of different questions that come up routinely, you know, around, you know, engagement with the customer. You know, how are you guys seeing, you know, follow up engagement? How are you seeing, you know, it affects in different categories? Usually that comes up as well. Can you talk a little bit about, you know, alternative payment methods? In on this, you know, a core topic that I'm hearing all the time as well, right? How do we increase conversion at checkout? Then, you know, how do these fit in? Are there any categories that you're seeing hate over indexes? And then I just had somebody ask those Can you recap, the percentage of profit that you started with it? You know, associated with like, that path?

Rohan Shah 6:59

Yeah, totally. So on the Best Buy side and I'll and I'll caveat this to be totally transparent. Best Buy is somewhat of a unique case, in that, I don't think they really have much of a margin profile at all on the actual products that they sell, so they completely drive profit to the services landscape. So 52% of their net income, or their profit was driven by extended warranties in 2017. From their earnings report, so a massive portion of their profit comes from extended warranties. To answer your question, Aaron, it's pretty interesting what we see in the space. You know, from a category perspective, in terms of what we cover, there are categories that you can sell an extended warranty and professional sign on, and then others where you just simply can't, I would say the biggest category that you cannot, is really just apparel, you can't sell an extended warranty on a T shirt or a hoodie, for example. But you know, electronics, both small and large appliances, both small and large sports and fitness equipment, glasses, sunglasses, auto parts, furniture and home goods, mattresses, jewelry, and watches, musical instruments, bags, suitcases briefcases, you know, the number of categories, I typically get this question and my answer, you know, what can't do cover with an extended warranty is a little bit easier to answer. Because the amount of coverage we do in the market today is pretty significant. To answer your question around sort of purchase conversion, and what we see around both like top of funnel as well as after sale, around engagement, you know, I think there's been a lot A lot, a lot of focus, specifically in eCommerce on top of funnel and conversion optimization, right? It's like, how do we get people to our websites, he talks about the new iOS updates and whatnot. And Facebook efficacy really driving folks back to sort of Amazon channels and away from their direct to consumer channels, what we see is extended warranties can definitely play a role in that up funnel purchase conversion, nine out pay laters and other great ones site optimization tools by speed tools or other ones. And so we definitely play a role there, where I think we frankly play an even stronger role is on the post purchase engagement side. Typically, especially when you look at a lot of the categories that we talked about, these are not customers that are coming to a website 678 910 times a year. These are considered purchases that people are making one or two times a year. So getting people back to a website and ensuring that you solve pain points across the post purchase experience as it relates to that product is where we've had a lot of success. For example, if you buy a pair of glasses and six months later, you know you're getting into an Uber and you sit on them, those glasses might break and that's not covered by a manufacturer. You're you know, pardon my French but kind of shit out of luck and you just have to buy a new one. for our customers. For example, when you buy a protection plan on a pair of glasses, even if you crack them dense from scratch the lens. We cover all of those things. Customers come to us they file a claim, and we send that customer with an approved claim back to the merchants website to then get a replacement product, we pay for that replacement product, because we're taking on the risk of that policy. And the retailer or the brand is now being paid a second time with a customer that has already bought a product. And in many cases, seeing those customers then buy other products with additional protection plans, because of how seamless an experience they just had. So that's really where, you know, I talked about loyalty and LTV, it's the repeat engagement that we drive these brands without having to pay any sort of CAC or upfront cost to market and sell those customers to get them back to the website.

Aaron Conant 10:32

And I agree with you, because of those updates around iOS 14.5. And I think was 15, they're saying, there's actually going to be the opportunity for people to kind of mask their email address as well, like there's going to be even more, it's just been a huge focus and conversations I have in it, you know, top of funnel has now gotten smaller and harder to still. So how do we make, you know, bottom of funnel and then a converted customer? You know, the lifetime value higher? And so is there? Is there $1 figure that you see, you know, if this is another, you know, arrow in your quiver ride for optimizing your your direct consumer website. And I want to jump over quickly, because I just, you know, one person asked him about what about in store? You know, what does this add to the bottom line is what everybody's gonna know.

Rohan Shah 11:32

Absolutely. So just like quick back of the napkin, what we see in the market is for the online, and I'll split online and offline, because there's some key differences. So the online ecosystem, what we typically see is about 10 to 15% of customers, adding an extended warranty at checkout, the average selling price of that extended warranty is around 15% of retail. So typically, what you're seeing is about a one and a half to 2% increase in top line revenue. With these programs being activated, a significant portion of that 2% of top line increase goes directly to a merchant or brands bottom line as pure profit, extend, and our partners on the back end hold all of the liability. So the insurance risk, as well as all of the performance obligations on servicing those contracts if and when a customer has a claim. So you're talking about it's pretty, pretty meaningful portion of added profit to a bottom line, which, which doesn't even incorporate the repeat engagement downstream. So that's the back of the napkin on sort of the revenue model, if you will, Aaron, and how we drive more profit through the checkout process for retailers with a solution that like doesn't cost anything, we don't charge monthly or annual fees to use the service. We make our money when a customer buys an extended warranty. So it's a you know, I like to think of it as a truly aligned partnership, I put my money where my mouth is on getting you live fast and getting you time to value as quickly as possible.

Aaron Conant 13:02

So a question comes in around checkout screen and then I want to jump back to you know, what about in store? You know, what, if you have a product that maybe people are buying in the store, is the opportunity after they purchased it to, you know, be able to register or anything like that. But first checkouts doing is what people are asking about is what does this look like in in checkout? And then can it be added post purchase? Or does it have to be added during checkout?

Rohan Shah 13:34

Yep. So and I forgot to mention the in store stuff. So maybe I'll just start with that for in store. Depending on the store architecture. This is for a store that there have merchant or brand owns and operates, we typically see attached rates go up by around three to 4x, you're talking about 30 to 40%. In some cases, we see upwards of 60% attach rates on some products like mattresses and others. So attackers can go up significantly, the price points remain the same. And so even greater opportunity for in store environments for a brand, right a brand that maybe sells through a DSP website, but also sells through other third party retail channels. We have a couple of different solutions we bring to the table. The first is the checkout flow, right? So integrating with an eCommerce website and providing customers the option to buy at checkout. The second is we actually have solutions around post purchase and registration on so technology solutions that drive higher registration rates and then upsell a customer and extended warranty through the registration slow itself. So you know and take a partner of ours like JBL JBL is one of our partners, they sell speakers and audio equipment. They sell a significant portion of their volume through third party retail channels. They absolutely also have a direct to consumer website. That's an area where we've seen a lot of success in post purchase experiences, even for customers who maybe bought the product through a third party retailer, transparently and candidly attached rates are lower right because You have to get a customer to register, which many of us here No, that's not an easy task to do. However, it still gives those customers the option. And you know, from my perspective actually helps you generate a relationship and a dialogue with more customers than what you're seeing today, which is also incredibly important to that LTV equation. So that's what we do for brands that don't have their own in store experience, Aaron, but then sell products through third party retail channels.

Aaron Conant 15:27

Awesome. No, no, got it is so easy. What if it's on site, and they don't purchase that checkout? Are you hitting them with a follow up email?

Rohan Shah 15:37

Absolutely. Yep. So we enable you know, that customer, if they didn't buy the extended warranty doesn't have a direct relationship with extend. So us sending them emails separately, is not the best experience, nor does it drive the highest conversion rates, what we do is we build technology solution that then in enables our merchants marketing teams, to create the campaigns, we provide all of the content and sequences as needed. And then we create a like, effectively a marketing token or a lead token that contains the order details of the original transaction, and drive the customer through an email campaign back to the merchants website to add an extended warranty or protections. But we typically recommend doing this like upon delivery, six months after buying, and then a month before the manufacturer warranty expires. So we actually give brands through the manufacturer warranty period, to remark it to a customer post purchase and drive them back to the website. In some cases, actually, you know, it's interesting. Take a company like iRobot, who's one of our partners, you know, what's unique about an iRobot, I don't know if anyone here has a Roomba zoom, the thing either runs around and eats up dusted food off the floor. But you control that product with an app. So they actually have an app experience on the back end that ties to the product. What we're doing, there is a post purchase offer natively through the app. So it's a push notification, as soon as you like name, your name your robot, and it does it first clean that says congrats on a great clean apartment, make sure to never miss another clean to add a protection plan here that coverage, covers drops, spills, cracks, etc. We have a bunch of different channels that we can do it through post purchase, depending on, you know, a brand or merchants ecosystem and product type.

Aaron Conant 17:15

That's super interesting. I mean, we did a call with a direct mail company called Rob earlier, or I should say later last week, which you know, I don't know if anybody is aware if you tie them into, you know, basically your email marketing campaigns. But it also then can kick out a flyer that's printed on demand. Anyways, interest, I'm thinking like how you might even be able to partner with somebody like that. And that's why we're kicked out a flyer with the exact item they purchased on it. And it's all built in and it shows up. So you not only hit them with an email, but you can also hit them with a flyer as well. Absolutely, yeah.

Rohan Shah 18:00

It's basically like, how do you you know, the way we look at it is like, how do you touch a customer in a moment of interaction where they're thinking about the product, you know, as much as I wish every product had the engaged in like a cell phone does, it's just not the case, until finding the ways and channels to touch customers during the moments where they're interacting with the product ends up driving those conversion rates up dramatically. And there's obviously a bunch of different ways to sort of solve that problem. And so we really work with our partners consultatively to figure out what they think is best because, look, I'm never gonna sit here and tell someone that I know their customers better than they do. And so it needs to be a partnership. And we're all motivated in the same way to drive revenue there. Did you question the question I've

Owen 18:45

Quick question on that project. So do you know Could you speak to the percentage of emails that your partners are sending out? That are to try to push the extended warranty as opposed to, you know, other just engagements around additional product sales or other things? What what kind of fraction of our email bandwidth? Are they? Are they actually going to the Extend? offer?

Rohan Shah 19:16

Yeah, so for the merchants that are leveraging our post purchase capabilities 100%. So like, we look at eligible products of products we are covering with an extended warranty through checkout 100% of the eligible products that are sold without an extended warranty, have an email sequence and cadence go out after the point of sale, typically with about three or four touch points during the manufacturer warranty period. So like upon delivery six months later, nine months later, and then a month before the manufacturer warranty expires. I it's hard for me to say what percentage of their overall bandwidth Yeah, now, the differences here and I'm sorry, I didn't catch your name. But the difference here is we are looking we are looking at existing transactions within ups. Sell on those existing transactions relevant to the usage of that product, rather than remarketing a net new product to that customer when they can just bump on already.

Owen 20:10

Great. Thank you.

Rohan Shah 20:11

Absolutely. Great question.

Aaron Conant 20:12

Yeah awesome. And, and thanks for jumping in others. If you have questions, you know, feel free to jump in and comment. You know, so a question that comes in is around, you mentioned liability. So where is the liability? Where does it fall? And then how is that process? You know, elaborate? Because I know, a lot of times people have a question about brands and brand voice, and how the experience works. Is it on brand or off brand is usually given to the marketers in the midst dumping, especially when talking even about email, and, you know, maybe there's SMS or you have a user interface through mobile app. But how does the flow actually work? Where you have the liability, what does that work look like? And then if you have a liability, how does the follow up work? Is the next question that comes in? Like, are they going back to the website? And there's a credit to the site and gift cards, the site, you know, where is that able to be used?

Rohan Shah 21:12

Yep, that's a great question. So I'll start sort of marrying the customer journey, which is, as I go through Checkout, we for an eCommerce solution, and have like pre built apps and SDKs for different platforms. And as customers go through, they will see offers on the specific product they're looking at. It says, Hey, add a protection plan, here's what it covers, here's the price point, etc. And those are offered and sold by Extend. So there is some branding, similar to a payment method mechanism, right like a firm recliner and after pay. Once a customer buys, Extend handles correspondence with that customer around, hey, here's the protection plan that you purchase the terms and conditions, again, what's covered, as well as how to file a claim. Now, we have merchants and brands that are you know, in some cases have a product type that's incredibly complicated. Take a robotic vacuum cleaner, or $2500 exercise bike. And so in many cases, those merchants actually want to control that first touch with the customer. The first touch point when they're having an issue, and they want to run diagnostics. So we support that we actually have back office tooling where customers can call into the merchant or brands call centers Support Center, initiate a support ticket, if you will. And then the decision is made on whether an extended warranty claim needs to be filed, we actually enabled those support reps to file a claim on behalf of the customer using some back office tooling that we have. So I would say this is the type of program that we consider sort of a hybrid management model, Aaron, where they're not holding any of the liability, we still hold all of the risks on those extended warranty claims. However, we enable them to play a role as part of that claim filing process. On the flip side, there are other merchants that say, you know what, we don't want to handle anything, we're trying to reduce costs in our call center, we want less things that our team needs to manage. And in that case, that's totally fine. Those customers when they have a claim to file will have a call to action in the email. And oftentimes, we put a little bit of information on the merchants website, as well as part of an FAQ. And they will click that call to action and be directed to our website where we have a digitally native chat bot that's fully built in house that actually administers and adjudicates all of these claims automatically. So about 98% of our claims go through that digital channel today, with the majority of those claims being adjudicated in less than 60 seconds. And as soon as those claims are adjudicated, we then send the customer back to the merchants website, using store credit or promo codes or gift cards. Depending on what functionality the merchant has available. The customer buys a new product, and we pay the merchant for that product because again, we hold all of the liability through our own insurance company in captive or through one of our third parties like AIG or and others.

Aaron Conant 23:56

You know, there's a lot of questions you can keep, you can keep sending them over, you know, a couple other things like policing. So we talked a little bit alive, iOS 14.5 update, I mean, COVID is is shifting a ton of other things, you know, to online direct sales. How have you seen you know, have you seen a major shift in customers purchasing extended warranties in this space? Like right now, like, what's happening, what the trend lines look like for them?

Rohan Shah 24:25

Yeah, absolutely. I mean, I'll tell you anecdotally, when COVID first started, we basically paused like all hiring and gross and sort of wanted to understand like what was going to happen? About three weeks later, we saw our conversion rates, our tax rates, as well as our overall volume of sales, just go through the roof. And so as you know, Aaron, we've been insanely growing since then. But, you know, I think the consumer behavior and consumer sentiment was such that people were, hey, if I'm going to make a purchase, purchase that is a considered purchase. I want to make sure that if anything goes wrong, I'm covered. I'm protected. I mean, you've seen tailwinds across the entire insurance space as a whole, we have the benefit of consistent transactions through the commerce channel. So it's been amazing to see the reception and the consumer behaviors around protection of the products that they're buying. Simply because people I mean, it makes sense. People are worried This is ultimately insurance product that gives people peace of mind as they go through checkout. You know, another interesting data point that we saw is the purchase conversion with the presence of extended warranties went up dramatically. We have some merchants that sauce 12% increases in sitewide purchase conversion with the implementation of our solution. Because customers were thinking, like, what happens if this product breaks? Do I really want to buy it? Oh, I can add a protection plan that covers, you know, me dropping it or spilling on it or cracking it? Great. Now I can get over the hump and finish that transaction. So it's been unbelievably positive the reception we've seen in the market. And it speaks to, you know, some of the success we've had in growing to having over 450 merchants live on the platform and signing up about 15 new ones every single week right now.

Aaron Conant 26:05

That's awesome. Are there new verticals that you see this extend into? You know, where does this got me into digital products? Right? How many new verticals you see this reaching out to?

Rohan Shah 26:17

It's a good question. You know, we started by really using sort of off the shelf programs, if you will, we call programs like, what are we covering and what type of products are considered as part of that program. So verticals, is sort of what you're saying, We started off using a lot of off the shelf programs. So Electronics is sort of the traditional category. Furniture has also been around a long time appliances is another traditional category. But we really expanded beyond that, because we saw a lot of consumer value and consumer demand across other ones. So sunglasses, accessories, jewelry is another important one that we've expanded into, you know, where we see the market moving next Aaron is, and this is sort of why we actually incorporated our own insurance company in house to be vertically integrated, is we can now get programs off the ground that have never existed. So a merchant that we recently signed up and took live with a company called solo stove, they make like a steel outdoor, like sort of grills type equipment. That wasn't a typical product type that insurance companies covered because it didn't have the same mechanical and electrical components that a traditional appliance would, what did we do, we literally built that program in house and customize the coverage types based on what their support team, their customer support team was fielding claims from customers already built a program around what customer pain points already existed in the market. And that was a consultative process where we built that program over a four week period and then launched it. So we're opening up new verticals every single day. And even areas like you know, we signed up Michael's the arts and crafts store not too long ago, we built them a custom program around high end picture frames, from dense cracks, chips and things like that. So we're opening up new verticals consistently. It's typically a process that we go through based on merchant demand to opportunities that we have in the market where something doesn't exist already, where we think there's a consumer value proposition that's strong and meaningful, and we can go test it.

Aaron Conant 28:16

Awesome. So the question that comes in around high, aov items, right? So is there the opportunity, are you able to customize it so that you can build in like a free extended warranty, and then it's built in actually being covered on the back end, but then they they the manufacturer can actually front the cost for it? And then the next question that comes in is white labeling. Love is hackable?

Rohan Shah 28:43

Yeah, so I'll tackle the second one, because I think it's a quick range. So there's, there's definitely opportunities for white labeling, you know, there's a number of factors that collide that are sort of indicative of why we don't have widespread white labeling in the market. First is customer confusion, if you white label a program, but then customers need to file a claim with extend that's incredibly confusing. The second is compliance. There are a number of compliance regulations and licensing that come with a branded program. That, frankly, especially in the SMB and mid market segments, a lot of the folks just simply don't have the bandwidth to really support. So that's the second one. And then the third one is just the technical list. The technical list is greater from a white labeling perspective, because there are differentiated operational flows that need to come into play. So our recommendation is typically starting, starting simple, getting live with the programs and then building up over time as the performance metrics come in. And then I think your second question, Aaron, remind me was

Aaron Conant 29:44

Hi aov items, so I know that you can you can easily build it into the cost, and it's automatically then the next question that comes in is how does it work with a manufacturer's warranty? Are you over Are you Yeah, so anyways, I think

Rohan Shah 30:01

it's a great question, it's a great question in both of those really come together. So every product that we cover legally needs to have a manufacturer's warranty, there needs to be some sort of guarantee, even if that's a 30 day guarantee return policy, if you will, which we can leverage as a manufacturer warranty, every product needs to have some sort of guarantee attached to it from the manufacturer or the retailer. And that's important because an insurance company, either ourselves or a third party will stand behind the product that the manufacturer or retailer themselves won't stand behind for a period of time. So that's the first thing. The second thing in terms of the high o v is you there are opportunities to build the cost of the extended warranty into the product cost itself. from a regulatory perspective, customers must be able to purchase the product without the extended warranty. So there needs to be sort of an understood cost for that protection that a customer can choose whether they want or not, what you're sort of talking about when building into the cost is effectively increasing the scope of the manufacturer's warranty for a customer and giving, you know the merchant, the ability to basically build that in. So we customize a lot of programs. And it's sort of nuanced for different product types. So it's hard for me to speak in too much generality here. But what we typically do is go through a consultative deep dive, which typically takes a couple of weeks and understand what the merchant is trying to accomplish, or the brand is trying to accomplish. And then build the program and our back end. And we have a 15 person programs team that literally just builds programs for our different merchant partners.

Aaron Conant 31:39

Awesome. Love it. And just a reminder, others if you have questions, you know, keep dropping them in. And we'll keep getting them answered. You can always just jump in as well as you'd be nailing them. Next question that comes in is what is implementation time look like? And how long before? You know there's a return on investment?

Rohan Shah 32:00

Yeah, absolutely. So kind of hard hitting questions. No, it's great. I love it depends, is a simple answer. We have merchants that are on Shopify, that sign a contract, and they're live selling extended warranties. The next day or the subsequent day after that, I actually have a team of 15 Shopify engineers that go in and do implementations for merchants on Shopify. So they make a copy of this theme, they do the integration, they put it into a test environment, and the merchant is unable to make a decision on Hey, tweak this development or that hex code, and then we go live. So really, really, really fast time to market on platforms like Shopify Magento. In Big Commerce and others, with merchants that have fully customized front ends. Those are situations in which I mean a there's typically a development team, right? And so we can work with that development team. And we do partner programming and pair programming. Those implementations typically take bit longer, probably about four to six weeks, on average, those are more of our enterprise grade implementations. So I would say it depends what we're talking about anywhere from a week to two weeks on sort of the prebuilt eCommerce platforms, up to four to six weeks for more enterprise grade systems with legacy DRP systems on the back end, the biggest list Aaron, is the ERP accounting reconciliation flows and setting up the skews for the extended warranty. The eCommerce side of it is super straightforward, and typically takes a couple of days for a competent developer.

Aaron Conant 33:34

Awesome. So the next question, you know, how does this overlap? So these two are versus you know, how does this the lab overlap on to a current standard manufacturer's warranty? And then, so let's let's tackle that one first. And then we can jump we can jump into the next one. Which is, is it highly recommend people rolling it out? isn't one of that isn't one item is it? Everything is customizable. So

Rohan Shah 34:02

So we have two types of programs and I'll give you examples of both. We have one program which is a traditional extended warranty. Extended warranties kicked in after the manufacturer warranty expires. So you use your exercise bike for the first year is covered by the one year manufacturer warranty. You bought a two year extended warranty on day 366 Extend kicks in and we cover the subsequent two years. And what we're covering there is the same coverage that the manufacturer warranty supports but for an extended period of time. The second type of program we have is more of what I call this protection plan. It really goes above and beyond what the manufacturer warranty will cover and includes, you know I call it the rowhome being clumsy policy, like me dropping my phone and the screen cracking it covers accidents, human fallibility drops, cracks, spills, etc. That program actually starts on day one, because again, it goes above the manufacturers warranty. So it covers more than the manufacturer's warranty and starts either on the date of purchase or the data fulfillment for furniture, for example, some companies have, you know, six week, eight week lead times, you don't want to start a policy on day one, and then have them Miss two months of coverage. So we started on the data fulfillment in those cases. So two types of policies really tailored to what type of products are we covering. And again, that's a conversation and a discussion between the merchant and Extend, it's not here, take it or leave it sort of opportunity. Because again, you know, these are concentrated programs, and we want to understand exactly what they're seeing in the market with their customers. So we can cover the right things. Because that consumer value prop is ultimately what drives, you know, we call a tax rate or conversion rate for the extended warranties. And then your second question, Aaron, sorry, remind me again.

Aaron Conant 35:49

So the second question comes in is around, how is it rolled out? Is it website wide? Is it product specific? Are you visit test and learn? You know, what's the best in class methodology for rolling out an extended warranty program?

Rohan Shah 36:05

You know, I'm obviously not biased at all here in answering this question. But the majority of our the majority of our merchants really do roll it out across their store across the eligible product categories. We have a number of partners in that country and others who have rolled out a B tests using Optimizely or something like that. And so they'll A B tests on certain portions of their traffic. We've had zero merchants turn off our integration after a B testing. We've seen no material negative impacts to purchase conversion across 450. Live merchants, if anything, we've seen positive impacts. So there are customers Aaron, that do roll it out either on an AV testing framework, or in a portion of their catalog, those are sort of the two, I wouldn't say they're common, because they don't happen that often. But for when someone does do a software rollout, that's how they're doing it either through an AV test or a portion of their catalog. Oftentimes, I mean, from a ramp perspective, we're seeing extended warranties sold within 30 minutes to an hour after implementation is pushed into production, simply because if you think about it, customers are going to Amazon, Walmart, Costco, Wayfair, and other companies and seeing extended warranties on all of these products for every transaction that they make. Customers are super use to these own really hacky start good, awesome.

Aaron Conant 37:24

So another? No, I love it. I think there's just um, you know, he said, somebody haven't jumped into others. If you have questions, feel free to feel free to jump in. Because he has something else to say there.

Rohan Shah 37:37

Oh, no. I mean, that's typically the rollout process. But again, the point remains is like, especially for brands we work with, a lot of people sell on Amazon, as well as on the BBC website, guess what, if Amazon can sell a warranty on your product, they will. And they keep every dime of profit for themselves, that is not shared with the seller or the merchant. And so these are things that customers are used to. And I think it's always important to remember that his customers, in many cases, some of our partners have run consumer sentiment surveys, customers are going to their website, browsing for whatever product they want, and then switching over to Amazon and buying it there. And basically giving away the CAC that they had to get that customer, the website, and the obvious costs that Amazon is then charging, as seller sees too. So from a margin perspective, it can actually be quite dramatic when you lose that customer and have them go to another website.

Aaron Conant 38:26

It's great. So a question that comes in here is how is Extend different. So there's others out there, and you were talking a little bit beginning, hey, like there's a need that needs to be filled. Housing is different than the other place.

Rohan Shah 38:42

Yeah. Across across a different couple lenses. So there's sort of two segments around extend, we've established ourselves as the modern leader in technology based extended warranty programs. You know, I mentioned we've raised over $315 million, we have over 300 people on our team. So from when you compare us against sort of the startup market, there are a couple other companies out there about 40 people, these companies can absolutely stand up the front end of what an extended warranty product looks like. So the front end application, merchandising on the eCommerce website, where they fail is twofold. One is with enterprise ecosystems, they just haven't been able to prove that they can get enterprise ecosystems live in any meaningful or reasonable amount of time. In some cases, we see customers that have signed with them who aren't live nine months later. And so bringing a center of excellence around implementation, I have 150 people today whose job is focused around solution architecture, sales, engineering, customer success, and then customer activation. So we have a team that is larger by three fold of any of the other startups in the space to get programs live and then ensure the success of those programs over time. The second area is really customer experience with the startup market. No one has the operational capabilities that Extend those to truly serve customers in the right way that drives loyalty and LPV. What they do is, you know, maybe this sounds a little crass, but it's basically lipstick on a pig, they sell a policy and then they kick it over to a legacy insurance company that typically takes five to 10 business days just to adjudicate that claim to make a decision on that claim, because they have a human in the loop that is forced to do that. So it's really not a great process or experience from a customer perspective. Then, if you look at the top of the market, Aaron, I mean, there are companies that all things considered, we have a ton of respect for. on our end companies like Allstate, which has a product around squaretrade, that does extended warranties, companies like Asurion, who are well known for the cell phone protection plans that they do. These are companies that have been around for 2030 years. They do not bring technology to the equation whatsoever. They are back end insurance providers that then handle customer claims through legacy channels like email and phone support. So you're forced to pick up the phone to file that claim to where we Excel, there is really around the technology enablement. Again, customers, you know, we've had folks that are enterprise clients of ours that talked to those companies. And basically, it would take them about nine to 16 months to actually implement and get the program live. No one has a development roadmap that can support an implementation that's going to take that long. So that's really where fast activation technology enablement and automation. And again, customer experience is where we went there. And we established that, you know, I mean, again, Aaron, you know, this and hopefully doesn't scare anyone, we're a 13 month old company, we haven't been around a super, super long time. But if you look at the brands and partners that we power programs for, that's what's made us successful is their ability to execute in the market. And this is an execution business. It's really important from an execution perspective that you can get programs live and handle customer claims the way they need to be. It's why Peloton Advanced Autoparts iRobot. And all these other clients have trusted us with their programs and that we're executing on.

Aaron Conant 42:07

Lastly, are there other things that you thought might come up today that come up routinely, or things you see, you know, coming in the future that you think people should know about in this space as a whole?

Rohan Shah 42:21

Yeah, you know, I mean, I think one of the things that I think about a lot on it, my and Aaron is, and I'm sure everyone on this call can resonate with this more than even I can, which is people are getting reached out to by 500 different providers every single week solving acute pain points as it relates to their business. I think, you know, similar to what we saw with sort of like the App Store environment seven, eight years ago compared to today is there's going to be a read bundling around service providers within eCommerce as a whole. My understanding is that the majority of partners we work with don't want to have seven different providers for seven different use cases. So a question that I get around that often is like, Where are you guys going next? Right? Is it just a point solution around extended warranties and protection plans? Or is there an opportunity to drive more value across different areas of sort of that post purchase journey. And you know, as I mentioned, running product strategy here is an area that we spend a lot of time thinking about and are actually in development on a number of different solutions. So where we see from a vision, perspective, extend growing, and why we've been so successful at fundraising around the business outside of just our core competency, is really what we want to build is a end to end post purchase experience for brands and retailers. So the moment that customer buys a product, what can go wrong, right, maybe they their package was lost, stolen or damaged during shipping, maybe they just don't want it anymore, maybe they want a different color. Maybe that product was dead on arrival, maybe that product broke six months later, during the manufacturer, time warranty, period. These are all areas that we are building solutions around. So that anything that happens after that initial customer purchase journey can be solved through one integration point can be a better customer experience, a customer experience that actually is embedded into the merchants ecosystem, so that customers don't need to navigate to a third party website, and to leverage the eCommerce integrations that we already have, that are robust and functional in the wild. So you know, thinking through that entire post purchase experience, that's where Extend is going to and we'll be launching new products and services in q1 of next year. around those experiences as well.

Aaron Conant 44:30

Yeah, it's awesome. And I agree with you, you know, pretty COVID you know, people were ever need a pediatric residency in the state, but it wasn't as huge of a focus as it is right now. And people are trying to balance out Amazon, they're hoping Walmart might step in Walmart's not doing a ton unless you're in a traditional, you know, grocery run. And then what's happened is, you know, a lot of competition on the direct consumer side and with that, You're right, there's new service provider every week that's popping up. And the test back is getting bigger and bigger. And more and more people are saying, Hey, we're the best. It's just the greatest spot.

Rohan Shah 45:11

Yeah, and you know, I mean, like, you probably resonate with this, but like, unfortunately, the best products don't always win. It's the unfortunate reality that we've seen is, the big behemoths have a huge advantage and can market and sell whatever products that they want, because they have the services that drive consumers back to their storefronts, time and time again. And so from really an accessibility perspective, and I hate the word democratization, because every startup uses it, so I won't, but from making services that actually drive retention and loyalty more accessible through clean integration touchpoints. With work that's manageable for merchants of different sizes, right? We work with merchants today that do $5,000, in sales, all the way up to merchants that do $15 billion in sales. So giving access to every merchant, regardless of their size, to enable their customers to have these services through a direct conversation and direct relationship to their website. That's really what we see is our mission and our goal. And, you know, we feel despite the early successes that we've had, that we're just getting started here, I mean, I would ask you to Aaron and don't get to have all the fun. I would ask you like, how many times do you see of merchants and retailers coming to you saying like, Is there a single company that can solve three or four different pain points for us rather than one?

Aaron Conant 46:29

I think it's coming more recently, just in the past three or four months, where they're not specifically stating that they're just saying I'm overwhelmed. Right? So if you look back a year ago, people had email marketing, right, and then all of a sudden, SMS took off, you don't have, you know, mobile messaging, like, you need to get it like yesterday, because even though you may not like it, like everybody does, you know, a younger generation, if that's your demographic, they love it, and an abandoned cart email, it's 48 to 72 hours to be opened, if it gets opened at all, and an SMS branded card, you know, message utopian in three minutes? Well, I should probably put that in this direct mail kind of that ties in and it kicks it off. And it's print on demand. Like, wait a minute, every survey looks at an email, but everybody looks at the mail. Right? And so you get the exposure? Well, okay, well, that's two, what payments back do I have? Right in there's, you know, sezzle and klarna. And after paying quadpay and split it, then Amazon pay and chop pay? And oh, I do I need both at checkout, you know, there's all these different people. And, you know, year and a half ago, it was just nice to have now, for you to win in this, you know, the kind of good friend of ours Muggles of Korea. So this is spoil me now. I want every option and I want everyone put in front of me when I want to put in front of me. And in order to handle that, you know, people are trying to manage this through, you know, 47 different partners. And it's

Rohan Shah 48:03

Yeah, it's just overwhelming, right. And we see we see that sort of mythology or sort of exhaustion that people have today, even just in basic deal cycles, because they're doing this over and over over again, for every different place solution that we need that they need. So I do think there's a massive rebounding coming of service providers. And it's really about choosing those winners as it relates to supporting your business.

Aaron Conant 48:30

Yeah, we've got it is stretching a little bit is we've got a you know, I'll call it a digital age three PL, right, who is ting come into the mix, and they can dropship for Amazon overflow FBA, or your direct consumer or any marketplace COVID they can also replace like a channel advisor on the back end, and plug it all in. And then they can they own their warehouses. So now you don't have to have the warehouse space more than you're making. Now, there's not four hands in the pie with one hand in the pie. And they're actually able to then operate at high percent. They can individually pick pack, ship kit bundle, put inserts and move it around syndicate your content, they can do all this 5% and, you know, right now people are trying to stitch together you know, this, we've been given service providers and you know, 1718 22% So, yeah, I think you're right, that people are looking for that simplification across the board. And

Rohan Shah 49:29

that's where it that's where it gets me excited for sure. Because you know, the majority of solutions out there touch one organizational or functional group within a business. And that actually does simplify the sales process. No doubt for those companies. Where we I think have an advantage is a we're driving completely accretive revenue, right and profit to the streets in someone's bottom line without targeting anything, anything incremental for the solution, and be it's a cross functional effort to get these programs up and running for our mid market enterprise. clients that have mature teams. I mean, you're talking about working with the head of eCommerce, the head of revenue, the CFO, the it and DRP teams, as well as the customer support and service teams. And we get all those people onto the same page aligned. And then we have a success motion that works for me, for those folks individually to understand, what more can we build for them? So, you know, while it's maybe a little bit more upfront complexity for us during the sales cycle, I actually think it's a huge competitive advantage because we start building relationships across the organization. And for us, as a, you know, I look at ourselves as a consultant business, and I'm a recovering consultant myself. Like that gets me excited, because that's, I think, the relationship that we need to have with merchants to help them grow and to help ourselves grow. Which benefits everyone.

Aaron Conant 50:43

Yeah, absolutely. Awesome. Well, I see we're right at time here. Rohan, thanks so much. For the time today, thanks for jumping on, when it's pretty on the hot seat, and in being open to sharing what you're seeing, but also how you're helping everybody out today. Again, anybody if you want more information around, Extend extended warranties as a whole well on the team and Extend great friends, partners, supporters of the network, but also working with a ton of brands become highly recommended. So more than happy to put you in touch with them after the call, also love to have a conversation with you on my side as well to see what other pain points you have. If you're looking for any help across the board, never hesitate to reach out. We're here to help you in any way we can. And with that, we're going to kind of wrap it up here. hope everybody has a fantastic Tuesday. Everybody take care. Stay safe. I look forward to having you at a future events. And thanks again, Rohan. Have a great day already.

Rohan Shah 51:33

Thanks, everyone. Appreciate you all joining

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