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5 Misconceptions About Extended Warranties

Extended warranty programs have gotten a bad reputation. Despite many changes in the industry, many retailers still perceive them in a negative light. For retailers, the technology supporting extended warranty programs has drastically improved in the last few years, and launching these programs isn’t daunting anymore. And consumers are seeking out product protection plans more and more - the extended warranty industry is a $50B+ market and growing. So what’s holding more retailers back from embedding this highly demanded, easy-to-launch revenue driver into their customer journey? Let’s debunk the common misconceptions to enable more retailers to take advantage of extended warranty programs.

Technical Integration

Then: For retailers, setting up extended warranties used to be a long and time-consuming process. It involved connecting with multiple warranty providers, vetting available coverage options, gathering information for their complete product catalog, negotiating agreements, and then finally setting up the technical integration almost entirely from scratch. It took months to complete the integration and start offering extended warranties for products. No wonder retailers were apprehensive about this process.

Now: Integration takes days instead of months! Using API integrations, extended warranty programs can be easily embedded into the customer journey. Product protection platforms often have out of the box integrations with common ecommerce platforms like Shopify, Magento, and WooCommerce. Then, by partnering with product protection experts, a retailer can customize and strategize how the offers are displayed to customers to maximize conversion and deliver a great experience.

Offer Set Up

Then: After dealing with the long integration process, a retailer had to manage the extended warranty program manually. Along with the launch process, and with each change to their product catalog, retailers needed to make excel files containing the relevant SKUs and submit them to the insurer; the insurer would then append a warranty price to each SKU and return it. This was followed by creating new SKUs for warranties in the database using the file provided by the insurer, associating warranty SKUs with their respective items, writing code to offer the warranty to customers as they added items to the cart, building batch files and sending warranty sales and cancelations to the insurer via FTP, and finally submitting the invoice to the retailer. If just reading this makes it sound cumbersome, imagine the actual day-to-day activities!

Now: Technology can drastically automate this process. Using data science principles, some extended warranty technology platforms can automatically detect product categories on web pages to auto-generate the correct warranty offers for the particular product being displayed. This saves a tremendous amount of time and effort in setting up and maintaining a warranty program for a large suite of products. This is also a more fool-proof way of integrating extended warranty offers into a website because it reduces human error in the process.

Claims Process

Then: The typical claims process was long and challenging for customers and resource-intensive for retailers. For example, customers would usually start by calling the retailer’s customer service center to initiate a claim. The customer service representative would have to look up the details and see if the claim was valid and create a work order. The field officer would then validate the service response and send a field technician. The field technician would perform the service request, raise a request for the spare parts needed, and record the expenses. The finance center, repair center, and inventory warehouse were manually managed and updated through this process.

Now: A centralized extended warranty platform partner manages the claims process end-to-end and makes it quick and easy for customers. Warranties can be automatically registered for customers upon purchase, and then simply accessed through a customer dashboard. Filing a claim can be done by email, phone, chat, or web form - with the online options taking just a few clicks to get everything submitted. Then the extended warranty partner takes care of the rest - with no burden on the retailer’s team - sending a trained technician to repair the product or initiating a replacement if needed. If the customer wants more detail about their plan or even to cancel or transfer the plan, they can do so right from their warranty dashboard. All of the key steps of the claims process are easily available, intuitive, and fast to deliver a great customer experience while also making life easier for retailers.


Then: After the challenging setup to get extended warranty offers live on a retailer’s website, the plans themselves often didn’t provide enough coverage to be attractive to consumers. Whether that be due to the cost relative to coverage, or the lack of long-term or accidental damage coverage, consumers didn’t see value in these protection plans and were not purchasing plans at a significant rate.

Now: Extended warranty programs can now cover a wide range of product categories and over long periods of time (2-10 years depending on the category). Even more importantly, these plans go beyond what limited warranties offer and can include protection against everyday accidents such as food stains, wear and tear, drops, scratches, defects, and more.

Data Visibility

Then: Historically, extended warranty programs required manual data entry at multiple steps, with no out of the box dashboards or reporting to analyze performance and drive program improvements. There were no proactive measures to look into metrics such as claims rate by product, customer segments most likely to purchase extended warranties, or conversion rate differences by season or promotion. This led to poor performance of the extended warranty program, with no insight into how to improve conversion or resolve issues.

Now: Data on your extended warranty program can be available in real-time. This includes data on warranties sold, impact of pricing tests and promotions, products that are driving the highest upsell rates, and more. With so much data available, you can better optimize your program to achieve your goals and improve your most important business metrics.


Ready to get started with your own technology-enabled extended warranty program? Learn how Mulberry’s people-first product protection platform can get a program up and running quickly and efficiently, delivering a great offering and experience to your customers and significant revenue impact to your business. Schedule your demo today.

Unlock incremental revenue, boost customer loyalty with Mulberry

This post was originally published April 2019 and updated January 2021.

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Ellie Mirman

About the author

Ellie Mirman has over a decade of experience building and scaling marketing at high-growth tech companies, including HubSpot and Toast. When she's not digging into the latest ecommerce trends, you can find her in the kitchen trying out a new cookie recipe.

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