So you’re ready to offer protection plans for the products on your ecommerce website. Maybe you’ve heard request after request from customers who want extended or accidental coverage, or maybe you’ve realized the incredible revenue potential of adding an extended warranty program. Either way, it’s great that you’re exploring this revenue driver that can improve how you serve your customers. As you start down the path to launch an extended warranty program, here are four factors to consider to map out a successful program.
The first step is to determine what product protection plans you want to offer. These plans will serve as another product that you are offering your customers, so you want to figure out what type of coverage will be most relevant and valuable to them.
Do you want to offer extended coverage for product defects after the manufacturer’s limited warranty period? Do you want to offer accidental coverage for protection against spills, scratches, or other issues? What timeframes are most relevant - 2 year, 5 year, something else?
The answers to these questions will depend on your product category and what sort of limited warranty you already offer. In the end, you don’t need a lot of plans for launch - for example, a single level of coverage with two options for warranty length can keep things simple for your customers. You can always test out alternative plans post-launch during ongoing optimizations.
Aside from coverage, pricing is the most important factor customers use to decide whether or not to purchase a protection plan. It may take some testing to find the right balance of high attachment rates and high margins (the higher the cost, the higher the margins, but fewer customers are likely to buy the plan).
Some retailers choose to offer their protection plans at a loss in order to improve overall site conversion rates, while other retailers choose to use their warranty program to drive up average order value (AOV). When figuring out a price for launch, first and foremost consider the cost of the plan in relation to the cost of the product. And when offering multiple plan options, think about which plan you want to encourage more than the other and how you can scale pricing up/down for each plan to encourage that behavior. For example, a retailer looking to promote longer-term protection plans may want to offer a 3 year warranty for $25 and a 5 year warranty for $30, incentivizing customers to choose the 5 year plan because it’s a greater value.
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Once you have your protection plan offers set, the question is, where will you be placing these offers? Consider all of the available options along the customer journey -- pre, during, and post checkout. A combination of placements can significantly increase attachment rates and provide insight into where your customers are most likely to add protection plans.
Ideal placement options include: product pages near the Add to Cart button or in a pop-up modal, in the shopping cart or checkout page or drawers, on the confirmation page post-checkout, and post-purchase campaigns through email and SMS. Pre-purchase placements can help drive conversions from cautious shoppers, in addition to all of the other benefits of the product protection program. These placements also tend to have the highest attachments rates. Meanwhile, post-purchase placements give retailers another opportunity to interact with customers and help serve customers who wanted to add a protection plan but forgot to do so during checkout.
Finally, it’s time to turn to how to best market these offers beyond their placement. Marketing considerations include what language to use in protection plan call-to-actions (CTAs), FAQs, and other content. Here are a few tips for crafting effective - and compliant - language:
Remember that, after you launch, there’s a lot of opportunity to optimize each and every aspect of your product protection program! After some initial data collection around the success of your program, think about what you’d like to test in each of the above areas. For example:
An extended warranty program can offer significant revenue growth while serving up valuable protection customers want. With these key factors mapped out and customized to your business goals and customer needs, you’ll be ready to launch your first product protection program.
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