Putting a Fresh Face on Warranties
Mike Frosch, a 25-year warranty industry veteran, is now an entrepreneur looking to put a fresh face on the warranty business with his newly formed company, Personal Safeguards Group (PSG). He has seen plenty of opportunity in the market for a firm that focuses on supporting dealers and vendors in driving customer acquisition and retention through an approach that helps them develop differentiated factory warranty and extended warranty strategies.
On the retail side, customers need good reasons beyond mere protection to buy a warranty, Frosch said, especially with consumer electronics becoming less expensive with each product generation and warranties that consumers feel are not worth the price of protection.
“Here’s an example: for a $299 laptop, a three-year accidental damage warranty is $199. It’s very difficult to get someone to spend that kind of money,” he said.
“You have to think about what extra you can offer to a consumer, what benefit will be more closely aligned to what they’ll need.” That could include things like identity theft protection, or free virus removal for a computer.
The industry, he said, suffers from a “me-too” rut.
“If you think of the extended warranty business, you basically have a handful of very good providers, but a lot of them are doing the same things. You have customer who’ll switch from Provider A to B, and maybe they’ll get a better deal because they’ll save on their fee. But they’ll get basically the same results, and haven’t really changed anything because they’re all doing the same thing within the same structure.”
Frosch said he is passionate about customer care at the point of sale and well beyond. He is not a fan of the handoffs that happen through the history of a product’s lifespan, saying the warranty industry is too diffuse and segmented; integrated solutions are needed.
“The customer should not have a different experience depending upon how old the product is. If your customer care company is one you use as a retailer or a manufacturer from day one, why not just have them take care of the customer through the entire experience? I wanted to assemble anorganization that suggests,
‘Why don’t I become an agnostic provider of the best components and solutions for each individual need?’ There should be no handoffs. Give the customer the best experience you possibly can, because you want them back in the store later.”
PSG also focuses on factory warranties. “There are OEMs just coming into the U.S., and they’re in need of extensive help coming into new markets. What do you do on day one to take care of the customer early on, and what do you want that customer experience to be? How do you want the portal to look where they can register a product and where you can establish and build a relationship with them? There is no one size fits all.”
For retailers, building loyalty has always been paramount.
“The retailer needs to think about the entirety of building the product as opposed to using the same product or continuing to change warranty providers. They’re not selling toasters,” Frosch said. “This is a service that has a long-lasting effect – a tremendous impact on the relationship with the consumer. When you sell them something, and they needservice in the future, it should be perfect, smooth and of wonderful quality.”
The need is especially acute for online extended warranty sales, Frosch said.
“Very few companies are doing well selling warranties online compared to what sells in the retail model. The products really need to mirror what the consumer is looking for.”
Frosch views PSG’s role as multi-faceted: a broker between buyer and seller, and as an adviser on the configuration of warranty products.
“People are looking for help and guidance and suggestions and ideas,” he said. “They may be on their second or third or fourth provider, but they’re basically getting the same results they had before. So they’re looking at what could be done differently. To do that, you need to be outside the box, as opposed to being in the box, where you’ll have one perspective. It’s very customizable and collaborative.
“What I care about is customer retention, acquisition of new customers and growing for my clients. Those are the three drivers. I just happen to use factory and extended warranties as parts of those drivers.”
Related story: Warranty Veteran Frosch Founds PSG