Product protection and extended warranties


Ask over 2,500 US consumers what they want from product protection offers, like extended warranties, and you’ll find that value psychology drives many decisions.

The Language of Trust: Decoding Product Protection Purchasing Behaviors, a collaboration between PYMNTS and Clyde, revealed that consumers have specific ideas about which products deserve warranty protection, in large part due to the price tags of articles concerned.

This plays out mostly with durable goods like large appliances, expensive furniture and electronics, with the study finding that 30% of people who recently purchased durable goods “chose to get coverage plans – either during the sales process online or in person, or via after-sales follow-up, when 31% were offered coverage but declined it. “

Surprisingly, almost 40% said they had never received an extended warranty at the time of purchase, “reflecting a significant lost opportunity in the durable goods market”.

See the study: The language of trust

Protection models emerge

The cost of the product is a key factor in purchasing additional product protection. As The Language of Trust found, “Consumers have added protection plans for 47% of their last durable goods purchases of $ 500 or more, but only for 17% of durable goods that cost less than $ 500” .

Goods most often protected by consumer warranties tend to follow this pattern, with the study noting that “buyers add product protection most often to D2C mattresses (40% of purchases), exercise (38%), luggage (34%), electronics (32%) and furniture (30%) ”, observing that a desire to cover such items“ reflects the reality that product protection does not isn’t just for items that are easy to break or lose – consumers also want to protect their investments in items they expect to last for many years.

The astonishing thing here is the missed opportunity for retailers who can generate greater consumer satisfaction and loyalty by using extended warranties. It is often a matter of trust.

According to the study, “For consumers, the value of a protection plan is directly related to the faith in the supplier’s ability to keep his end of the bargain. The importance of trust is confirmed by the data and is the second most common reason consumers buy coverage: 38% of shoppers trust the company that offers product protection to follow up. This share exceeds the 36% who wanted protection in the event of a product malfunction after the manufacturer’s warranty expires, and the 33% who feared losing the item.

See also: The language of trust

Perfecting the pitch

InsurTech merchants and partners improve the chances of consumers adding protection to products in a variety of ways to build trust, including their marketing approaches.

“Consumer behavior tends to vary based on the language used in sales and marketing, and product protection is no exception,” the study said. “PYMNTS research tested differences in responses to otherwise identical survey questions that use either the term ‘extended warranty’ or ‘product protection plan,’ and the results show that buyers see the plans. product coverage differs depending on the term used, and notable differences exist between age groups and income groups.

For example, Generation Z, Generation Y and Generation Y consumers are showing a greater interest in coverage known as “extended warranty”. In the case of the Gen Z cohort, 50% “expressed strong interest in extended warranties, but only 37% expressed strong interest in product protection plans. Generation X, baby boomers and senior consumers preferred product protection plans.

In addition, “believing that the service provider will honor the deal is a critical factor for those wishing to purchase a plan, and the most preferred channel to purchase these plans is the originating merchant, which underscores the central role of confidence in the purchasing behavior of consumers for the protection of products. “

See the study: The language of trust

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NEW PYMNTS DATA: 2021 HOLIDAY SHOPPING OUTLOOK

On: It’s almost time for the holiday shopping season, and nearly 90% of US consumers plan to do at least some of their purchases online, 13% more than in 2020. The 2021 Holiday Shopping Outlook, PYMNTS surveyed over 3,600 consumers to find out more about what drives online sales this holiday season and the impact of product availability and personalized rewards on merchant preferences.


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