Online retailers need to offer tailored warranty protection at the point of sale to stay competitive
VP of Partnerships, Peter Paine, spoke with PYMNTS.com on how we distribute personalized warranty products to customers of the world’s largest online companies, such as Wayfair.
“As consumers look for peace of mind for their purchases, consumers are also looking for protection — and they don’t want another thing to worry about in the current uncertain climate,” Paine said. “These days, peace of mind is top of mind for everybody.”
Hi, I’m Peter Paine, and VP of Partnerships at Cover Genius. We’re a global insurer that can distribute a broad range of production products from your traditional insurance all the way through to product warranty. We enable global brands to be able to do this around the world. And today I’m going to touch on a couple of topics. One is really looking back at the past 10 months and the retail landscape and what trends we’re seeing within the last 10 months and how those trends will continue to impact the future outlook of retail in the next year or two in the next five years.
In October, your CEO Angus McDonald said PoS insurance “is driving an increase in purchase volume”. What purchasing trends stand out the most over the 4 months since?
We definitely think consumers have shifted to the digital world. They handle everything online now, and this is really the biggest purchasing trend that we’ve seen since the start of Covid. And consumers are really comfortable purchasing everything online now from small purchases like everyday groceries to really large purchases like major appliances. I think, generally speaking, people want to protect those important purchases. So, it’s no surprise that they will be willing to pay more on what they buy if that investment is protected in case the unexpected happens. I mean, we can all reflect back on the time that maybe our dog chewed up our phone or our cat scratched up the sofa or maybe our kids banged up the dining room table. Those are all unexpected events. That would be nice to have protection when those unexpected things happen from.
What main forces are bearing on consumer thinking in early 2021?
I mean, interestingly, our data analytics team have gathered data from our network of partners that we work with over the course of the last few months since the pandemic hit. And there were many findings and we found that attach rates or conversion rates across a broad range of industries, including travel and retail and logistics, where we saw an increase in those conversion rates from 400 percent to 600 percent higher since the start of the pandemic as consumers look for a piece of mind for their purchases.
And consumers are also looking for protection. And they don’t want another thing to worry about in their current uncertain climate of today. And I’ve been saying this a lot to a lot of people these days, that peace of mind is top of mind for really for everybody.
How does offering insurance at the PoS help merchants compete in todays’ digital world?
No one gets up early in the morning wanting to buy insurance. So, when a customer is offered the right protection product at the right time, they would prefer it rather than going out and seeking protection later on after they purchase a product. We actually found that 59 percent of customers were not offered insurance or warranty the last time they shopped online and actually 60 percent of customers prefer to buy insurance warranty from brands they already trust and shop at because they already have a relationship with a retailer who offers them a great online experience.
And then another really interesting insight was that we found was average order value is actually 62 percent higher when protection is purchased at the point of sale. So this also help builds the overall basket size for the retailer. So, when you step back and really look at those numbers, you understand that there is an untapped opportunity for retailers to really drive customer lifetime value, which is a really important metric, and better serves their customer as a whole.
Can you connect the dots between Wayfair’s 2020 performance and their partnership with Cover Genius to offer customers tailored warranty protection?
I mean, Wayfair is definitely another amazing growth and success story in 2020. Just looking at their last fiscal Q3, their net revenue grew by 67 percent year over year to almost 4 billion dollars, and their active user increased by 51 percent year over year. I mean, that is those are huge, impressive numbers. And there was really a combination of reasons why they saw such massive growth during this time period. I mean, obviously, it’s really the online sales boom.
The second is really because consumers couldn’t spend money on travel or entertainment or going out dining any more. So, on top of all that Wayfair shopping experience is really, really easy for their customers. They make it really seamless, easy checkout, easy return, and have great prices and a huge, huge product selection so you can really find everything you need for your home on one destination. And Wayfair and Cover Genius are such a great fit because we’re both technology companies that put the customers first.
And Wayfair really saw us at Cover Genius as the importance of our value propositions like our XCover platform that can distribute personalized warranty products to their customers, simple and fast claim servicing for our customers, our pricing capability, our global framework. It all makes sense for our partnership and their future growth aspirations.
Are we heading for a sea change in the insurance sector, with development time and cost reductions leading?
The ability to really move fast when things like a global pandemic happens is really critical.
You want to make sure that you put the right product at the hands of the people and companies at the time they need it most. An example would be the COVID proof bundle of travel insurance that Cover Genius created for our partner, Skyscanner, within a few weeks, to really ensure that travelers can feel safe when they’re able to book travel again. So, looking back, it is also important to make sure that people can be really protected when the unexpected happens and that they’re compensated instantly.
Not after weeks and months of waiting for that claim payment. We know that on average the time to get paid for a claim from a traditional insurer takes up to 22 days. So, when an insurtech is actually able to make instant payment for claims like Cover Genius is a game changer for consumers.