by Matt Pufall
As an online business, you are are continuously looking to increase revenue potential. Many times, this can be accomplished by offering free shipping if a customer spends a certain amount, suggesting similar products, or upselling customers to a more expensive model with promises of more satisfaction. In addition to offering up other products customers might like, or promoting upgraded versions of the items of interest, retailers should try and add value to the product that the customer already wants. For retailers selling high-ticket items, adding a protection plan to your offerings could significantly impact your bottom line.
Protection Plans: A Win-Win Scenario
Protection plans offer a great opportunity for retailers. By packaging up a protection plan with the original item of interest, the customer gets additional peace of mind knowing their investment will be repaired or replaced in the event of damage. This, in turn, helps increase loyalty from that customer, leading to a higher chance of repeat business.
The retailer benefits as well. Protection plans are commission-based revenue generators for each sale, and the retailer makes no additional investment to generate that revenue when they partner with a third-party to facilitate the sale and handle the claims.
Why Monetize a Protection Plan?
Consumers are becoming more interested in protecting their valuable purchases. They’re more inclined to protect an expensive iPhone instead of that clamshell phone they had ten years ago. Thus, retailers have a great opportunity to leverage what’s called “protection commerce.”
There’s new research to support interest from retailers in offering more protection plans.
In a recent survey commissioned by the Product Protection team at Assurant®, 57 percent of small business retailers think a commission-based protection plan offering on items at check-out can increase their annual revenue by as much as 25 percent. What’s more, 35 percent of retailers polled feel protection plan offerings could increase their Average Order Value (AOV) between six and nine percent.
Beyond revenue, increased customer loyalty is also at stake. 40 percent of retailers believe that protection plan offerings could result in repeat business on a quarter of all customer transactions.
Why Aren’t More Retailers Leveraging Protection Commerce?
What’s preventing more retailers from leveraging protection commerce? According to the survey, the biggest reason is the technology enhancements required to add protection plans into the web store checkout process. This is problematic as 43 percent of retailers feel they do not have the necessary IT resources to implement the technology to make a protection plan available on their ecommerce site.
Fortunately for these retailers, commission-based protection plans from third parties today can be seamlessly integrated with full claims management support into their web store without any involvement from in-house IT staff. Once this takes place, retailers simply collect the commissions on each protection plan sale.
Consumers want to get the most out of the product that they are buying. By offering customers a chance to add additional value to an item that interests them through protection plans, e-retailers can make the item more desirable or appealing all while increasing their own revenue. Offering a “protection commerce” product like protections plans can also build an increased level of trust, loyalty and repeat business with e-retailer’s customers. Truly a win-win situation for consumers and e-retailers, “protection commerce” should be a staple in every web store.