Kevin Gillan, new Managing Director of warranty provider Squaretrade, spoke to Retail Gazette about the importance of offering tech-savvy consumers with fragile devices value for money in the current economic climate.
Tell us a bit about the company and why the time was right to launch a warranty solution.
We are a San Francisco-based company with over 200 employees at present though we are growing rapidly. The business has doubled in size over the last 12 months and is continuing to win accounts, notably with US retailer Costco. Here in the UK, we’ve only been going since last year but have already secured the likes of Tesco, Amazon and eBay as clients. I have come on in the last few weeks to grow the business here and across Europe while helping with the mobile networks as well. There are few companies that you get the opportunity to join when they are going through 100 per cent growth per annum so this is a very exciting time for the business.
As we all know, the whole world of extended warranty in the UK has not had a good reputation so I think if a company like ours can come along and offer customers good value in the space, that can only be a good thing.
Importantly, we are all increasingly carrying devices around in our hands costing hundreds of pounds and the question is not if you drop the thing but how much it’s going to cost when you do drop it. Whether it’s kids at home with a tablet or adults walking around with expensive smartphones, far too few of us have no protection plans in place for our technology at all and I think if someone can come along offering a great solution and customer service, there will be a strong opportunity in the UK for such a company.
What are the legal implications for the consumer of dealing with a third party such as Squaretrade?
It’s quite simple, in terms of the cost to protect the product. If you break it or it breaks down, the key thing is that within five days, we will fix it and return it to you or we will pay cash for the original price. Often when you protect things under home contents cover, you will be offered the depreciated value of the product; so if you bought an iPhone for £100, they could offer you a payment of £50, which doesn’t go very far to buying a new one. So the promise that we make is that within five days we will have it repaired and back in your hands or give you cash instead. You can do all of this online in a couple of minutes so you don’t have to visit our contact centre if you chose not to.
We pay out a lot more than most insurance companies and we don’t quibble, we just say that we stick to the promise we made when you bought the extended warranty with the product, that’s how it works.
Why is it important to offer value for money now and how do you make consumers aware of their rights?
The technology is breaking; if you look at 10 people’s phones, a large amount would have cracked or broken screens and they do not know how to get them fixed. Consumers are spending a lot more on technology than they used to and carrying it around before dropping it and breaking it. What we are saying is that the vast majority of people have no protection whatsoever and if people knew that such a solution is available, they would be very attracted as a result.
Historically, certain retailers have offered protection at an extra cost and instantly you think “I’m going to get had here” and that is the challenge that we’ve got as a business. We need to convince people that there is something called value for money, there is something called good service.
Looking at the reviews that we have had on Amazon or Google or even the Facebook followers we’ve got, they speak volumes and people will still say what a great solution we offer even though they haven’t broken their phone, because they have the confidence that the service we promised can deliver.
Squaretrade has previously published reports on reliability; how reliable do you believe current technology truly is?
From a mechanical point of view, having worked at Carphone Warehouse for many years, I believe phones are probably less likely to break now than before. However, most smartphones are made of glass and aluminium so if you drop them, as compared with an older mobile phone, you can do serious damage to the exterior and as soon as you tap it against something it gets scratched. I challenge anyone to say that they have not dropped their phone in the last 12 months; we’ve all done it.
What do you think is missing from retailers’ strategies for warranties?
If you go into well-known retailers in the UK, they have offered extended warranty for years and that hasn’t changed. Banks also offer extended warranty, though one of the big issues with that is that you don’t know who you’re insuring your product with. You may think that you’re insuring your goods with a retailer or a familiar brand or bank, but often the small print tells you this is actually covered by a third party and that’s why the real issue of a lack of transparency is coming up across the industry. Who is really taken accountability and whose promise is this? This is a classic move for insurance companies to make money as the business models are not customer-centric . We are a B2C brand and we pride ourselves on that; I have ambitions of becoming what the AA is to motor insurance. Retail is about helping customers when things go wrong, that is what great service is. We want people to make successful claims and continue to use us and renew their policies or extend them to other products – that has got to be the essence of what the business is about.
How have your new clients responded to the solution?
Right now, we are most proud of our Tesco relationship which started at the end of last year; if you go into any of the Tesco Extra stores you will find the product; they would say themselves it’s been a fantastic launch which was hugely well-received by employees. Staff themselves really believe in the solution so they sell it as they believe it is value for money. The response has been phenomenal as this is about a very simple product where pricing should be transparent and you know what will happen if things go wrong. Often you find there’s lots of small print explaining what is and isn’t covered. There must be integrity around the product you sell and if there’s any quibble it’s on us to just pay out the customer at the end of the day, that’s what it is all about.
What will European expansion involve in terms of strategy?
We are working on a couple of big deals here in the UK right now, though are very proud of those we have secured already. We have ambitions across the mobile phone space in Europe as well given that it’s one of the most vulnerable technologies consumers use as they are carried around so much. My first goal right now is to get the UK onto a really good platform here before growing across new markets.