Today’s interview is with Steve Abernethy, Executive Chairman andCo-founder of SquareTrade, the leading extended warranty service provider for consumer electronics and appliances. Steve joins me today to talk about SquareTrade, why they have made their company’s focus customer happiness, how they’ve made a traditionally ‘uncool’ sector cool and how customer loyalty is changing.
This interview follows on from my recent interview: Customer insight, big data and the bigger skills gap – Interview with Vivek Jetley of EXL – and is number one-hundred and eleven in the series of interviews with authors and business leaders that are doing great things, helping businesses innovate, become more social and deliver better service.
Highlights of my interview with Steve:
- Steve founded the business in 1999 with a colleague without a clear idea that they would end up transforming the warranty industry.
- They took the view that the warranty industry was a really crumby industry that could be transformed through injecting transparency and service.
- They have made their company focus: customer happiness.
- They did this because traditionally the warranty business was built around a model that minimised costs, made it hard for customers to claim and had no incentive to delight customers.
- Therefore, they did a few things:
- One, they made their service transparent and re-searchable such that consumers could research their warranty products and find out what other customers were saying about them.
- Two, they decided that a claim should be a branding and service experience exercise and not a cost-minimisation experience. Therefore, they design their service to fulfil that.
- Their objective was to create a customer for life and not just worry about profiting from one warranty.
- This was hard to do in the beginning as they had to break through all of the inertia and negative feeling that surrounded the sector. In effect, they had to relaunch the sector.
- To maintain that momentum, they have consistently used their customer’s experience to amplify and validate what they are trying to do – Currently they have an Apple App Store average score of 4.5 out of 5 based on 7000+ reviews, a 4.7 out of 5 average score based on 35,000+ reviews on Amazon and a 4.9 out of 5 average score on 600+ Google reviews.
- Traditionally, many warranty companies have made money because their customers have lost the paperwork for their warranty. SquareTrade have focused on removing as much of the ‘pain’ as possible from the customer experience and, in particular, they have made it easy for the customer to store all of their information for them so they don’t have to remember their policy number or have access to their paperwork in order to make a claim. This helps them build trust and confidence in their service.
- Another thing they have introduced is a 5-day service guarantee where if they haven’t fixed or refunded or addressed a customers warranty issue within 5 days then they’ll refund their warranty fee. That is a tangible and measurable service promise that didn’t exist in the warranty industry before they came along.
- However, they always beat that as they have built systems and technology that means that they normally respond with a day.
- To build and create a sustainable business they have followed a number of principles:
- 1. A disciplined approach to capital.
- 2. A long-term approach to growth.
- 3. To focus on creating a service that can sell itself and operate in a unassisted, retail environment.
- Fascinating statistic…something like $2-3billion per year of consumer electronics in the US are destroyed by pets.
- Loyalty is being changed by some new services, particularly services like Hotwire which doesn’t allow a traveler to specify a hotel but places them in a hotel in the location they want depending on their budget.
- Loyalty is driven by predictability of service.
- Loyalty is becoming less of an individual experience and more of a collective experience. Therefore, we will question our loyalty if our own experience differs from others.
- SquareTrade are continually focused on trying to out innovate themselves to stay ahead of the competition and provide and even better service to their customers.
About Steve (taken from his Squaretrade bio)
Earning awards and global recognition from the World Economic Forum, the United Nations, and the Federal Trade Commission as a technology pioneer, Steve has guided the development of SquareTrade into the top-rated protection plan by consumers and a trusted service offered by top retailers in the U.S. and UK. Prior to co-founding SquareTrade in 1999, Steve was a management consultant at McKinsey & Co. Steve earned his M.B.A. from Harvard Business School and a B.S. in Architectural Engineering from California Polytechnic University in San Luis Obispo.