Customers’ Peace of Mind Should be Retailers’ Top of Mind

6/5/2020

As we all slowly emerge from widespread stay-at-home orders, there are high levels of uncertainty as to what our new normal will look like.

Consumers are more cautious with their purchases in such difficult times and expect their favorite retail brands to offer them personalized services that best fit their changing needs, in addition to some peace of mind. So what can retailers do to stay engaged with their consumers and offer them that sense of protection that they now need? 

We are seeing retailers shift their strategies to better serve customers and look beyond the “sale.” Offering ancillary services can be the added layer that will guarantee peace of mind for consumers.

Recent research shows that 32.7% of consumers would both buy and spend more if they were offered insurance and warranties coverage at checkout. Such protection can guard against accidental damage, loss/theft, or an extended warranty for a high value item.

See also: The Tech Ulta Beauty & Sephora are Banking on to Reimagine the Beauty Industry

The takeaway here is that these are all offered to the consumer at the right in time, when they are in the right mindset, at checkout, and ready to make the additional investment to insure their purchase is protected. Offering a warranty add-ons at checkout will provide customers with a sense of safety and increase trust and brand loyalty.

A quick glance at the top 100 fastest growing and declining categories in e-commerce shows a significant sales increase in the kitchen appliance category on one hand (bread machines alone have spiked by 652%!), and on the other hand a significant growth in weight training (+307%) and fitness equipment (+170%).

Many have also had to improve their WFH environment, surging computer monitor sales (+172%) and doubling up on office chairs and desks purchases. All these are high value products that consumers will need to rely on for weeks and months to come. They may also find that replacing these items is harder than usual so insurance coverage will become a “must have” safety net for consumers in case something goes wrong.

The product warranty industry as a whole — including home, auto and product merchandise — is known to spike during downturns. People value protection that will give them some kind of a safety net when their life has become somewhat chaotic.

Recent research by the Cover Genius analytics team shows an increase of 1,200% in conversion rates for insurance products add-ons, proving that consumers are becoming more cautious, valuing peace of mind more than ever before in all aspects of their lives. Consumers that buy high-value products want them to last longer, especially when they take into consideration that their income may not be stable for long.

Here’s the equation: They’d much rather spend a few dollars more in the moment of purchase and protect their items than spend more in the future to replace or repair them. By offering insurance and warranty products at the checkout, you are reaching customers when their purchase is most valuable to them and also at its most vulnerable.

Even in these troubling times, e-commerce can find creative solutions that will keep their customers engaged and loyal. When downturns and crisis occur, risk taking naturally decreases and consumers become more careful, their purchases become more essential and the longevity of their items becomes critical.

Offering them simple and straightforward protection for any purchase is something all retailers today should be prioritizing, as they strive to shore up new revenue streams and a level of CLTV that will see them through the bumpy road ahead. 

Peter Paine is head of retail partnerships Cover Genius, where he’s responsible for leading and executing partnerships for some of the biggest retail brands in the Americas.

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