Warrantech Woos Retail Customers With Warranty Offers

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Warrantech Corp. will appeal to consumers' sense of urgency in a mail and telemarketing campaign offering extended service contracts to customers of two Canadian electronics retailers just as the manufacturer's warranty run out.


RepairMaster Canada, the Canadian subsidiary of Euless, TX-based Warrantech, has inked three-year contracts to run the campaigns for Audio Warehouse, a six-store electronics retail chain in the Saskatchewan province, and Visions, another electronics retailer with 26 stores in Western Canada. Visions is now Warrantech's biggest client in Canada, and the company plans to tap markets in Quebec and Ontario, where two-thirds of the Canadian population live, for more new clients, said Michael Bailey, president of RepairMaster Canada.


"You'll be seeing more of this," Bailey said of the new contracts. "This is the first two of a few."


Warrantech Direct, Warrantech's direct-marketing arm, will provide marketing services for both the Visions and Audio Warehouse contracts. The campaigns, expected to launch in late July, will be aimed at customers who received an offer of an extended-warranty policy at the retail level when they bought their electronic products but did not accept the offer.


The cost of each extended warranty varies depending on the item, but the average cost is $100. Warrantech will receive a commission on each extended warranty generated by the campaign, though the company would not disclose how much.


The marketing agency first will send mailers to the targeted customers. The mailers, shipped in standard letter envelopes and containing a letter and business-reply card, will be timed to drop just as the customer's manufacturer's warranty expires.


Retail customers are tracked according to the product they purchased, and Warrantech has a database with information on the length of the manufacturer's warranty for each product. Using that information, Warrantech will determine when a consumer's manufacturer's warranty is nearing an end.


The letter will remind customers that their warranties are about to expire and offer them a final opportunity to purchase extended coverage from the retailer. Customers can respond using the business reply card or a toll-free number. A majority of responses to the mailers usually come through the toll-free number. But in past campaigns in which Warrantech has marketed service contracts to consumers, as many as 30 percent of responses came through the business-reply card included in the mailer.


Approximately four weeks after the mailer drops, Warrantech Direct will call customers who still haven't accepted the offer. The delay is intended to give the customer an opportunity to respond to the mailer and then give them one last chance with the telemarketing offer, said Randall San Antonio, president of Warrantech Direct.


"We're not competing with our own mail," San Antonio said. "We're calling customers and reminding them of this final opportunity."


Warrantech will target approximately 100,000 Audio Warehouse customers, who have purchased $20 million in electronics merchandise from the retailer. More than twice that many Visions customers, representing $113 million in purchases from the retailer, will be targeted, and additional prospects will be created as new customers make purchases.


According to San Antonio, a conversion rate of 2.5 percent to 7 percent will be considered successful.


The telemarketing campaign will be provided by Warrantech Direct's call center in Euless, which staffs approximately 80 outbound agents along with about half a dozen inbound representatives. Last year, Warrantech completed 1 million outbound calls and mailed 300,000 pieces, and the company is prepared to handle larger calling volumes, San Antonio said.


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