Affinity Customer Service in Brazil: its Evolution from the Extended Warranty Service Contract (today an insurance product) Concept

Article sponsored and written by Antonio Espinoza:

Antonio Espinoza has a 22-year career in extended warranty in Brazil. Antonio worked, in a pioneering way, in the definition and implementation of Customer Service policies and Claims of the Extended Warranty programs, processes that until today are followed by the insurance companies that operate this product in Brazil. This product marked a turn in the acceptance and popularization of Affinity products in the country. Antonio is available for extended warranty and service contract consulting and advisory roles in Brazil.

It can be said that this Customer Service, at least as it is known today, started between 1997 and 1998, with the introduction and quick expansion of a pioneering service in Brazil, the Extended Warranty Service Contract. Since 2005 this financial service fell under regulatory insurance authorities.

This product protects goods, electrical, electronics and furniture products from manufacturing failures for up to 5 years extending the initial manufacturer or supplier warranty period, which normally lasts 3 months (legal, mandatory) to 1 year. It also covers replacement of the product in the event it cannot be repaired. It also covers replacement due to lack of parts. This extended service contract is mainly sold by retailers. Originally it was sold by the Mappin department store chain in São Paulo in 1998. Shortly thereafter, several other major retailers in the country began selling the same product, reaching millions of consumers who looked for peace of mind and did not want to worry about their product. Today it is estimated that between 40 and 60% of consumers of appliances, electronics, electromechanical and furniture products acquire this extended service protection.

In the beginning, retailers looked to improve customer loyalty by offering new services to their consumers, who were not too familiar with the product they had just purchased. So, in order to gain a deeper trust from the buyer, the retailer believed the extended service contractwould convert the consumer into a de facto promoter of this new product and also convince the same customer to return to the store and look to add an extended service contract on future home goods purchased. The retailer began to see a very important revenue stream in his/her business.

As a main premise, it was thought that the consumer should always be assisted during his/her first contact with the sales rep, the benefits of the extended service contract explained and a long term peace of mind solution will have been offered, even if preliminary: explain to him/her the role of Technical Assistant, or follow up with him/her after the meeting with the Technical Assistant, and try to close on the selling of the Extended Service Contract the same day. Explain to the customer the accessibility to a free-of-charge Hot Line telephone service, including a Call Center team and a Technical Service Repair Network.

The telephone service was fast and efficient. The Technical Assistance Repair Network received the product, repaired it and promptly delivered it in perfect use condition. All this with the constant support and monitoring by the Extended Service Administrator and Third-Party Obligor.

Of course, there were already Call Centers for other segments, mainly for manufacturers of electronic products and appliances and banks, but these did not need to deal with real time information or offer quick solutions to their consumers. It is worth remembering that the Customer Service to policyholders was done mainly by insurance brokers (small companies). These referred all consumer questions to insurance and financial services companies (credit, banks, cards), taking a long time to get solutions.

The entry of the intangible product Extended Warranty Service Insurance (sold as insurance since 2005) required its suppliers (financial services, insurance companies, credit card administrators), to acquire cutting-edge telephone technology, intelligent systems to optimize the calls flow (predictive dialing, URV units and automatic options), train their CSR’s (Customer Services Representatives) and create complex flows and processes.

Much has changed with the evolution of technology since the 2000s. Most of these service processes have been automated on social networks or internet applications, the expansion of the internet has made this possible. Today it is possible to resolve a claim without even speaking to a person. So, the call by telephone is one among many ways to contact the providers and have consumer questions forwarded.

But what cannot change is the efficiency, the service speed, as well as a well-trained internal team and a robust and qualified technical service network. The way of contact may change, but the end result is the same. If this premise is abandoned, high investments in technology will be worthless. Having an omnichannel does not solve the problems of speed and efficiency.

In summary, even with the evolutionary technology and its high investments, the idea that the consumer expects a fast and an efficient service, for any product he/she buys, intangible or not, should prevail, as well as ensuring that technological means offered be user-friendly and workable! The introduction of Extended Warranty Insurance more than 20 years ago increased the demand for state-of-the-art telephone technology in the Brazilian insurance and financial services market. Today there are other affinity insurance products offered by large companies operating in this market, but the premises and objectives of 20 years ago remainthe same.