Woody Levin x The Future of Fandom

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FULL TRANSCRIPT BELOW

Adam Conner (01:19):

Woody, thank you so much for joining me. How are you doing?

Woody Levin (01:21):

I’m doing great. Thanks for having me, Adam.

Adam Conner (01:23):

It’s a pleasure. We should start, of course, as most of these do. It’s probable that a lot of people know what you are, but they don’t see you until the very end of their normal shopping experience, so could you please start us out by just describing what Extend is and why it started?

Woody Levin (01:43):

Absolutely, I’d be happy to. So Extend, and I love that we say that it’s probable that a lot of people know. I love that, and we do work with over 800 merchants.

Adam Conner (01:51):

We’re certainly hopeful, yeah.

Woody Levin (01:53):

Yes. We work with over 800 merchants today offering modern, digitally-native, best-in-class, extended warranties and product protection. And what I mean by that is Amazon, Best Buy, Costco, Walmart, Wayfair, when you were checking out and buying something, you, many times, are offered to an extended warranty, or what we call product protection on that purchase. But you really don’t know what you’re buying, you don’t know how the service is going to be. The customer experience could be really poor as it is with many of the legacy players out there, and the customer isn’t informed. It’s not a transparent offer to them. What’s covered? What’s not covered? Is there a deductible? How do you file a claim? What does that process look like? So Extend is solving all that. Let me take a step back. What we found is that a lot of people don’t love extended warranties as the legacy players provide them, but they do love AppleCare. And I don’t know, Adam, if you buy AppleCare, do you?

Adam Conner (02:51):

I do. Yeah, I’m a customer of AppleCare.

Woody Levin (02:54):

Fantastic. So AppleCare has almost 85% of Apple, and iPhone owners add AppleCare. It’s a huge revenue generator for them, and they’ve figured out a way to provide customers with a great value that is called AppleCare, but it’s really just an extended warranty. So think of Extend as AppleCare for everything. Modern, digitally-native, approachable, fair, transparent, and where customers can get value. So we created an easy to integrate, API-first solution that allows any merchant to offer extended warranties and protection plans on the products they sell while doubling down on focusing on the best customer service in the industry, as well as making sure that for merchants, we can also drive significantly higher attach rates than any of our competitors. In a nutshell, you should think of Extend as AppleCare for everything. Really, a modern, next generation e-commerce tool that levels the playing field for all merchants and allows them to offer the optionality customers have come to expect from the biggest retailers in the world.

Adam Conner (03:59):

Okay. Helpful foundation, and that is a good way to explain it, AppleCare for everything. Folks, you’ll know exactly what Extend is, and I didn’t say that tongue in cheek at the beginning. You’ve probably literally seen it. In fact, you may have gotten an Extend warranty and not immediately attach the name to this, but now you will. So this ease of use is something that I have explored, specifically within FinTech with the various instruments in which you can invest your money today. I mean, that continues to grow almost by the minute. And in that world, it’s all about access to information and ease of investment.

Adam Conner (04:42):

Now, you mentioned ease of use in sort of picking up an Extend warranty or an Extend policy with anything that you buy. What else do you see as a gap in that total e-com transaction that helps to set your mind towards what a next gen or future state of e-com experience, the way that it is. Obviously, this is where you’re developing and spending all your time right now, but I’m just curious if there’s sort of a higher ecosystem that you think this is part of that it’s modeled after.

Woody Levin (05:19):

Well, I mean, if you look at the best retailers in the world today, right, they’re offering same day shipping. Not everyone does that, but the best retailers do, in my opinion. The biggest retailers do, in my opinion. They’re offering “Buy now, pay later,” or consumer point-of-sale financing, right? Different ways for you to purchase that item. They’re offering product protection. They’re offering returns management or free returns, so I think there’s this modern e-commerce stack, right, that the largest merchants, the largest retailers have been using for some time now, and in order to truly compete with them, you have to have these bells and whistles. You have to offer customers these options.

Woody Levin (06:05):

Now you can say, “Well, sure I’d get it,” but you’re not going to get the limited edition or the bespoke products, right, on an Amazon or on a Walmart that you would get when you go directly to the OEM, or directly to the manufacturer or the fashion designer. And you’re probably right, so there are ways to accomplish differentiating yourself from the marketplaces or the big retailers with special products, but that’s a much bigger lift than just saying, “Hey, there’s all these tools that I can now use to, and sign me up.”

Adam Conner (06:37):

So at the end of the day, of course, this just makes for the best possible customer experience, and that’s where we focus a lot of our time here on the podcast, is to learn how that experience is being built and the various pieces that layer together to create it. I’m going to stoke this next question a little bit because those various pieces can come together, and, of course, as e-commerce has really come into its own and, let’s say, across the 2000s broadly. That tends to be piecemeal, things coming here and there. You put in different widgets here, different suppliers there, but you note the importance of owning the full stack of that. Can you explain what that is a little bit more and put it into the mind of a consumer who may be experiencing that piecemeal process today?

Woody Levin (07:26):

When we say Extend owns the full-service contract stack, and service contracts are just a different way to say extended warranties and protection plans. When we say we own the full stack and that we believe it’s necessary to own the full stack in order to drive the best customer experience, we mean that you need to control the technology-enabled broker. So what that is that’s the prebuilt integrations into the e-commerce platforms like Shopify, Magento, BigCommerce, WooCommerce, IBM Hybris, and many others. It’s the administration layer, so you need to be licensed in all 50 states in order to be an administrator of service contracts, and the administrator is who controls the customer experience, the approval and the denial of the claims. [inaudible 00:08:15] you get a replacement? Do you get a repair? What does that look like when you get reimbursed? Do you send someone a prepaid debit card or a check in the mail, or can you actually keep them in the merchant’s ecosystem, turning potentially negative experience into a positive one like Extend does, and getting them a replacement directly from that merchant?

Woody Levin (08:33):

So controlling that customer experience by the administrator is so important. And then last but not least, there’s the underwriting, right? So again, technology-enabled broker, administrator controlling the customer journey, and then the underwriter is who’s taking on the balance sheet risk of these programs. Now that may sound pretty mundane, but it’s important that the underwriter, or the obligor who’s taking on the balance sheet risk of the programs, can create bespoke programs that serve the customers best. I’m happy to give some examples of that later on, but we found really owning the full stack from the brokering, the selling of the protection plan, to the administration, the customer experience if and when something goes wrong, and how do you utilize that protection plan to get a repair or replacement of the product, as well as the underwriting, are all necessary elements to be a leader in this space.

Adam Conner (09:32):

Yeah, I would feel much more comfortable if any of my buying experiences, at least in my head, gave me the perception that it was all in one house, so to speak. And not even just from a fluidity of experience, but just from I don’t want my data going here, there, and everywhere else. As a customer and as a regular Joe who’s always weary and wary of that kind of thing, I agree, and not just as a business operator. Of course, if I were owning the business, I want to own every piece of it, too, but I think that is going to continue to be part of best-in-class customer experience for anybody because the more barriers that you can take away, the more obstacles, mentally or otherwise, you can take away to a consumer engaging with your thing, whatever that thing is. You get them closer and closer to becoming a fan.

Adam Conner (10:27):

I mean, are there really fans of extended warranties on things? I want to get your thoughts here because I’ve talked to a lot of folks and a lot of brands for whom the word fandom is tangential, maybe translatable, but here it seems completely extraterrestrial. So could you help me figure out how extend works to build something close to a fandom within the consumers it serves?

Woody Levin (10:56):

Fandom or promoters or advocates of our service offering, that’s what we strive to do every single day is build that. We are in the midst of building, and we’re doing a pretty good job of it thus far, a consumer-facing brand that is recognized across hundreds of different merchants that’s trusted, that’s reliable, and that gives you value. That’s the end goal here, right? No legacy company in the service contractor or extended warranty space has built a powerful brand. The net promoter scores of these insurance companies that run service contract businesses or the service contract businesses is in the low 20s.

Woody Levin (11:45):

Our CSAT score is over 92. We’re talking step functions greater than what it is today, so we are so focused on, again, building promoters, building happy customers, which become fans of our product, and they talk about the experience they had with Extend. How easy it was to file a claim, how we replaced their products immediately from the retailer they bought it from, or from that manufacturer, how we very quickly got to a resolution on their claim, how they didn’t have to jump through the hoops that they thought they were going to.

“Again, creating this elegant, digitally-native, modern, dare I even say, delightful experience around extended warranties because when you need us, if we’re trying to create obstacles, create hurdles around filing a claim, then you’re not going to be our fan. But if we can create this streamlined experience and do what we promised, you’re going to tell your friends about it. Next time you see it, you’re going to buy it, and it will create this flywheel, right? It will create this flywheel where merchants will be incentivized to work with Extend because they know their customers are going to get a great experience. We are an extension of our merchant partners. One of the reasons we’ve been able to grow so quickly is because of the fact that we have created, to use your language, your vernacular, fans of Extend. Both merchants who are fans of how we integrate and how we drive revenue, but also consumers who are fans of Extend because we stand behind our offering. We service them well.”

— Woody Levin (12:19)

Adam Conner (13:26):

The flywheel is where I’d like to turn for a moment because it’s a really advantageous thing as a business, of course, to be able to, at least at the beginning when nobody really knows who you are, borrow the fandom, but really consumer base of somebody else, adding on a value-added service. And then in time, creating a core of people who love you for you. I talked about this earlier in our podcast with Rakuten, and serving as a marketplace within which you could buy your favorite pair of shoes or from your favorite retailer. And now, they have developed an audience where some of their die-hards will only shop through Rakuten, no matter what. If Rakuten isn’t attached, it doesn’t matter what the brand is. They won’t do it, and maybe that’s because of the benefits they get and in their case, it’s not ease of service or ease of claim, but it’s the cash back. Do you see brands of the future, who become really sticky, start in that same way, “borrowing other fandoms” to create a flywheel of fandom? Does that make sense?

Woody Levin (14:31):

Sure! I can’t speak to how others will grow or how others think about it. I can really only be specific to Extend, and I can tell you that from the beginning, it was deliberate for us to focus on delivering an uplevel, dare I even say, the best customer experience in the industry right from the start because we knew at the end of the day, if we served our merchants’ customers well, the chances of them ever leaving us and going somewhere else were very small. And the opportunity for us to grow organically from the ground up, because all these merchants talk to each other, right? All the merchants are saying, “What new tool are you using?” or “How can I improve my business?” They all talk to each other and they share information. And for Extend, they talk to their customers too and when their customers have a great experience with Extend, they promote us to other merchants, and we’ve seen that.

Woody Levin (15:28):

That’s one of the reasons.

“See, we’re not trying to hide behind anything. We’re not trying to create customer confusion. We’re trying to create clarity, and when you create the clarity of information and people understand what they’re purchasing, we have found that an informed consumer who understands the value they’re getting converts at a three to four, to even five times higher rate for extended warranties and protection plan, than in the legacy providers are driving today. So let me say that one more time. Because we, from the beginning, are fair, transparent, and open and educating consumers on the value of what they’re spending money on with our extended warranties and protection plans, we’re seeing conversion rates, how many people out of 100 buy an extended warranty when offered, that are three, four, sometimes even five times greater than the legacy protection plan providers. Our attach rates are 14, 16, even 20%+ across our merchant universe.”

 — Woody Levin (19:30) 

Adam Conner (20:29):

All those metrics are super impressive, and the one thing I can’t get out of my head is, “My God, I wish that there were some sort of translate tool that I could just highlight some text in a contract available online somewhere, and it just like live edits.” There’s a good business. Somebody out there listening to this. Maybe you don’t practice. Maybe you went to law school or something like that, similar to our guests and have that in mind because my God, wouldn’t that be easy? Wouldn’t that be a great experience for a consumer? But it is undeniable, the business case here, and obviously it’s showing, even though you’ve been around for what, just about three years, just a little over. You have been able to grow and create those great experiences and those great relationships. You’re doing so externally.

Adam Conner (21:11):

Now, I’ve got a few more questions here for you, but before I get to the big other F word here, which is future, I need to talk about how you’re doing things internally. And maybe this is where fandom becomes a little bit more recognizable of a word because, of course, you’re building relationships with everybody who’s getting covered through your services. How do you make sure that your employees are fans of you, too? I’m going to say a quote here because folks, we do a little bit of prep, and the quote that I wrote down from my notes was, “You can’t create external fans without internal ones.” Well, that’s plain English to me, but I’d love to, let’s say, double click into that a little bit more if you could, Woody.

Woody Levin (22:37):

I’m passionate about what we’re doing here, right? I used to be a competitive athlete. I played sparingly, but I played Division I College Hockey at the University of Wisconsin, and I’m extremely competitive. Now this is my competition, right? I want to build. I want to win. I want to be proud of what we’re doing, and I like to bring people on this journey, the team members that we have at Extend who are also focused on that. We give people ownership here, right? We’re not micromanaging them. We hire them and we point them towards what we want them to go tackle, and they get to figure out how to do it. Two of the biggest things at the beginning of the year that I shared with the entire team, we’re about 440, 450 people right now, were number one, focus, number two, accountability. What are the key things which we’re going to focus on, what we’re going to drive forward this year, right, and what’s going to be expected of you?

“If you provide your team members with those two things, “Here’s what we’re going to focus on, and here’s what’s going to be expected of you to get us towards those goals,” I believe that you create a culture, you create an environment where people can thrive. So not only do they become fans of the work they’re doing, but they become fans of the culture and the environment, and they become fans of the team that they’re on. So again, as we talked before, you can’t create external fans if the internal people are not passionate about what they’re doing. And that doesn’t mean that everyone here has to wake up every day and go, “Oh my gosh, I love service contracts! I love extended warranties!” Because besides me and a couple other people here, probably not many people do, right? But they need to be stimulated by the challenges here, they need to feel like they’re making an impact. They need to feel like there’s a career opportunity, and they need to feel, again, like our customers feel, that I am being transparent about where the company’s going and what we’re doing.”

— Woody Levin (23:32)

Adam Conner (24:30):

Well, I mean it’s easy to just throw that word around, as you said at the beginning, culture and be like, “Oh, it’s great. Yeah everybody!” It’s just such a team dynamic, and you could very quickly slip into an area where even if somebody’s an employee over time, just to start to look around and say, “Ooh, okay. People really don’t either practice what they preach, or it’s just not as important as they claimed it was when I was signing my papers.” But I completely agree with you, and it’s something that we don’t really talk about a whole lot on this show. Again, we mostly just talk about consumer experiences, but you really can’t do that and hope to build it, especially in a world where it hasn’t really been prevalent before like in the business that you’re in, without having those internal advocates, because that’s how you build the best team in the future.

Adam Conner (25:21):

Now, let’s talk about that future as we begin to round out today. I would broadly just say, “What do you think the future of Extend looks like?” But rather, I want to go back to something we touched on towards the top, and we touched on it lightly while talking about owning the full stack of your service, but just in a broad sense, looking at what the future of e-commerce tool sets should be, and maybe the future of what consumers within e-commerce should expect. Because if you have services like Extend, where you’re the AppleCare of everything, that’s like bringing a top level service in with anything from a one person, mom-and-pop shop, all the way up to the largest retailers out there. It makes me wonder what other elements of that consumer experience we should expect in the future to rise to that level of the biggest and greatest to survive.

Woody Levin (26:16):

Yeah, so coming from Extend’s standpoint, we’re really focused, Adam, on upleveling and owning the entire post-purchase experience for consumers. And if you think about how much money is spent and how much time and effort is spent on pre-purchase, getting customers to the merchant, getting the product or in their cart, right? Clicking on that button, right? So there’s the pre-purchase, there’s app purchase, right, which is how do you check out? Is it one-click checkout? Is it buy now, pay later? Is it stripe? Is it PayPal, whatever it may be? And then what happens post-purchase? In so many industries which you see, is you see an unbundling of services and that leaves you with dozens or more of providers who are offering discrete services, right, to a user base, or a merchant base in this case, and you have to manage dozens of different integrations.

Woody Levin (27:15):

So what usually happens is that over time, you see a rebundling that happens, and you’re left with maybe three or four integrations, but they’re still providing you with this wide array of services, and Extend wants to own the post-purchase experience for our merchants and their customers. There’s a lot that we’re building there in order to be able to provide a more streamlined experience, just like we’re doing by owning the entire stack internally for service contracts. Unfortunately I can’t share all them today, but we’ve identified multiple customer-merchant interactions that take place post-purchase that are very disjointed and disorganized today. So as we look towards the future, where we want to grow is to really go deeper in that merchant stack, and we can because of the significant right to play across the merchant stack, because of how we integrate into their ERP, into their order management system, into their customer service stack, into their billing and accounting system, we are already there. So we’re getting pulled deeper in the merchant stack, which allows us to do more for customers and merchants in the post-purchase timeline.

Adam Conner (28:42):

Well, I’m sure you have a master plan. I don’t want you to uncover that plan for us. I’ve done this a couple times, but I’ll round out with this then. Perhaps you can help me by filling in this blank, and I’m going to make a sentence and hopefully you can fill it for me. Sentence reads as follows, “If I have anything to say about it, the future of best-in-class e-commerce experiences will not include blank.” What’s that blank for you?

Woody Levin (29:13):

It will not include customer confusion, frustration, misinformation. I think that’s the focus, right? Eliminating confusion, eliminating frustration, eliminating misinformation.

Adam Conner (29:30):

Well, there you have it. Well, I appreciate you going into this world with us. It’s a world that I knew very little about even before jumping on the mic and listeners, I’m guessing you probably haven’t explored this world, or you’ve certainly explored it less than Woody. And as it relates to creating relationships and maybe fans down the road, it’s just an angle that we wouldn’t normally approach. So for looking into that lens with us, Woody, thank you so much for joining us.

Woody Levin (29:55):

Thanks for having me, Adam. I really appreciate the time.

Adam Conner (30:01):

Thanks again to Woody Levin for joining us and telling us how Extend is building relationships. I enjoy chats like this. It makes me wonder what other often ignored offerings are quickly building followings, and maybe even fandoms. And thanks to you, the listener, of course, for exploring the future of fandom with us. I’d encourage you to stay connected, so subscribe to The Future of Fandom wherever you listen to podcasts, or you can also find all of our content at livelike.com/podcast, and across socials, LinkedIn @LiveLike, and Twitter @LiveLikeInc. I look forward to predicting the future again with you real soon, and until then, I’m Adam Conner saying so long, and thanks for being a fan.