According to Joel Robinson, Vice President of strategic growth for the company, ASE is the only insurance and extended contract provider in the industry that administers all program aspects starting with underwriting and continuing through marketing, customer service and claims.
All of the ASE products are available to the major industries covered by the Associated Equipment Distributors (AED).
“There are two areas that (AED members) concentrate on a great deal,” Robinson explained. “The first area, of course, is customer retention/customer loyalty. There’s an old adage in the industry that sales sells the first machine and service sells the next 10, so the products we have, especially the extended warranty plans are designed so that after a dealer sells a machine, the customer brings it back to them for service.”
That, in turn, ties into the second area that AED members tend to concentrate on -- absorption, which is the percentage of parts and service profit that pays for the overall costs of running a dealership.
“The (extended warranties) are what’s driving those customers back to the dealership, which is going to greatly help the dealer’s absorption rates,” Robinson said.
When customers bring equipment back to the dealers for repairs covered by their extended warranty, ASE pays dealers posted shop labor rate and a margin on part sales, so dealers experience an increase in their Parts & Service business.
Extended warranties also allow manufacturers and dealers the ability to capture additional data on machinery instead of the one or two years covered by base warranty. When you couple an extended warranty with telematics, you can get the full picture of the equipment’s performance over a greater period of time.
“While telematics is not new to construction equipment, the standardization and centralized data source is relatively new. It is already vital in maintaining optimum performance to avoid unnecessary/costly downtime for the user”, according to David Kocourek, President of AmTrust Specialty Equipment.
“You’re seeing more and more (dealers) taking advantage of telematics and the other sources that monitor not only the performance of their equipment, but the service intervals and preventive maintenance,” Kocourek said. “You’re going to see that continue to expand. It’s a new era of technology. In order to run a successful business, you’re going to have to take advantage of technology and the economics that it can provide.”
“One of the challenges we face is building trust with our partners,” Robinson explained. “I am always talking to the manufactures’ and dealers we’re working with about the strength of AmTrust Financial Services. We are publically traded on the NASDAQ global market and have an ‘A’ (Excellent) A.M. Best rating with $17 Billion in assets. As people struggle to trust a partner in this area, the financial strength and security is there to show them that AmTrust is here for the long haul.”
Another challenge facing the extended warranty business is the decline in new equipment sales, which is why ASE also offers extended warranties for used equipment purchases as well as leasing and rental coverage. The goal is to provide a full range of products that allow dealers to become a one-stop shop for their customers where the customer can buy their equipment, finance it, and get it insured and serviced -- all to build customer loyalty.
“You see (customers) come back to the dealer,” Kocourek explained. “They identify with the positive experience received, especially when an unforeseen mechanical failure occurs and high cost of a repair comes up. There’s no better feeling out there when dealers are able to tell their customer the repair costs are covered. It reinforces & enhances the experience. The dealers benefit from it because now they have a loyal customer who keeps coming back.”
Although Kocourek’s 34 years of experience is in insurance and risk management, it helps that most of the team he has built has years of experience in the equipment industry.
“We understand the business,” Kocourek said. “Just about everybody that works for our company has extensive experience (in the equipment industry). Key members of our management team all have 10, 20, 30+ years of experience in the equipment industry. This is our niche and all we do. Our focus is specialized and centered in the equipment world.”