Brands Try Insurance Plans

As consumer confidence  continues to hit all-time lows, more marketers are getting into the insurance business.

Last week, for instance, Hewlett-Packard began offering a “printing payback guarantee” which promises consumers a check if its printing solutions don’t deliver the recommended cost savings in a year. Earlier this month, Sears launched its “Buyer Protection Program,” which lets buyers keep an appliance purchased for more than $399 with a Sears card if the consumer loses his or her job.

“Get a new appliance. Get peace of mind,” the program’s landing page proclaims, adding, “The Sears Blue Appliance Crew has got your back.”

Kevin Brown, CMO for Sears’ home appliances division, said the incentive was necessary to get consumers to buy. “It really came from listening to our customers who have been telling us that…they’re worrying about their jobs and the economy,” Brown said, noting that consumers are “deferring much needed appliances and bigger ticket purchases.”

Sears and HP aren’t the first to try to address consumers’ sagging confidence. Brands ranging from Virgin Mobile to men’s clothing retailer Jos. A. Bank have been running similar offers in recent months. The catalyst appears to be Hyundai, which trumpeted the idea the loudest with its Super Bowl “Assurance” spot, which outlined a program in which the automaker offered to buy back consumers’ cars should they lose their jobs within a year.

Addressing consumers’ concerns about their jobs is an unusual marketing tack. Jack Trout, president of Trout & Partners, said he has never seen anyone making such offers before in previous recessions. “It just shows you how tough it is out there,” he said. “It shows you how people’s minds have changed.”

Yet programs essentially telling consumers, “We’ve got your back,” have emerged in large numbers. Since Hyundai’s introduction, buyer protection programs have become hot, with about 100 similar deals following the Korean carmaker’s promotion, said company rep Lori Scholz. “Consumers have been listening and our message is resonating,” she said, adding that Hyundai’s market share, ad recall levels and online shopping activity have all increased in the last several months. (The company reported a 3 percent increase in June vehicle sales units, or 37,943 cars sold.)

Will the other programs work as well as Hyundai’s apparently did? The answer is, it’s too early to tell if most of the programs are successful. Virgin Mobile, for instance, is still waiting for official July numbers, but so far, approximately 6,000 out of its 5 million subscribers have signed up for the Pink Slip Protection program.

One potential hitch is that many consumers sense that such deals have loopholes. After Hyundai advertised its offer, for instance, General Motors and Ford jumped in with their own protection plans, making it hard for consumers to determine who covers what. Auto blog Jalopnik noted that “all three plans on their own are pretty confusing. Combined, all three are just a mess of different offerings.”

Analysts say the programs are worth a shot. Mary Brett Whitfield of the market research firm Retail Forward said that at best, these types of offers have “the potential to pull those who are on the sidelines because they are worried about the future,” though they are unlikely to work with consumers who are unemployed and don’t have the extra cash.

Trout said fostering the perception of some type of assurance to jittery buyers is valuable, even if few consumers ever actually cash in on the programs: “It’s a ‘What if?’ move…if something happens, I’m covered…But how many people fall over and die the next day after buying insurance? Not too many.”