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U.S. businesses spend more than $2 billion per month on warranty claims. However, even with this high-level of spending many businesses have limited controls in place to manage their warranty programs. So how can your business manage warranties to increase customer satisfaction and reduce service costs?
The Aberdeen Group answers this question in a recent report titled Winning with Integrated Warranty Management. According to the report, 86 percent of respondents felt that managing warranties is important to overall company performance. However, most of the respondents were less than marginally satisfied with their company’s approach to warranty management.
WARRANTY MANAGEMENT PROBLEMS
According to the report, one reason for this dissatisfaction is the fragmented “warranty chain”. They describe the warranty chain as a series of events involving suppliers as well as other functional units within an organization that have an influence on the warranty management process. At most OEM’s, the functional units involved in the warranty chain include finance, product design, manufacturing, quality and reliability, sales and marketing and service.
Another problem mentioned by Aberdeen is accurately identifying the root causes of product and part failures. Without adequate measures and procedures in place, many companies have to struggle through negotiations with suppliers regarding who is responsible for warranty coverage. Situations like this can increase the cost and processing time involved with claims, as well as lead to dissatisfied customers.
One solution that Aberdeen’s “best-in-class” companies use to combat warranty management problems is having a single senior service director overseeing all aspects of warranty management. This responsibility would include contract definition, claims processing and analytics.
BENEFITS OF WARRANTY MANAGEMENT
Warranty management can be automated and optimized by implementing a software solution, such as Metrix, but once you improve your warranty management function what type of ROI will you see? Aberdeen’s best-in-class companies stated the top three benefits are:
- Improved Customer Satisfaction
- Improved Product Quality
- Reduced Service Costs
These best-in-class companies reported that they spend 0.9 percent of their annual revenues to support warranty claims and take 1.4 business days to process a warranty claim. In addition, they get 2.5 percent of their products returned for repair during their initial warranty period.
To get the full story on warranty management, Metrix recommends downloading Winning with Integrated Warranty Management from the Aberdeen Group. As a subscriber to the Metrix eNewsletter, we’d like to offer you a free copy of the report, which you can get by clicking here: http://www.metrix.com/pdfs/Aberdeen_WarrantyMgmt.pdf |
