Effective Warranty Management for Improved Customer Satisfaction and Profitability in 2015

Each year, Strategies For Growth℠ (SFG℠), the independent Westtown, Pennsylvania-based research analyst and consulting firm, conducts a series of Benchmark Surveys among its global outreach community of services professionals. There were a total of 228 responses for the firm’s 2014 Warranty Chain Management Benchmark Survey, conducted over a six-month period in 2014.

According to SFGSM president and principal consulting analyst, Bill Pollock, “The survey results reveal that roughly three-quarters (76%) of respondents believe effective warranty chain management to be at least ‘very important’ to the overall financial performance of the business, with just over a quarter (28%) believing it to be ‘extremely important’. The results further reveal that this sense of importance is increasing substantially, year-over-year, as nearly one-third (32%) believe effective warranty chain management to be ‘more important than one year ago’, compared to only 1% believing it to be ‘less important’ – a ratio of more than 32:1 citing ‘more important’ over ‘less important’.”

However, while the importance of warranty management is sufficiently validated by the respondents to the firm’s survey, a majority of warranty management solution users are not as duly impressed with the vendors that provide these services. For example, Pollock claims that “only 39% of respondents are presently ‘satisfied’ with the services and solutions provided by their primary warranty management solution vendors – including a stunningly low 12%, or only one-out-of-eight, who are ‘extremely satisfied’.”

In fact, Pollock goes on to say, “the majority of users (51%) rate their perceptions of the performance of their primary vendor as ‘neither satisfied nor dissatisfied’ – or what we would normally describe as a ‘complacent’ user base. While less than 1% of users claim to be ‘not at all satisfied’, there are still a total of 10% that fall into the ‘dissatisfied’ category.”

Vibhor Mishra, Director Marketing at Tavant Technologies, a leading global provider of warranty chain management solutions, agrees that many providers need to focus on meeting their customers’ needs, requirements or expectations, and says “That is why we base much of our company’s success on the fact that we share a firm belief that software providers need to deliver value while meeting quality standards. As a result, we are continually leveraging our global experience to provide best-of-breed solutions to our customers in all of our offerings.”

This is also one of the main reasons why, according to Mishra, Tavant holds its premier marquee annual event, “engage”, now in its sixth year, as “a collaborative gathering of employees, customers, industry luminaries, and the leadership team, to discuss and exchange ideas about the latest in business and technology”. He also believes that “It serves as a venue where everything can be discussed openly, and our customers have direct access to the executives of the company to share their thoughts and suggestions.”

On the surface, while it may appear somewhat encouraging that 70% of respondents are currently running their warranty management operations using at least some “partially automated” processes, this finding is, unfortunately, not actually that encouraging. In fact, only about one-in-five (21%) claim to have “fully automated” the warranty management processes currently in place at their respective businesses.

By aggregating the various categories of partial-to-full automation, the current market base reflects one where, although 70% of respondents claim to be using at least some “partially automated” warranty management processes, there are a nearly equal amount (69%) where some manual processes are still being relied on.

However, regardless of the current state of automation – or lack thereof – within the broadly defined warranty claims management segment, Pollock says “One thing is extremely clear: businesses plan to increase their annual warranty budgets over the next 12 months (i.e., through mid-2015) and beyond. For some, about 14%, or roughly one-in-seven, the increase will be modest, at less than 5%; however, another 16%, or about one-in-six, plan to increase their respective budgets by between 5% and 9%. Still another 10% plan to increase their budgets by more than 10% – typically in the plus or minus 20% range.”

Mishra echoes that “This growth is also manifested at Tavant where the company is on track to double its revenue in only two years (i.e., from 2014 – 2016). In fact, Tavant is presently achieving a year-on-year growth of 40 percent, which is significantly above the industry average.”

All told, by the close of 2015, twice as many organizations plan to increase their annual warranty budgets, compared to those planning to decrease. This two-to-one ratio suggests a strong – and growing – global warranty chain management segment, and is further supported by the finding that the percent of work orders currently being serviced under warranty is also expected to increase over the next 12 months by an even greater ratio – i.e., 24% expected to increase, compared to only 11% expected to decrease.

So, how are the leading organizations planning to leverage their increased warranty management spending into improved customer satisfaction and increased profitability? To attain these goals, the top strategic actions currently cited by at least one-quarter (25%) of survey respondents include:

  • 52% Develop/improve the KPIs used to measure advanced warranty chain analytics
  • 39% Streamline the parts return process to improve overall efficiency
  • 35% Improve warranty management-related planning and forecasting activities
  • 32% Restructure for improved warranty management oversight and accountability
  • 31% Foster a closer working collaboration between product design and service
  • 29% Institute/enforce process workflow improvements for supplier cost recovery

However, there are many other strategic actions that the leading warranty management organizations are also currently taking, including purchasing and/or upgrading an automated warranty chain management solution (20%), restructuring/updating existing warranty pricing schedules (19%), providing additional training to extended warranty sales personnel (17%) and outsourcing some, or all, of their warranty management activities to third parties (16%).

Based on the results of SFG’s 2014 Warranty Chain Management Benchmark Survey, the key takeaways that best describe the global state of warranty management in 2015 – and beyond – are:

  • Warranty management organizations are being driven, first, by Customer-focused factors; second, by Cost-focused factors; and third, by Revenue-focused factors
  • Through 2015, annual warranty management budgets are expected to increase, with more than twice as many organizations planning more increases than decreases
  • In 2015, warranty services managers will be focusing primarily on developing and/or improving their KPIs and warranty analytic programs, streamlining their parts return processes and improving warranty management-related planning and forecasting activities
  • Nearly three-quarters (73%) of organizations are currently integrating warranty management with all other services functions, and almost as many (64%) already have an end-to-end workflow process in place to handle claims and returns
  • The top uses of data/information collected from warranty events are basically to improve processes (i.e., field service, depot repair, parts returns, etc.) and effect changes (i.e., product design, manufacturing, etc.

________________________________________________________________

For an expanded version of this content, including a Q & A session with SFG‘s, Bill Pollock and Executives from Tavant Technologies, look for our feature article in the January 29, 2015 issue of Warranty Week magazine.

For more information, to download a complimentary copy of the companion White Paper to this article, or to register for the companion Webcast of the same name, hosted by Tavant Technologies, please go to http://info.tavant.com/Warranty_Webinar.html.

Also, be sure to stop by the Tavant exhibit for more information at the 2015 Warranty Chain Management Conference, March 10 – 12 in Miami, Florida.

Advertisements

It’s 2015 – Time to Revitalize Your Services Portfolio!

After a while, even the most innovative services offerings begin to lose some of their appeal, ultimately being perceived as commodity-like offerings, rather than as representing a differentiated portfolio. What was initially offered to the market as a specialized service, often without much competition, soon becomes just another service commodity positioned ineffectively among scores of increasingly competitive offerings.

Regardless of your organization’s market share or position, it is important to gauge exactly where your service portfolio stands at any given point in time with respect to the perceptions – and expectations – of your targeted market base. In most cases, it is the new, innovative upstart companies that are typically conducting the bulk of the market research and competitive intelligence prior to launching their new products and services, not necessarily the companies that are still selling their older commodity-like offerings.

However, there may still be a great deal of life left in the more mature business lines that comprise the majority of your company’s product or services portfolio. Even better, these lines tend to already be “tried and true” with respect to market acceptance, and may only need a gentle marketing or promotional “push” every once in awhile to stimulate additional market interest and sales. Even NASA uses a “mid-course correction” every now and then to ensure that the rocket gets to the proper destination!

There are many ways in which a business can determine exactly how much “kick” its services offerings still have in them, or, conversely, whether it is time to “kick” some of them out of the portfolio altogether and replace them with newer, more innovative and technologically-competitive lines.

The path recommended to evaluate the overall health of your present portfolio of services, is to conduct a strategic business assessment that focuses on:

  • An assessment of your customers’ – and the market’s – perceptions,
    needs, requirements, preferences and expectations with respect to your existing portfolio of services offerings.
  • The specific features and characteristics (e.g., attributes, benefits, value, cost, etc.) that currently define your services lines, and what it will likely take to “ramp them up” to the new and/or emerging market requirements (i.e., the Three R’s: Refine, Re-design and/or Re-package).
  • Customer/market perceptions and opinions regarding the current quality and performance of the services offered – both from your organization and its competitors.
  • A set of recommended improvements to your existing portfolio in order to better position it against the competition, and to maximize both sales potential and ongoing customer satisfaction.

The assessment and evaluation of the findings from such a study would be extremely useful in terms of providing your company management with the strategic, marketing and promotional tools it needs to:

  • Identify the basic customer/market needs, requirements, preferences and perceptions that can be used to assess and “fine tune” the overall strategic market positioning of the organization’s existing service lines.
  • Ensure that the company is effectively marketing the right services; to the right market segments; by communicating the right marketing, branding, and promotional messages; all through the right media.
  • Modify and enhance existing product/service lines to address the highest levels of customer and market demands.
  • Develop new products and/or services to address the emerging needs and requirements of both the existing and prospective customer bases.
  • Identify and cultivate the most attractive target markets based on identified patterns of customer decision-making and purchase behaviors, and product preferences and perceptions.
  • Strengthen the company’s overall product/service awareness and image, advertising and promotion, and sales activities through the execution of the recommended refinements, enhancements and/or modifications based on the study findings.

While your present business lines are probably the key factors that helped
your company grow to its current size and market position, they may have become “dusty” over the years and may now be in need of a good “dusting off” – or even, retirement.

Putting a “cash cow” off to pasture before it is time can cost your company a great deal of money in terms of lost potential. However, keeping it on once its gone “dry” may cost you even more in the long run in terms of giving your company a perceived market image as being less than innovative, or no longer offering anything more than commodity-like products and services.

Assessing where your product and services portfolio currently stand in terms
of market perceptions, and your ability to meet the market’s – and your customers’ – changing and evolving needs, will allow you to determine just how much “dust” has collected on your existing offerings – as well as what you will need to “dust off” in order to compete more effectively.