Mize kicked off the new year by hosting another presentation for our online webinar series. The January 17, 2019 presentation entitled “Benchmark & Optimize Warranty Management” focused on current and future forecasts in warranty management as well as best practices to optimize warranty management.
We had 3 key speakers, including Bill Pollock, President and Principal Consulting Analyst of Strategies for Growth, Eric Arnum, Editor of Warranty Week, and Ashok Kartham, founder and CEO of Mize, Inc.
This blog will bring readers up to speed on what they missed from the webinar and provide direct access to the presentation (and its resources) for download.
Pollock began our webinar by sharing key findings from SFG’s 2019 Warranty Chain Management Survey. The survey garnered responses from 105 warranty management professionals—including managers, administrators, and technicians—from organizations of varying size, location, and industry. As such, the survey results represent a microcosm of the global warranty management community today.
From this research, we gained knowledge into what warranty management systems are currently being used, the challenges facing warranty management initiatives, and the drivers and strategic actions already in place.
These findings are further outlined in Pollock’s Analysts Take paper (available below).
Figure 1: Analyst Take paper on "The State of Warranty Chain Management in 2019 - and Beyond"
Arnum then followed up with his own research regarding the future state of warranty management. He presented 8 separate snapshots of actual numbers in the US warranty industry from 2003-2018. His data includes claims per quarter (in millions of dollars) and accrual rates and claims rates (as percentages of sales) from industries such as automotive, high tech, and residential. Given such a comprehensive and long-lasting data set, Arnum affords us a bigger picture of the major trends in warranty over time.
Lastly, Kartham tied all this data together by explaining the best practices to optimize warranty management. Kartham explains that by running warranty as a profit-center, rather than a cost-center, companies can increase their customer satisfaction and revenues. To do this, companies should use a connected warranty platform that allows all stakeholders—including customers, OEMs, dealers, and suppliers—to collaborate and share data in real-time.
Here are the 5 key points we learned from last week’s webinar:
1.The Warranty Market is Expanding
Based on the SFG’s survey data, we saw that most service organizations are expecting to increase their budgets for warranty in the next year.
Table 1: Annual Warranty Budgets Are Expected to Continue to Increase
This reflects a trend within organizations to deal with a growing warranty market and manage their respective warranty activities in the next year. Only 18% of respondents were expecting to decrease their warranty budgets in the next year, but this could be due to organizations using a more automated process to manage their warranty—which would reduce their overall warranty cost and brings us to our next key point.
2.Warranty Management Systems are Moving Towards Automation
For the first time—ever—more companies are using an automated warranty management system over manual process. The SFG survey revealed that nearly 2/3 of all respondents are using fully or partially automated warranty management systems.
Table 2: The Movement Toward Universally Automated Warranty Management Processes
This ties hand in hand with what we learned from Arnum’s data. The following table is an aggregate of all the industries (automotive, high-tech, and residential) and their warranty claims & accrual rates over the last 15 years:
Table 3: All Industries—Warranty Claims & Accrual Rates, 2003-2018
The chart demonstrates that the claims rates for all industries lie somewhere between 1-2%. The data also show that as company sales grow, the number of claims can be expected to grow accordingly. Therefore, organizations can predict that they will eventually need an automated system (if they do not have one in place already) to account for the increase in numbers of claims.
3.There is a Strong Focus on Improving Warranty Management Operations
According to the SFG survey, the top 3 strategic actions currently being taken to improve warranty management operations are:
- Improving warranty-related planning and forecasting activities
- Developing/improving metrics, or KPIs, for warranty chain analytics
- Restructuring for improved warranty management accountability
These activities are codependent. In other words, to restructure and improve current warranty management operations, your company must have a good foundation of which KPIs to measure. In turn, those KPIs inform what planning and forecasting activities should take place.
This means that if your company doesn’t already have KPIs set in place for warranty management, they should be developed. If your company does have some, they should be reviewed to make sure they are ones that can help improve customer satisfaction.
4.Customer Satisfaction is Cited as the Number One Key Performance Indicator
Customer satisfaction is key when it comes to warranty management. More than half of respondents from the SFG survey agreed that keeping their customers satisfied is a top priority.
Additionally, Kartham explains that a customer-centric approach to warranty management can increase company revenues. For example, using a connected warranty management platform can simplify the customer on-boarding experience and prevent unnecessary warranty repairs. Sharing a common platform also enables OEMs to attach maintenance and service contracts to generate revenue. In short, managing warranty as a profit-center with a customer focus leads to higher customer satisfaction and retention rates.
5. Using a Connected Customer Platform for Warranty Management Enhances the Customer Experience
Warranty plays a critical role in improving customer satisfaction, retention, and service profits. One way to optimize warranty management is to use a Connected Customer Platform to connect all warranty processes for a seamless customer experience.
Using a Connected Customer Platform means moving from a pipeline warranty model where customers, dealers, OEMs, and suppliers are separated and experience a delay time….
Figure 2: Warranty Pipeline Model
….to an environment where all these stakeholders can interact with each other in real-time.
Figure 3: Connected Warranty Platform
Doing so allows multiple business entities to share data across a single, connected platform which leads to saved time and money, especially in supplier recovery costs. When time and money are saved by optimizing warranty management, the customer is more satisfied.
Mize invites you to:
- Watch a full recording of the webinar
- Download the webinar presentations
- Download the Analysts Take paper by Bill Pollock based on the SFG 2019 Warranty Chain Management Benchmark Survey