Executive Briefings

Free Up the Money Buried in Warranty Management

The performance gap between manufacturers that manage warranties effectively and those that barely manage them at all is wider than you think. It's high time to look at the dollars and sense of this practice and how it affects customer management practices.

By now it's an old saw that manufacturers should look at post-sales service, including warranty management, for its potential to contribute to top-line growth, instead of as a drain on bottom-line progress. In the recent report, "Warranty Management: The Bridge to Future Revenue Creation," the researchers at Aberdeen Group put some numbers behind that assertion. They found that best-in-class companies - those that have created an end-to-end workflow for product returns and warranties - boast a 2.0-day warranty claims processing time, in contrast with 7.2 days for all others; a 19-percent reduction in warranty-related repair/return costs over the last 12 months, as opposed to a 1-percent increase for all other firms; and a 30-percent decrease in length of time to process a warranty claim over the previous 12 months, compared with a 4-percentdecrease in performance for all other organizations. It's not hard to see the payoff buried in those statistics.

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The performance gap between manufacturers that manage warranties effectively and those that barely manage them at all is wider than you think. It's high time to look at the dollars and sense of this practice and how it affects customer management practices.

By now it's an old saw that manufacturers should look at post-sales service, including warranty management, for its potential to contribute to top-line growth, instead of as a drain on bottom-line progress. In the recent report, "Warranty Management: The Bridge to Future Revenue Creation," the researchers at Aberdeen Group put some numbers behind that assertion. They found that best-in-class companies - those that have created an end-to-end workflow for product returns and warranties - boast a 2.0-day warranty claims processing time, in contrast with 7.2 days for all others; a 19-percent reduction in warranty-related repair/return costs over the last 12 months, as opposed to a 1-percent increase for all other firms; and a 30-percent decrease in length of time to process a warranty claim over the previous 12 months, compared with a 4-percentdecrease in performance for all other organizations. It's not hard to see the payoff buried in those statistics.

Read Full Article