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When warranties spoil the aftersales experience

Solutions instead of products is the smarter way to bring value out of product use
Tuesday, July 2, 2019 - 07:00
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During a phone call with the veteran president, he lamented about certain brake part competitors making lifetime promises on brake pads. He sees it as a marketing ploy to grab market share for a product category that naturally decays under normal driving conditions. Out of fear of losing sales, few businesses are willing to be the first to scale back warranties because it will create a new set of challenges about how a company must distinguish itself. To stay in the aftermarket game, the product must be sold at the best possible price, ensure vehicle coverage and maintain quality. But to win it, the company will have to create a persuasive service as a solution differentiator. In concept, raising service standards seems like a reasonable confidence builder that promises solutions that stretch value out of product. DIYers and independent repair shop operators may expect imperfect products, but they feel more entitled than ever that their supplier resolve their problems quickly.

 

Consider two fixes. One digital solution has been on the market since 2009. Turntable imagery allows the online shopper to circle around the auto part. This enhanced product content-rich service promoted by Snap36 promises to streamline the e-commerce trip by obtaining the correct part the first time and reducing product returns. Industry experts argue that installation breakdowns are caused by limited product application information and an inadequate number of photographs. Buyers are left second guessing whether they have identified the proper item.

 

Snap36 prepares a photo shoot

Matt Fowler, the director of sales for Snap36 has been busy convincing the major retailers and their vendors that 72 images will help the shopper to inspect a part with greater certainty because of the interactive capability to manipulate each item in vivid detail. In contrast with static photos, which consists of five to ten shots, the shopper cannot determine the true nature of the vehicle fitment. In those situations, explained Fowler, multiple products are purchased, installed, and returned to the retailer. For the naysayers, Fowler encourages them to test 40 items, and measure the improvement. That’s why Amazon, said Fowler, is gaining in the aftermarket space while having to deal with a low percentage of warranty issues.

Second, redefining how a manufacturer and their accounts collaborate merits close study. Collaboration places competitors at a disadvantage because they are locked out from having a first-hand knowledge of technology and processes. Proper training is needed, too. What worries Jarosik is the shrinking knowledge base at the parts counter. It ends at the year-make-model point-of-sale screen. While it is hard enough for Jarosik’s service writers to trust any counter person, what will the advisory experience become for a DIYer about to embark on a major repair? Suppliers can arm the frontline with proper diagnostic strategies and ways to spot an abused part.

Meanwhile, upfront warranty funds could be replaced with year-end incentives. Nowadays already, many employers use performance bonuses. By extending a motivational driver with a focus on diagnosing the problem first and then installing the part will bring the best out of the store employees as capable consultants. While video technology will continue to improve, counter people can make a difference in building customer loyalty. Establishing a metric for reduced defective products at the store level would hold the frontline accountable where the return supply chain starts.

Some managers may disagree and hold their own version of a service as a solution. Bring it on! Keep the conversation moving across all venues, including at trade group events. Root-cause questions about what motivates someone to return products or why someone would be willing to pay more for the same product would help shape the direction of this industry problem. A willingness to pay for an extended warranty program on all categories is an important customer pain point because one segment has different priorities than others. A busy repair facility whose vehicle turnover flow is financially impacted by a different set of constraints than the weekend DIYer who fixes the car when there is time. Surely a retailer with a rich databank of customer transactions could reveal clues to what type of questions to ask when answering the objective of stopping warranties.

There is an abundance of evidence about the dynamics of filtering out defective products from perfectly operational ones. So long as resources and answers remain scattered, costs will climb higher. An annualized 10 percent hike on $80 million dollars spent on claims is a sign of wasted monies from inaction. With a concerted dialog between all channel partners, everybody would be better served to take those reserves off the table.         

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