Warranty is like a quality assurance given by manufacturers to their customers. Warranty management began as a cost function. But now, the concept of warranty management and its strategic significance has evolved. As CRM gained importance, warranty management became a cross-functional dedicated department. Warranty management should keep up with the shifting business landscape. But how are electronic and allied sectors seeing warranty management? How does it impact the business strategy and revenue?
Warranty Management for electronics and allied sectors
For electronics, warranty management assumes a greater significance.
- Recalls, returns, and repairs are a daily activity in the electronic sector.
- Electronic items are expensive and complex. With the advent of new technology, warranty management needs to pick up the pace. The new technologies increase the instances of NFF (no Fault Found). It means that the company cannot find the original defect or complaint upon return. So lack of traceability across the warranty process cycle impacts the bottom line.
- Understanding the product functions and spare parts is complex. So the warranty management needs a team of Subject Matter Experts. Cross-functional teams now address warranty process claims in electronic and allied sectors.
- Customers are now buying electronics online, adding to the complexity of supply chains. Data management adds to the cost-efficiency of warranty claims management.
Warranty is an undertaking of quality assurance. In a competitive market, the brands' reputation attracts and retains customers. Lean and efficient warranty management adds to the brand's image.
Warranty management comes at a cost. But how are the top-performing brands making the process cost-effective?
Best practices and analysis
The average cost of warranty management is 3% of the revenue. But only one-third of the cost goes into direct repairs.
Are the top performers doing something different?
- The top brands claim settlement time is four times faster than the brands in the bottom.
- Top performers use their warranty systems to analyze and correct product issues. The time for failure correction and prediction is 30 days faster than the rest.
- Top companies have a cost-efficient warranty management system. The average cost is 150% lower than the low-performing brands.
Reducing operations costs and repair cycles gives a competitive edge to electronic brands. Warranty management adds a significant amount to operations costs and delays. So, top brands have reinvented their warranty management systems. But what does it take to reenergize the practice of warranty?
Components of effective warranty management:
New age techniques of lean warranty management go beyond customer satisfaction. Modern warranty management systems offer tangible and intangible benefits to brands. Effective warranty management systems:
- Reduce operational expenses for companies.
- Improve the brand image, reputation, and integrity in the eyes of the customers.
- Provide a competitive edge for product improvement.
- Today warranty management systems can become a source of revenue.
So an effective warranty management system has the following factors:
- End-to-end standardization: Electronic industries see many mergers and acquisitions. So the claims process may not be the same across product ranges.
- The supply chain from the original equipment manufacturer (OEM) to the user is complex. A warranty claim process can be fast if there is cross-team communication.
- Best practices in warranty management include the traceability factor.
As a strategic function, warranty management systems need to adopt the latest technology.
Why is digitization the way forward?
Digitization is inevitable for most functions across sectors. The electronics business has a widespread network of distributors and complex supply chains. So, data management is a challenge. Using IoT and other technology to digitize warranty management has many benefits.
Warranty claims are painful for manufacturers and customers:
Without clear visibility of the supply chain, warranty claims become a daily pain. Brands have no way to identify the vendor that manufactured the product part. Sometimes vendors keep the returned products in the warehouses as scrap.
With digital warranty, brands can identify the vendors and hold them accountable. So the brands can avoid lengthy repair times and costly vendor disputes. Without a digital warranty, the delay in product repair and replacement is tiring. Lack of efficiency in the system has given rise to the issue of fake claims as well. Offline warranty claims management is messy and costly. Customers get tired of the lack of coordination within different functions. Today, hassle-free services and user experience have become a business imperative.
Spot and stop fake claims:
QR codes, 2D and 3D markers aid in authenticity verification. Codes and markers on products keep counterfeits out of the supply chain. With such codes and markers, customers can make warranty claims only if they have a fake product. So, anti-counterfeit technology help in detecting fake products and fake warranty claims.
Quick and easy settlements for customers:
Customers value a brand that values time. Quick and easy warranty settlements have proven to improve customer satisfaction. QR code or marker-based warranty settlements aid in loyalty management.
Leveraging data for analyzing buyer behavior:
IoT, machine learning aid in data management. Using technology for warranty management can open new revenue streams for electronic brands. Technology can help brands understand how their customers are using the products. Brands can leverage this information to offer extended warranty and tiered servicing. Brands can analyze the data to provide complementary services and similar products.
Failure mitigation and product development:
AI in warranty management can analyze claims trends. Brands can receive warnings and alerts of a possible product failure. Also, the company can share the information across stakeholders to enable product development.
Can past warranty claims predict future warranty costs? Are you wondering whether you should repair the product or replace it? Technology and big data have the power to project future repair needs and remedies. The technology used in warranty management can help predict cost-effective solutions.
Effective warranty management is a tool for customer loyalty and brand image.