“A customer is never out of warranty, even if his product is.” This quote by noted author Seth Godin is so true. In today’s age, it’s the businesses that face a wide array of challenges while managing warranty claims in the traditional manner.
A warranty is only as good as the business that stands behind it. Businesses that rely on legacy warranty management systems are more susceptible to errors, frauds, inefficiencies, and various other complexities.
However, businesses that leverage sophisticated warranty management software can simplify warranty claim management processes and deliver ongoing value to their end customers and channel partners.
At LoyaltyXpert, we understand how important it is for contemporary organizations to manage warranty claims as efficiently as possible.
In this blog post we will discuss the top challenges businesses face in managing warranty claims, tips to solve challenges in management and processing warranty claims, what warranty management software is and how it works, as well as the best practices to choose the right warranty management software for your business.
If you are an owner of a business that deals with products with warranty, this blog post is extremely insightful for you. Read on and thank us later.
Key Challenges Businesses Face in Managing Warranty Claims
Not all businesses face challenges in managing warranty claims, for instance the organizations that use advanced warranty management software. But businesses that manage warranty claims using traditional warranty management systems face a lot of challenges. Here are some common challenges businesses face while managing warranty claims.
1. Errors and Inefficiencies
The companies that rely on manual processes of handling warranty claims are much more error prone and susceptible to manual errors. Not just that they pay high warranty costs.
Did you know?
According to data published by APQC, businesses that perform the lowest are more likely to have warranty costs five times higher than top performers. Some bottom-performers can spend as high as four percent of their sales on warranty claims.
2. Poor Communication
Would you be surprised to know that a lot of companies struggle with poor communication as they go on managing warranty claims manually? You shouldn’t.
Without the right warranty management system, the internal teams are siloed and that affects warranty claims resolution. Customer complaints increase. Customer satisfaction drops. When the communication is poor, it makes everything so difficult.
3. Delayed Updates
Handling warranty claims the traditional way delays support and updates. In today’s time, customers hate to wait. When they don’t get the important updates on time, it breaks their trust in the business.
It all happens because of the lack of real-time tracking and delayed claim notifications. Digital warranty management should move fast. Or it fails. Without the right digital warranty management system, processing warranty claims becomes time-consuming.
4. Missing Feedback Loops
Traditional warranty management systems don’t connect the dots. Claims come in, get processed. But the claim data and warranty data are not used properly. That results in missed feedback loops.
No feedback means no progress. If businesses don’t know where they need to improve, they can’t fix the problems and can’t improve their processes. That’s why feedback is important.
5. Limited Visibility
When the visibility is limited, it gives rise to confusion and errors. In the context of warranty management, limited visibility can increase costs, delay issue resolutions, and decrease customer satisfaction.
Did you know? As per Infosys whitepaper, 75 percent of annual warranty expenses are often consumed by repetitive and chronic problems.
6. Lack of Transparency in Supplier Recovery
Did you know? As per a report by Harvard Business Review Analytic Services for Basware, nearly 60 percent of business leaders say a lack of transparency between their procurement and finance functions and their suppliers represents a risk to their business.
When businesses don’t have clear warranty terms in place, the communication between their procurement and finance functions and their suppliers goes for a toss.
7. Compliance Issues
Can traditional warranty management lead to compliance issues? Oh yes! It definitely can. When warranty policies get skipped or claims go unchecked, it can lead to a lot of complications.
That’s when complying with rules becomes difficult for companies and auditing becomes a nightmare. And when that happens, it not only sets a harmful precedent but also increases failure rates.
8. Warranty Frauds
Did you know? As per data published by INSIA.ai, fraudulent warranty claims represent three to five percent of total warranty expenses. And that’s not all. A Warranty Week data estimates warranty fraud at two to four percent of company revenues per year.
Even though the true size of warranty fraud is not known, warranty frauds cost original equipment manufacturers up to USD 25 billion each year. Dealer and distributor fraud is estimated at USD 2.5 billion every year. Traditional warranty management methods are behind such a high number of warranty frauds.
Tips to Solve Key Challenges in Warranty Management
We have already discussed the various issues businesses face in handling warranty claims. But it doesn’t have to be that way. In the present era, overcoming the challenges is super easy with the following steps.
1. Leverage the Right Warranty Management Software
We have already discussed that handling warranty claims the traditional way is behind a majority of challenges. One of the easiest and most effective ways to overcome the challenges is to take the help of sophisticated technology tools. A perfect example would be to leverage the right modern warranty management software that’s exclusively engineered for warranty management. When businesses choose the right warranty management solution, they get a massive edge. That’s like winning half the battle.
2. Automate Warranty Claims Processing
In the age of automation and Artificial Intelligence (AI), relying on handling warranty claims manually is just similar to riding a horse-drawn carriage instead of a motorcar. By automating warranty claims processing, businesses can save a lot of time, money, and energy. The prevalence of generative AI tools has made it effortless to manage claims in bulk within a few minutes.
3. Enable Real-Time Updates and Tracking
Manual warranty tracking can be extremely time consuming. Thankfully, a reliable and sophisticated real-time tracking system for warranty claims can help in getting real-time updates and monitor everything related to claim submission status. Leveraging the right real-time tracking tools enables in viewing all relevant warranty updates instantly. It also gives superior control and clarity.
4. Have Robust Feedback Mechanisms in Place
Noted author Ken Blanchard rightly said, “Feedback is the breakfast of champions.” Keeping feedback loops open is critical in knowing product quality and driving product improvement. Doing so can help identify trends and keep an eye on failure rates (if any).
5. Know the Key Metrics for Warranty Management
There are several essential metrics for warranty management that can help organizations to overcome various challenges in warranty management. Some of those are:
Warranty cost per unit: It is the average cost during the warranty coverage period. It’s calculated as the total warranty cost divided by the number of units.
Warranty cost as percent of sales: it helps organizations define the impact of warranty on their bottom line. It’s calculated as annual warranty cost divided by annual sales.
Did you know?
Warranty as a percentage of sales may vary from 0.5-5% of sales for different industries.
Warranty contribution rate: It measures the impact of warranty cost on total revenue. It’s calculated as warranty cost for a specific area divided by total warranty cost.
Simplify Warranty Claims Management with LoyaltyXpert's Warranty Management Software
Simplify Warranty Claims Management with LoyaltyXpert's Warranty Management Software
Claim frequency: As the name suggests, it measures how often warranty claims occur over time. It’s calculated as the number of claims divided by the number of units.
What Is Warranty Management Software?
In the above point, we have mentioned leveraging the right warranty management software is the best way to overcome the challenges associated with warranty claims management and processing. So let’s discuss what warranty management software is and why it is important for contemporary organizations.
First of all, as the name suggests, a warranty management software is a sophisticated tool using which businesses can handle all their warranty claims. Be it processing warranty claims or managing warranty claims, warranty management software can do it all.
Over the last few years, warranty management software solutions have become extremely popular. The main reason behind the rising popularity of sophisticated warranty management software and online warranty management systems are the various challenges associated with traditional and manual warranty claim management methods.
Did you know?
A report published by Data Horizon Research projects the global warranty management software market to grow at a compound annual growth rate (CAGR) of 9.3 percent from USD 5.2 billion in 2024 to USD 12.8 billion by 2033.
How Warranty Management Software Works?
Now that we have touched upon what warranty management software is, let’s explore how it works. Here is a step-by-step working principle of a warranty management system.
1. Generates Invoice
The warranty management software generates an invoice as soon as a product is sold to a dealer or distributor.
2. Scans QR Code
After generating the invoice, the digital warranty management software enables dealers and distributors to scan the QR code and invoice. When an end customer buys the product, the warranty gets registered via app instantly.
3. Raises Claim
In case of any issues or defects (that come under the warranty) during the warranty period, the dealer, distributor, or end customer can raise a repair or replacement request directly via the warranty management software or app.
4. Easy Tracking of Repair or Replacement
Using the right warranty management software, organizations can easily track the repair or exchange process. Whether it’s the initial diagnosis or the final repair, it tracks and records everything starting from the repair costs, warranty costs, parts used, and much more relevant information.
5. Analytics and Reporting
The right warranty management software can enable organizations to generate detailed reports on product details, warranty status, usage patterns, claim eligibility, and more such information in one dashboard.
Best Practices to Select the Right Warranty Management Software
Choosing the right warranty management software is not as easy as it may sound. In a crowded market, there are many options. But when it comes to automating and streamlining warranty management, only a few can deliver. Here are some best practices to handpick the right warranty management software.
1. Use Precise Search Terms
As you start your quest to find the right warranty management software, make sure that you use highly specific and precise search terms. Here are some examples of highly specific search terms—”cost effective warranty management software,” “affordable warranty management system,” “top product warranty management software,” “best online warranty management system for original equipment manufacturers.” Remember, the longer and detailed your search terms are, the higher are your chances of getting the right warranty claim management software.
2. Look at Features
The next thing is to look at some of the most useful features such as QR-based warranty registration, automated invoice management, real-time warranty tracking, automated approvals, automated warranty claim management, repair tracking and more. It’s extremely necessary to list the key features you need in the warranty management software even before you start looking for the software. That would help you determine the purpose of investing in the software and what you want from it.
Also Read: A Complete Guide to Adding Warranty Management Features to Your Loyalty App
3. Ensure Integration with Existing Systems
If the warranty management software is not able to integrate with your existing systems and software (such as CRM, SCM, and ERP systems), then it won’t be the right fit for your organization. It’s unreasonable to replace all your existing systems and software for a digital warranty management system. That’s why the seamless integration of warranty management software with existing systems as well as other software is extremely important.
4. Is It Easy to Use and Scalable?
While using the free trial version of the warranty management software, ask the following questions: How easy is it to use the warranty management software? Can your staff handle the digital warranty management system after a few training sessions? Does the software display any problems while working? Does the software provider have to intervene multiple times to fix the software? Last and the most important question, can the software adapt to your growth and expansion plans?
5. Choose the Right Price Plan
The pricing plans of warranty management software vary depending on features and use cases. So, it’s better to set aside a reasonable budget. And based on that, choose the right price plan after the free trial is complete. For instance, there could be a basic version, which carries the lowest price tag due to the basic features it offers. Then there are pro and premium versions which are priced higher as they have more features. Also, consider if the monthly, quarterly, or the yearly plan would be suitable for you. If you are happy with the free trial version and you want to use the software for a long time, then the yearly plan would be more suitable and cost-effective for you in the long run.
Taking Everything Into Consideration,
Contemporary manufacturers and businesses must understand one thing: Simplifying warranty claim management is not at all difficult in today’s age. The availability of sophisticated warranty management software has made warranty claim management a piece of cake.
However, organizations must make sure that they handpick the right warranty management software to handle warranty claims as efficiently as possible.
At LoyaltyXpert, we have engineered our warranty management software to simplify warranty claim management and processing with just one scan. By leveraging our sophisticated digital warranty management system, organizations can not only digitize warranty registration and claims but also track every product sold, every return request filed, and every repair request.
If you want to know if LoyaltyXpert’s warranty management software is the right solution for your business, contact us today to book a free demo.