11 Ways to Increase Your Warranty Department Revenue
- April 26th, 2012
Does warranty processing have your service department bogged down? Do you have tons of claims just sitting there waiting to be filed? Are they gathering dust because you don’t have the proper information to file the claim? Warranty repair can be a significant part of your business, especially if you are a dealership offering full service.
Warranty processing begins when the service work order is written, whether it is a manufacturer’s warranty or an extended service contract, and it ends when the claim is paid.
Even if you have a dedicated warranty administrator, the process is a team effort.
It is very important for service writers, parts people, and technicians to understand the warranty requirements for each vendor and for all to handle the repair accordingly. Warranty policies vary from vendor to vendor, and need to be communicated to the folks that are involved in writing the work order, ordering the parts for the repair, making the actual repair and filing the claim.
Here are some tips that can help…
1. Clearly communicate amongst your service and parts departments the warranty policies for all your warranty vendors by creating “cheat sheets”. These cheat sheets should contain the basic warranty information, such as vendor contacts for customer service and tech support, replacement parts policies, length of warranty and approval methods, and amounts.
2. Qualify the repair as a warranty repair before starting the work.
3. Establish a good working relationship with your vendors, and communicate with them during the warranty repair as necessary.
4. Create an information form for repairs on generators and engines so the technician can gather the information necessary to file the claim. Engine/generator hours as well as the failed part number are typical requirements for filing a warranty claim on these types of repairs. Without this information your claim will more than likely be denied.
5. Create a tag or sticker for warranty parts. Parts personnel should communicate to the vendor when ordering a part used for a warranty repair and obtain return authorization for the old part if that is their policy. When the new part comes in it can be tagged to let your technician know what to do with the old part when the repair is complete. The tag can contain information such as the work order number, date, the tech that performed the repair, and whether or not the part should be returned immediately or stored. Warranty parts that are stored can be shelved in a method similar to your stockroom locations. That location can be noted in your techs comments about the repair. If the vendor requests that a stored part be returned, it will be easy to locate.
6. If pictures are required, the service writer can notate the work order and the technician will know to obtain the proper pictures. Store pictures by the serial number of the vessel or RV, along with the work order number. Typically, pictures are required for all gel coat and fiberglass repairs.
7. Flat rated labor warranty repairs can sometimes be challenging in meeting the time allotted. Communicate the time requirements to your technicians. If the technician feels they cannot perform the repair in the amount of time allowed in the flat rate, then let the vendor know this. For example, sometimes an engine repair cannot be completed in the allotted time because of access. This is not the engine manufacturer’s problem, but a boat builder problem. If this is communicated to the boat builder, they may agree to pay for some of the extra labor for removing boat components necessary to access the engine or generator. Sometimes an engine or generator manufacturer will allow time for troubleshooting and/or test running. Make sure you consider that and claim all the time allowed.
8. Book the actual labor time and parts for the repair to the work order, even if you cannot claim the entire amount of the work order. This will allow you to report on the difference between the actual work order, and the actual claim. This can be beneficial when negotiating labor rates with your vendor. Labor on the work order should be billed at the vendor’s warranty labor rate, and parts should be billed at the amount the vendor will pay. Typically, vendors will only pay cost for parts, so bill them on the work order at cost.
9. File the claim within the manufacturer’s time limit to avoid denied claims.
10. If a claim is not fully paid, be prepared to go back to the manufacturer with good reason as to why they should pay the entire amount. If all the warranty requirements were met during the repair process you will stand a good chance of winning the battle.
11. Adding an incentive (% of claims collected on a timely basis) to be distributed to those handling claims can actually increase warranty income. Warranty is not a huge income source to begin with, given we do it nearly at cost, however having it sit around unprocessed and unclaimed is resulting in a huge loss! What handling warranty does do for us, is create good customer rapport and retention… Taking care of the customers needs is key!
The bottom line is communication, both internally and with your vendors. Communicate policies and let employees know that they are expected to comply with the manufacturer’s requirements in their part of the process.
This post was written by Bev Calhoun, Senior Training Specialist at Exuma Technologies. She can be reached at email@example.com