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Part 1: Best Practices to Unlock the Potential of Warranty Management

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Traditionally, warranty management has been viewed as a necessary evil—just another operational cost to minimize. Reduce claims, cut costs, and protect the bottom line—that’s all there was to it. 

For years, manufacturers found ways to chip away at warranty expenses with reasonable success: by 2019, warranty claim rates had fallen by as much as 30% compared to previous decades.

But modern OEMs are waking up to the incredible untapped potential of warranty management: when done right, it can be a powerhouse of value creation, driving customer loyalty, improving product quality, and contributing to revenue growth.

After all, this shift is already taking place elsewhere in the aftermarket value chain. 

By leveraging data and analytics, other functions have evolved to become powerful drivers of business value. For example, leveraging AI to price spare parts quickly and accurately has made them a major source of revenue. And using analytics to calculate risk has enabled sophisticated service-based contracts with higher margins. 

Now it’s time for warranty management to take the same journey: moving from low-priority cost-center to strategic lever for business success.

3 ways warranty management can delight customers

When approached strategically, warranty management can become a platform for delivering the kinds of exceptional experiences that encourage customers to stay with your brand for many years to come. 

There are three key ways that warranty management can contribute to an enhanced customer experience and, ultimately, enhance your bottom line. 

1. Quick and transparent warranty processes 

Speed, accuracy, and transparency in warranty processes aren’t just operational metrics—they’re the foundation of customer trust and loyalty.

The first few years with new customers are absolutely critical for building relationships, and poor warranty experiences will shatter that trust and increase churn. 

To develop deep customer loyalty and satisfaction, it’s essential to focus on two aspects of the warranty process: quick claims resolution and seamless transparency.

By adopting practices like automated claims handling, businesses can ensure faster resolution of warranty issues. This is not just about efficiency; it’s about respecting the customer’s time and minimizing disruption. 

Alongside speed, transparency throughout the warranty process reinforces customer trust. Making the process clear and keeping customers informed throughout helps them feel respected and valued. This transparency builds a foundation for long-term loyalty and greater customer lifetime value.

These two changes can transform the customer experience from one of trust-breaking delays and uncertainty to trust-building experiences of clear communication and swift resolution. 

2. Corrective action and continuous quality improvement

Warranty claims are not just a reactive process—they’re a goldmine of information about product performance in real-world conditions. 

When a business can collect, analyze, and act on this data—for example, usage patterns, failure modes, failure symptoms, key environmental factors—it can be used to improve the customer experience in the long term powerfully.

Firstly, by enabling corrective action to address existing issues from snowballing. For example, if several warranty claims come in around a particular product, you can investigate further and recall that product before more claims are made. 

Secondly, by leveraging details of the claim to improve manufacturing processes and minimize future issues. For example, recurring claims for a particular part might signal a design flaw that can be changed, making the product more resilient and reducing warranty claims over time.

3. Ready service-based business models 

Advanced warranty management practices can also help OEMs move towards high-margin service-based business models, where the focus shifts from merely selling products to delivering long-term value through services.

Delivering highly effective warranty service affects customer retention by keeping your customer base receptive and loyal. Similarly, warranty service feedback and product quality data help improve products and services over time. You build a solid reputation and earn customers’ trust when you deliver on your guarantees consistently and reliably. This virtuous cycle of customer retention and trust enables a service-based model where the OEM is responsible for ensuring product uptime, offering (and delivering!) guarantees of greater and greater value.

And tailored warranty services—such as extended coverage, proactive maintenance plans, or performance guarantees—not only reduce warranty claims costs but also open the door to selling long-term service contracts that provide consistent revenue streams.

Finally, warranty management can be the first step toward the broader Equipment-as-a-Service (EaaS) model, where customers pay for outcomes (e.g., uptime, productivity) rather than owning equipment outright. Modern warranty systems provide the infrastructure to monitor product performance, analyze usage, and manage risk—all critical components of a successful EaaS offering.

Major challenges to modernizing warranty

But, these modern warrant approaches require substantial technological sophistication and coordinated processes across the business. And for most OEMs, there are several major barriers to implementation:

  • Limited visibility:
    Siloed teams and fragmented relationships mean OEMs don’t have a clear view of their customers, policies or equipment, resulting in delays when those customers make claims 
  • Limited data:
    There can be a lack of clarity or availability of key warranty data (e.g., policy details, claim details, customer information) that massively delays claim processing times, slows down dealer reimbursements, and makes it harder (or even impossible) to claim refunds from suppliers
  • Limited collaboration:
    A lack of coordination and collaboration between teams, suppliers, and dealers can result in each taking their own approach to warranty management, creating a frustratingly inconsistent and inefficient experience for customers 
  • Limited feedback:
    Key failure data is not available, delaying feedback to quality or service departments, preventing issues from being addressed and manufacturing improvements from being made 

The key to transforming warranty management lies in overcoming these barriers by adopting data-centric practices that streamline operations, enhance collaboration, and, ultimately, elevate the customer experience. 

So, how do you get there? Find out in Part 2 coming December.

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