The dollars and sense of warranty service

By Paul MacDonald, ServiceSource

The results are in from AVB’s latest ServiceSource Service Survey.

Based on a comprehensive member poll, this extensive study offers invaluable insights into the latest trends, customer preferences and industry benchmarks shaping the future of service excellence.

In this last of a four-part series, we examine every aspect of warranty service and share BrandSource members’ comments on the industry’s greatest pain points.  (The complete survey results are available in the Backroom.)

So whether you’re a service manager, business owner or industry professional, these findings are essential for staying ahead of the curve, delivering exceptional customer experiences and gaining a competitive edge by leveraging the report’s data-driven strategies and best practices.

Part IV: Warranty Service

1.         COD vs. Warranty

The survey findings reveal a ratio of cash-on-delivery (COD) to warranty service calls of 60:40 within the BrandSource membership, indicating a significant proportion of immediate payment services compared to warranty work. However, industry standards suggest the optimal ratio should be 70% COD to 30% warranty service calls. This deviation from the recommended ratio highlights potential business strategy optimization areas.

While COD service calls are crucial for immediate profitable revenue generation, a higher proportion of warranty calls typically signifies a focus on long-term customer satisfaction and retention. Adjusting the ratio to align with industry recommendations can help service dealers balance short-term profitability and foster enduring customer relationships, ultimately enhancing overall business performance and market resilience.

2.         Pre-Screening Calls   

The survey indicates a first-call completion efficiency rate of 53%, falling slightly below the ideal range of 60-70%, as recommended for self-servicing dealers. This finding suggests room for improvement in streamlining service operations and optimizing technician performance.

Achieving a higher first-call completion rate enhances customer satisfaction by resolving issues promptly and improves operational efficiency and resource utilization. By implementing strategies to increase efficiency, such as better scheduling, improved technician training and enhanced inventory management, service dealers can work toward achieving a departmental efficiency closer to the desired range, ultimately leading to better service outcomes and increased customer loyalty.

3.         Parts Pre-Diagnose

 The survey results reveal that 79% of first-call complete service calls are pre-diagnosed for repair parts, shedding light on a significant trend in service operations. This high percentage suggests that most service calls are anticipated to require replacement parts even before the initial repair visit.

Such findings underscore the importance of thorough diagnostics and proactive inventory management within service operations. This insight from the survey results is a valuable guide for service providers aiming to enhance their operational efficiencies and deliver superior service experiences.

Those calls that were not pre-diagnosed with parts were due to 61% part uncertainty and 19% lack of knowledge by the screener, highlighting a training opportunity and the implementation of diagnostic software such as MyPartsHelp.

4.         Major vs. Minor Core Line Repairs

The survey findings indicate that for core line appliances, 60% of all repairs are classified as minor and 43% as major, providing valuable insights into the distribution and nature of repair work. The dominance of minor repairs highlights the prevalence of routine maintenance tasks and smaller-scale fixes across various brands. These repairs often involve relatively straightforward solutions and can be addressed swiftly, contributing to operational efficiency and minimizing disruptions.

By understanding this breakdown, organizations can tailor their maintenance strategies, allocate resources effectively, and prioritize efforts to optimize productivity and reduce homeowner disruptions. 

5.         Luxury Appliances

Twenty-eight percent of BrandSource servicing dealers work on luxury brand appliances.

BrandSource members speak out: What do you see as the most significant challenges with service?

  • “Aging technicians, limited support and low pay for warranty work.”
  • “Finding, training and retaining technicians.”
  • “Warranty rates and getting more techs.”
  • “Hiring quality candidates. Warranty rates and more techs.”
  • “Getting new candidates to take up the job of service technician.”
  • “Some manufacturers and TPA companies are hard to work with for payment. I would love to see those that are hard to get paid from to make it easier to receive payment and order parts. I have been left on hold with some companies for hours, to never speak to a person. Call avoidance is a terrible business model. Some companies have excellent policies, and others should try to follow suit. Some of the programs only allow one part per invoice number. It would be nice if I ordered 10 of an item to claim all 10 of them.”
  • “Warranty rates and finding techs. I am finding the manufacturers do not care enough about the cost of our truck roll. I have partnered with our local college and now they/we are teaching appliance repair with HVAC students. My tech will be training the teacher and his students. One student is starting here next week through a CTE program. I am excited to see where this all goes. I encourage all servicers to contact your local community college.”
  • “Dealing with warranty calls with angry customers of the big-box stores expecting us to jump through hoops even though they’ve never taken a step inside our store. Competing with big-box stores that never offer service and provide lower prices is frustrating on the sales side. We get angry customers expecting us to drop everything to fix their issue, sometimes leaving negative reviews on our social media and a mess in their wake.”
  • “I find it hard to find technicians and justify higher service rates to customers in a low-income town.”
  • “The biggest challenge is generations that do not want to work hard and work with their hands. So, finding service techs who like to work is a huge problem.”
  • “I struggle with retaining staff, training technicians and admin staff, and managing absenteeism. It seems that it no longer matters to employees whether or not they have sick/personal/vacation time accrued; they call in if they don’t feel like working.”
  • “Employee burnout and retention. Most servicers in our area are 7-10 days out.”
  • “We cannot find enough technicians to do the work we need to do. Most people don’t want to live in our little town, and we cannot incentivize this area enough to attract interest.”
  • “We struggle to maintain a second active technician.”
  • “Poorly built products fail at a higher rate and lack techs to perform the services.”
  • “Finding a new service tech to train as our team retires and evolves.”
  • “Somehow making service profitable regarding first-year warranty finished calls. A minimum warranty rate of $150 for a call, plus parts handling.”
  • “Parts availability.”
  • “Not enough technicians to hire. Service school certification programs.”
  • “Warranty pay rates that allow us to attract top-tier people.”
  • “Finding quality employee profitability in a throwaway society.”
  • “Getting in new techs right now; we are mostly family. Attracting young people with good work ethics and basic mechanical skills is challenging. All the service companies around us are sometimes 7-10 days booked out.”
  • “Finding qualified techs is at the top of the list to call.”
  • “The cost of parts is too high.”
  • “Manufacturers are not exchanging products that are under warranty, and the customer is done with waiting.”
  • “Techs are putting in the wrong parts and returning parts to the distributor.”
  • “We are in a rural area and cover many counties. We need higher warranty mileage rates.”
  • “First-time completes. No callbacks.”
  • “We can’t keep up with the calls; there are too many and insufficient service personnel in the area. The cost of a second truck and another setup and servicer is hard to justify. The initial setup would take two-plus years to recover the expenses.”
  • “The biggest problem is the lack of parts, and the manufacturers don’t train the tech lines well.”
  • “Warranty reimbursement rates. We are fixing the manufacturer’s problems and losing money.”
  • “Refrigeration is flammable, now that manufacturers have to use the R600 refrigerant. We don’t want to accept liability, waste money or get specialty tools, including carrying a fire extinguisher with a fan and sparkless vacuum pump. We think it is ridiculous, and why would you put something flammable into a person’s home?”

Paul MacDonald, AVB’s senior ServiceSource lead, ran his own 38-tech service business and is a past president of the UASA. He currently operates The Expert Service Program, which helps servicers run their operations more efficiently and profitably. You can reach Paul at (647) 500-7785 or at Paul.m.Macdonald@brandsource.com.

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