A limited manufacturer warranty truly is limited

By J.R. Zirkelbach, New Leaf Service Contracts

Have you ever thought about the actual purpose of a manufacturer warranty?

Sometimes we think it’s a testament by the manufacturer to the quality, reliability or longevity of their product. See if the following changes your view:

A man works on the assembly line at a major appliance factory.  The company is well known and reputable. The products they build are generally reliable and perform well for many years. As a result, customers often seek out this company’s products when shopping for a new appliance.

The man has worked for this company for many years. He is good at his job, which is to install a certain component as the appliance proceeds down the assembly line. He’s proud of his work, his company and the products they build.

One morning while getting ready for work the man has an argument with his wife and leaves the house angry. He stews during the drive to the factory. He’s still upset as he arrives at the plant and takes his place on the assembly line.  

Although he’s installed thousands of these components over time, on this day he’s preoccupied with the argument. In his distraction, he fails to notice a problem with a component or perhaps he installs it incorrectly.

The appliance continues down the line, its assembly completed, somehow passing inspection, and is boxed up and shipped to a dealer who puts it in the warehouse.  There it sits, with that defect hiding within, just waiting to be installed in a customer’s laundry room or kitchen.

One day, after the appliance was delivered to a customer’s home, the defect made itself known. The washer didn’t wash, the dryer didn’t dry, the refrigerator didn’t refrigerate.

If you read the owner’s manual packed inside a product on your sales floor and turn to the warranty page, you’ll find something like this: “This product includes a one-year limited manufacturer warranty which warrants the product against defects in parts and workmanship.”

 It doesn’t assure the owner that the product will last a long time. It doesn’t promise that it will operate trouble free for years to come. It guarantees one thing and one thing only: that if the manufacturer made a mistake in how the product was built or perhaps used a faulty component, the company will correct it at their expense.  

But unlike this scenario, most failures that occur weeks, months or years later typically have nothing to with manufacturing defects in parts or workmanship, and have everything to do with the customer’s use of the product and a component wearing out. Relying on the manufacturer’s limited warranty to cover the cost of the repair is risky for the owner, since the component isn’t likely to fail within the first year.

On the other hand, an extended service plan is intended to protect the customer from usage-related failures. Your customer will have peace of mind knowing that if the product should fail during the term of the agreement (typically five years), their appliance will be repaired and at no additional cost.

Making sure your shoppers understand the true nature of the limited manufacturer warranty — and providing the option to extend their coverage with a service policy — will result in happy customers, greater profitability for your business and increased earnings for your salespeople.

J.R. Zirkelbach is a business development executive at New Leaf Service Contracts with 30 years’ experience in retail. New Leaf-administered service contracts can provide an enhanced customer experience, earnings opportunities for salespeople and increased profitability for BrandSource members. Contact J.R. at jzirkelbach@newleafsc.net.

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