Stuck in the Middle

June 19, 2006


By: Matt Michel


A week ago, the CPU fan on my laptop quit. I took it to Richards Computer, the local Toshiba warranty repair shop. From conversations with the guys at Richards, I gather that they wish Toshiba would pay more for warranty work. I’ve heard that song before. However, in Richards’ case it’s probably more irritating since they service products they didn’t sell. For example, I bought my laptop from the Toshiba website.

Richards didn’t make a dime on the sale of my laptop and the manufacturer pays them less for warranty repairs than they get for non-warranty work. In short, they’re stuck in the middle between the manufacturer and the consumer.

Money Talks
Richards’ solution is simple. First, if someone is paying full rate, he gets priority over warranty work. If a warranty customer doesn’t like that, they have a solution.

Warranty customers can pay $39 for 2 to 3 day service. Pay $100, and a warranty customer can move to the top of the list, receiving service while waiting, provided the parts are in stock. If a warranty customer is paying for priority service, Richards will pull strings and expedite the parts.

To encourage people to buy from them, they waive the priority service charges for units they sell.

It’s a simple solution and it works. It can work for warranty work in a host of service industries. Simply prioritize calls and give people the option to pay to move up.

Stuck In The Middle Again
When I picked up my laptop, I dropped off my daughter’s. It had a minor screen problem that didn’t bother her enough to mention. The laptop was two months out of warranty and this was going to be expensive to fix. Richards extricated themselves by providing me with an 800# to call. They coached me on what to say to the Toshiba rep. In other words, they positioned themselves as someone on my side trying to help me with the big, impersonal manufacturer.

A Smart Manufacturer
When I called Toshiba, they informed me that the computer was only one month out of warranty. I wasn’t about to argue. To their credit, they made a one-time authorization to replace the screen under warranty.

Two things are noteworthy. First, I’ve learned that Toshiba apparently tacks on an extra month’s grace period to their warranties. A 12-month warranty is really 13-months. This covers people who wait until the last minute and miss the date. No one gets mad because they’re one day or one week out.

Second, by authorizing the replacement of the screen under warranty, Toshiba purchased my loyalty. I did mention to the rep knew we had four Toshiba laptops in our home and more at my office. However, they couldn’t know if I was telling the truth or not. By giving the customer the benefit of the doubt, they earned brand loyalty in a commodity market. In fact, I had the opposite experience with IBM and haven’t purchased anything from big blue since.

Lessons
1. If you’re stuck in the middle and not receiving enough payments for warranty work, prioritize your service, but give people the option to pay to move up in the queue.

2. Include priority service for people who buy from you. It might be that you only include priority service for people who buy the product and a maintenance agreement. Regardless, free priority service is a relatively low cost way to encourage sales from your company.

3. If you are offering warranties, tack on a small grace period. Don’t tell the customer or you will lose the benefit.

4. If you are only a little past the warranty period, cover it anyway to build future loyalty.

5. If you are stuck in the middle between the customer and what a manufacturer is willing to authorize, extricate yourself by giving the customer an 800# and coaching the customer. If the answer to a request is going to be “no,” let the manufacturer deliver the news to the consumer. You aren’t the heavy. Don’t allow yourself to play the heavy’s role.


Source: Comanche Marketing. Reprinted by permission.
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Copyright © 2004 Matt Michel

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