Quality of Service Determines Warranty Labor Rates.

There is a new trend in the warranty arena when it comes to seeking a warranty labor rate increase from some manufacturers. The consumer now has a say in whether or not you get that increase. More than one manufacturer is making a direct link between labor rate increase and the score a consumer gives on the quality of service (QOS) survey that they receive after a warranty service experience.
It wasn’t long ago some manufacturers could be heard saying “we can’t give you that raise; you’re already paid more than anyone else in town.” After years of teaching ourselves how to calculate and communicate our true cost of doing business to manufacturers they couldn’t use that excuse any longer. It’s almost as if manufacturers had to come up with a new angle to fight the ever rising cost of providing in home warranty service. But to ignore that service companies are faced with rising costs every day is just not acceptable. Manufacturers know firsthand about rising costs as they too are faced with the same increases that the independent service provider is every day. In manufacturing when costs exceed the ability to meet profit expectations then product prices are increased accordingly. Why shouldn’t labor rates follow suit?
Studies show that if a consumer has a positive warranty service experience they’re more likely to buy or recommend that brand in the future. A quality service experience is also necessary to ensure you get that customer to call you back when the product fails outside the warranty period. Most independent service companies regularly go out of their way to provide the best quality and professional service possible. If they haven’t they shouldn’t expect to be warranty authorized in the first place. Recommendations for your service shouldn’t be expected but earned.
The problem here is that QOS surveys being used today are flawed for several reasons. For manufacturers to make a direct connection between consumer satisfaction and labor rates that offset rising operational costs is unfair. The QOS survey not only rates the service experience but also the consumers satisfaction with the appliance they purchased that failed during the first year. If a consumer is not satisfied with the value they received for their money spent they’re not going to necessarily give the service company a fair grade. If you’re the preferred service company in your town and are constantly called in to correct or complete a service that was started by an incompetent company you’re bound to get a bad rating from that consumer as they have not had quality service to begin with. Often the performance of a service company is affected by back ordered parts or product improvement kits, actions that are out of the service provider’s control. Survey response rates from consumers are less than 2%, not a sizeable measure. Certainly not one I want my labor rates based on.
The concept here is a good one to ensure that warranty service providers are providing the level of service that consumers demand and that manufacturers are spending their money to regain consumer satisfaction and brand loyalty. But much work is needed to update the survey process to target the quality of service not brand satisfaction and to do so in a timely manner.
I often wonder how the independent service company compares to factory service when it comes to QOS but manufacturers are not willing to share those statistics freely.
As I’ve said in the past and I’ll say it again if an activity you’re doing isn’t profitable you shouldn’t be doing it. If warranty service for a certain brand is not paying you enough to cover your costs and make a profit then stop doing it. There are so many other more profitable services that you could be doing for your customers.