Studies Verifying the Benefits of Product Warranty Registration Incentives

1. National Warranty and Claim Company Case Study

  1. A fully automated registration leads to a 24% savings from a registration with a live customer care representative.

2. World HVAC equipment demand to reach $120 billion

  1. Global demand for HVAC equipment is forecast to increase 5.7% annually to $120 billion in 2018.
  2. Growth will be driven by an expansion of reliable energy sources and increases in income levels in China, India, and other developing countries, making HVAC equipment more accessible to a larger number of consumers.
  3. The Asia/Pacific region was the largest market for HVAC equipment in 2013, with 54% of the global total.
  4. Growth will be driven in large part by China, which will account for one-third of world sales in 2018.
  5. On a regional basis, North America is projected to achieve the most rapid gains through 2018, with HVAC equipment sales forecast to increase 6.8% per year from a low 2013 base.

3. Product Registration: The Foundation of Customer Relationships

  1. “Product registration is the first step in understanding our customers, and knowing our customers, specifically what products they have purchased, is important to customer retention. We can build more robots, but we can’t manufacture more customers. Customer retention is absolutely critical.”—Maryellen Abreu, director of global technical support, iRobot
  2. A powerful platform for optimizing phone, email, product registration and web communication with customers, Nikon’s new service system allows contact center staff to view customers’ complete service histories across all contact points…This ensured effective, personalized support and improved responsiveness to customers while the company’s unit sales volume increased substantially. To make this achievement more remarkable, department headcount remained flat for two years while productivity increased substantially.

4. Why a Smarter Warranty Registration Process is the Key to Better Customer Marketing Data

  1. Less than 10 percent of customers fill out warranty registration cards

5. Addressing Common Business Challenges Associated with Manufacturer Warranties

  1. Despite warranties’ obvious consumer appeal, they do add significantly to product pricing and pose accounting and cost estimation challenges. For example, in the automotive sector, warranty costs as a percentage of sales typically run between two and three percent.
  2. In low margin industries, warranty costs can easily surpass 25% of income.
  3. Tracking claims frequency by part and service provider may help a company identify “high frequency” servicers and aid in future loss mitigation efforts.
  4. iv. Claim information provides a means for tracking warranty performance and may include mileage, time in-service, labor code, part code, labor cost, part cost, transaction code, repair location, etc. This information is valuable both for tracking costs and for understanding the dynamics of cost emergence. For example, understanding which vehicle models “mileage out” rather than “time out” of warranty coverage may support the use of different modelling techniques or cost estimators for different makes and models.

4. Warranty Registrations

  1. The product warranty registration process suffers an abysmally low response rate because customers either couldn’t be bothered or they legitimately fear for their privacy. The familiar postcard-in-the-box format usually gets a 1% or 2% response rate, even when the significant hurdle of making the customer find stamps for the postcard is overcome with a prepaid business reply mail postage arrangement. The online format gets response rates in the 5% to 10% range, but that’s hardly much better considering the non-response rate is still in the range of 90% to 95%.
  2. Product warranty registration Web pages are a more recent development. The optimists would say they produced a five-fold increase in response rates, from 1% to 5%, or from 2% to 10%. The pessimists would note that this means nine out of ten customers still can’t be bothered, even when they don’t have to walk to a mailbox or lick a stamp.