Harnessing the Capabilities of Warranty Analytics to Increase Profits and Minimize Costs

The global economic recession has caused a great impact on the establishments across all industries, and as a result, the businesses are looking forward to ways for improving their bottom-line results. The automobile industry has not been spared from this situation.

The Challenges Encountered in Warranty Management

As far as the warranty management scenario is concerned, tracing fraudulent claims, improving customer satisfaction, and handling costs, are some of the major concerns for organizations that are serving in the warranty management segment. Around 70% of the warranty expenses are incurred from the repeated failures which occur in the performance of parts. Recognizing the primary cause of such failures is the biggest challenge faced by businesses today.

As per a Warranty Week report published in the October 2017 issue, the warranty expenses of the manufacturing companies come to around 1.5% to 3.5% of their total revenue. Hence, even a minor reduction in the amount which is paid towards claims can bring about an enormous impact on the bottom line of a particular organization. Apart from these direct costs, there are also indirect costs caused by the product defects which remain undetected. This can affect the safety and trust of the customers, thereby causing a detrimental impact on the brand image of the concerned manufacturer. In fact, the manufacturers are looking out for ways to cut their expenses incurred from illegitimate/fraudulent claims, recover more from suppliers, minimize warranty costs, and detect defects as fast as possible.

How can the Businesses Flourish in Such an Environment?

Bringing warranty analytics to the picture seems to be the only solution. In fact, a robust warranty analytics solution is required in order to convert raw data into an actionable plan, so as to achieve the best results. Further, many successful enterprises have leveraged on the capabilities of warranty analytics to increase revenue and augment customer satisfaction.

Analytics involves the usage of statistical tools to transform raw data into practical business solutions. It includes a predictive technique to assess future trends and upgrade the current processes. The insights thus achieved brings in value to all the key segments of a business such as product quality, customer management, and process enhancement.

Further, the analytics solutions offer a minuscular view into the core business operations, apart from offering statistical features, forecasts for arriving at the right business decisions, and predictive analysis. Moreover, it helps to evaluate the gaps and analyze the root cause that hinders the entire process. In fact, identifying the root cause enables the companies to decide on the best course of action. It also helps enterprises to improve the allocation of resources and stay focused on key strategic operations.

Understanding the Key Benefits of Warranty Analytics

Today, many companies offer warranty data analytics solutions like text mining, data mining, cluster analysis, social media analytics, etc. to deal with the complex nature of data generated by digital companies. In fact, this equips the companies to recognize trends, anomalies, and patterns concerned with their warranty data. This approach helps the manufacturing companies to identify claim fraud and react accordingly with suitable measures, thereby facilitating practical solutions for unanticipated circumstances. The good news is that the manufacturers can reduce their warranty costs by up to 20% by moving in this direction.

Here are some of the benefits brought about by warranty data analytics:

• Classifies and analyzes claims based upon aspects like a dealer, make, component, vendor, geographical area, root cause, etc.
• Facilitates real-time reporting of primary business metrics
• Detects fraud by observing typical behavior using the latest analytical algorithms
• Divides claims into suspicious, genuine, and fraudulent sections
• Analyzes individual data parameters using data analysis tools which are configurable
• Reduces loss of revenue by minimizing the total number of claims
• Boosts customer satisfaction by means of better quality, safety, and reliability of vehicles and processes
• Unveils valuable insights to enhance warranty performance

To summarize, warranty analytics acts as a crucial factor to accomplish business goals. A good warranty analytics strategy includes the right kind of techniques for analyzing data plus a good IT system that supports database linking and data collection across various departments.