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Warranty Outsourcing

PostPosted: Fri Jul 24, 2009 12:38 am
by Gone Fishing
Has anyone here worked for a warranty processing company or had to deal with them in anyway? I'm keen to find out what you think of them? Would you work for one? What are the pros and cons of them? I'm thinking of starting a service here in Australia and New Zealand.

Warranty Outsourcing

PostPosted: Fri Jul 24, 2009 7:44 am
by jimmuntz
I can answer with personal, albeit ancient experience. When I was a lot younger, in the late 70s I ran a warranty processing company for about 6 or 7 years. Its a tough business. We decided to go a different route, and I know of others that have stayed the course so I am sure you will find differing opinions.

But heres my take-

A claim processing service will probably never become the dominant way to process claims inside a dealership. For the past 50 years or so, the vast majority of dealerships handle this as an inside administrative task. As such, you will always be nibbling away at the edges.

In economic down turns we found that we were often the first candidate of things to get rid of when the cost cutting became serious. And its hard to argue with, the dealership is looking for a way to keep their employees on the payroll and you will represent a task that other dealers achieve with the in-store work force.

Having highly-trained people to perform the task is a must. This too is problematic in down turns. My recollection was that I was always looking for new talent when times were good then tended to hold on to them when things went south - fearing that business would pick up and I would need them. It was very difficult keeping the staff properly balanced for the amount of work coming through the door. It always was difficult to let someone go, especially since I knew that sooner or later I would need them again, but would have to settle for someone untrained.

But- that does not mean you cant make it work. My comments are a bit of a downer and that is more than likely influenced by my experience. Like I indicated earlier, those who have done this sort of work for decades are likely to have an entirely different take.

Warranty Outsourcing

PostPosted: Fri Jul 24, 2009 1:36 pm
by robc
I'll add to Jim's comments by saying (1) I agree with everything he said and (2) there are two different levels of claim processors.

One, is the one man operation that finds enough local work to be a hired gun for small stores and a stop gap for larger stores when they need temporary help. The problem with this is in the states are small stores are dying very quickly and larger stores have back-up plans. The upside is there are few start-up costs. If you are friends with a few factory reps you likely can find enough work to do ok. Since you are visiting the stores you don't have computer/equipment costs.

Two, is the multi-person warranty processing house. Here in the states there are already very competent companies out there fighting it out for the available work. The market place is well served. Second, it takes a substantial investment in equipment and understanding to be able to process claims for every manufacturer on every possible dealer system. There isn't enough work in a single make to earn more than you would working in a dealership.

That being said if you're dead set on making a go of it, for just a plane ticket to Australia with a small stop over in New Zealand and small fee I'd be happy to come out and set the whole thing for you

** Rob Campbell, Contributing Editor for DealersEdge **