Up Your Business is an exclusive GEARS Magazine feature in which I share stories, insights, and reflections about real business and life challenges.
In over 20 years as an arbitrator and mediator, I’ve observed that most customer disputes are somehow related to misunderstandings about warranties. The BBB reports that warranty disputes outnumber almost all other categories by a significant percentage.
Let’s look at an example that was recently discussed on ATRA’s What’s Working forum. For those of you who don’t know about it, ATRA’s What’s Working forum is a free discussion group where ATRA Members celebrate successes, share ideas, express frustrations, seek advice, or just generally commiserate with one another. The topics are limited to non-technical discussions on such things as sales, management, advertising, employee or customer issues, financial, legal matters, etc.
To sign up for the What’s Working forum, go to www.gearsmagazine.com/forums. Shops all across the USA and Canada are realizing better business by focusing on the five recurring traits we discovered all successful shop owners possess. Join the What’s Working forum and be part of what’s working in your industry.
The results we found that really work come from the people that are making it happen in today’s business climate. They are everyday shop owners just like you.
A Seemingly Simple Question
The following post recently appeared on the What’s Working forum:
“Quick question. When do you end a warranty? I have a customer that left a message last night. It’s been four years and over 60,000 miles since overhaul and there appears to be a problem, and he wants to know what I’m going to do about it. His son has it at school and he’s a good customer, but I’m not sure what to offer! Any ideas?”
The nice thing about this question is we’ve all heard it and had to deal with it. The bad thing about it is we’ve all heard it and had to deal with it.
The Discussion
As you might imagine, the members of the forum had plenty of questions, comments, opinions, and advice for the courageous shop owner who made the post. By the way, while I’m keeping the name of the shop owner anonymous, I can assure you that he’s a fine person, runs a quality shop, and has an outstanding reputation.
I found it interesting how quickly some were willing to make recommendations to the shop owner. This was most likely because, as I’ve already said, we’ve all been down this road before.
But let’s not put the “heart before the course.” First, let’s review the questions, both those that were asked and answered, and some that I feel should have been asked.
As an arbitrator, I always needed to know as many of the facts as possible — and to separate the facts from the fairytales — before making a decision. Likewise, I think this is good advice before offering your counsel or opinion, or recommending action to anyone.
Questions and Answers
Here’s a list of questions I’d want to have answered before making an arbitration ruling or complaint resolution recommendation. I’ll include the questions and answers that appeared on the forum as well as those that weren’t asked but should have been.
- Did the customer get a written warranty from you?
Yes. - What are the mileage and time limits on the warranty you gave the customer?
2 years / 24,000 miles. - (Question not asked or answered) Was it an ATRA Golden Rule Warranty?
- (Question not asked or answered) Where is the vehicle now? Assumed to be at an out-of-town shop.
- (Question not asked or answered) What’s wrong with the transmission? Assumed to be a major problem.
- Question not asked or answered) What is the year, make, and model of the vehicle and what is the transmission type?
- How many miles did the rebuilt transmission last?
Over 70,000 miles. - How many miles did the original transmission last?
“Had 115,000 on odo when it came here originally. It went only 70,000 miles after I rebuilt it. He thinks it should have gone 150,000. I usually beat the OE mileage; just didn’t this time.” - (Question asked late in the discussion, but this is one of the first questions I would have asked) What does the customer want you to do?
“He thinks it should have gone 150,000 miles. If I gave him $500 off and a longer warranty he said he might bring it back! I’m having him bring it in and I’ll help him, but I did tell him I couldn’t take $500 off and give him a longer warranty. I think he understands and I’ll let you know where this goes.”
Advice, Suggestions, and Opinions
There are no right or wrong answers in these situations. There’s no handbook or recipe… sometimes you just have to go with your gut. But I think it’s important to consider things like your reputation, word-ofmouth advertising (good and bad), the acquisition cost of getting just one new customer, etc.
Before I share my arbitrator/ mediator recommendation, let’s look at what the forum participants had to offer. I respect all the individuals and their answers, but I’m taking the liberty to provide alternate thoughts for your consideration.
- One shop owner offered this thought: “My rule of thumb… If it’s here, in my shop, ONLY!, I do a “fixit” for $1,000 or so on most any old unit of mine. It’s usually a full build, but it goes a long way for customer satisfaction, and I don’t lose the farm on it.”
- In my opinion, this is certainly a fair solution when you consider the warranty had expired in both time and mileage. Knowing the individual who posted this, I know that his “fixit” term doesn’t mean just do the minimum… he’ll fix it right. I also know that if the customer isn’t happy, he’s not happy, so he’d go further in situations that called for greater flexibility. As he stated, this is his “rule-of-thumb” solution.
- Another shop owner had these thoughts: “You’ve got to also factor in “outside sources” — related parts that can create additional wear. U-joints, mounts, engine endplay, and a host of other things that can shorten the life of even the best transmission. (Even lack of preventive maintenance). If it went 60K and developed problem, it wasn’t because of your repair. Your customer who claims it’s your fault just wants you to share the cost. It only cost him a phone call to ask. Do the same. Call the shop that has the car, find out what they think is wrong and what caused it. Try and work with the shop on behalf of your customer. It’s in your best interest to work with him to get the problem resolved, but it shouldn’t also be your problem to pay for it.
- I think this suggestion is well thought through. Again, knowing the shop owner who posted these thoughts, he is well intentioned.
But I think it might be too much of a leap to dismiss the possibility that some level of financial participation isn’t needed or appropriate. In fact, unless the problem is pinned to some other contributory factor, as he suggested in the first paragraph of his response, a gesture of some kind might go a long way toward restoring the relationship with this “good customer.” Remember, the shop owner, himself said, “I usually beat the OE mileage, just didn’t this time.” If this is top of mind for him to post, who knows? He might have set that bar by making such a statement to the customer when he sold the job.
- How do you feel about this response? “He’s asking you to warrant it longer than the original manufacturer did. I had a longtime customer try to do this to me as well; I offered a 50/50 split but he still didn’t go for it. He was at another shop and they were throwing us under the bus. Some relationships just can’t be salvaged. I concluded that something else caused the failure and he was too embarrassed to bring it to me.”
- I’m glad someone posted this response because I’m quite certain many of you thought similarly, and we can learn a lot from it. The person offering this response appears to be a little defensive. He’s making a recommendation based on something another customer tried to do to him. He’s also made some assumptions that may or may not be true.
This is a perfect example of what I mean when I say it’s necessary to separate the facts of what happened from emotions, or what I call “the stories,” when dealing with customer disputes.Can you separate the facts from the stories involved in this response? Let’s look at each statement. - He’s asking you to warrant it longer than the original. Fact.
- Another customer tried to do this to him. This is just a story or his perspective… not a fact.
- He offered a 50/50 split and the customer rejected it. Fact.
- The car was at another shop. This could be a fact or maybe the customer made it up as his story.
- The other shop was “throwing us under the bus.” This is just a story unless it’s confirmed first hand, by testimony or written affidavit.
- Some relationships just can’t be salvaged. While generally accepted by most people, this is totally a story.
- Something else failed and the customer was too embarrassed to admit it. Do I need to say it? This is absolutely his own story.
My Spin
My answer to the question, “When do you end a warranty?” is you don’t end a warranty. Legally speaking, the warranty document expresses a beginning and an ending in terms of time and mileage, but the lifespan of a warranty can be whatever the parties believe it to be.
When the customer thinks it should be longer than stated, there’s a body of law called the Uniform Code that deals with what’s called a reasonable service life expectancy of a product or service.
The Uniform Commercial Code provides an automatic “implied warranty of merchantability.” That unwritten protection guarantees that consumer products are free of substantial defects and will function properly for a reasonable period. What’s “reasonable” depends on the type of product and the amount you paid.
Clearly, by mutual agreement, a warranty or some aspect of it can be and often is honored far beyond the established limits.
With this in mind, I believe all resolutions of customer disputes about warranties should include a written agreement with some exchange of value between the customer and the shop.
The statement can be as simple as: The shop has performed repairs to the subject vehicle as described on this repair order for the reduced price of $_____. The parties agree that this is in full and complete settlement of all past, present, and future warranty claims related to repairs previously and contemporaneously performed on this vehicle.
IMPORTANT: This is a sample only; always check with your attorney to work out the best wording for your situation.
Finally, I feel the shop owner in this article should have immediately contacted the customer to find out all the details, including what he was hoping the shop owner would do for him. Without that information, how can he do anything but fret about it and make up stories that only feed his fear?
I don’t think he should have negotiated with the customer on the phone or told him what he was or wasn’t willing to do. The first thing he should have done was to reassure the customer that he was going to take care of the matter for him.
Once the vehicle was in the shop, he could determine the extent and cause of the damage. He would then be in a better position to discuss (not negotiate) an acceptable resolution for the customer.
In the end, he should make sure he retains a happy customer and protects his shop with a settlement agreement as I described.
In the next issue, I’ll explain what you need to know and what you can do to protect yourself, your business, and your customers when it comes to warranties.
Share Your Stories
If you’ve personally experienced a weird or unusual customer dispute and wouldn’t mind sharing it to help your industry, please contact me. You just tell me the story and I’ll do all the heavy lifting to write it.
We can make it an article about you, or you may remain anonymous. The main thing is we want to share stories that will help others avoid similar problems. Call me at 480-773-3131 or email me at coachthom@gmail.com.
About the Author
Thom Tschetter has served our industry for nearly four decades as a management and sales educator. He owned a chain of award-winning transmission centers in Washington State for over 25 years.
He calls on over 30 years of experience as a speaker, writer, business consultant, and certified arbitrator for topics for the feature column.
Thom is always eager to help members of our industry and continues to be proactive in pursuing ways to improve your business and your life.
