Warranty Wise

Back from another Trip

So funny. I just got back from another trip and what voice mail did I get, “hey man are you ever home?  All I ever read in your blog is you are going somewhere like Vegas or New York or Bike riding in the Sierras?  Yes, you may have noticed that I took a little vacation….Bike pedals worked just fine…..

While I was away, I stayed in touch with my contacts asking about a plethora of positions on insurance and underwriting for the bike industry….what a challenge….it seems that if we want to sell accidental damage there may be a challenge unless it is sold as an augmentation to a service plan or replacement plan.  If we want to sell maintenance there is not a challenge.  We can take the approach of having the customer join a bike repair membership program that if the part of the bike breaks the part or the entire bike will be replaced for free as long as they understand that they replacement part or bike belongs to the membership, not them……then we have to ask, what do we do about consumables like tires and things like intertubes?

What a trip…what to do….

Here is what I think.

IBD’s, (Independent Bike Dealers) need to offer maintenance….they need to offer it all.  Big retailers should offer the same plans they offer on Consumer Electronics, but with two options, either with or without consumables coverages…..

I’ll be getting going on pricing now so if you want anything else added in chime in soon.  There are 15 million bikes sold each year in the USA alone.....Think we can tap into this?

My Pedal Broke last weekend

Talk about timing.  I was in Tahoe this last weekend for three days of downhill rides. One at Downieville, CA (a 17 mile downhill rippin ride), another at Hole in the Ground near Donner Pass, CA, (a gorgeous ride in a beautiful canyon all over granite with Sierra vistas) and the other called Mr. Toads on the South Shore of Lake Tahoe, CA, where we rode from Oneidas road at 6500 feet elevation up 8 miles to Armstrong pass at 8800 feet, hung a right and rode up another 2 miles up 600 feet along the Tahoe Rim trail before we descended down the famous Mr Toads Wild Ride and Saxton Creek back to Oneidas, (down granite waterfall, natural and man made stairs, and gnarly banked sweeping turns).  Wow doesn’t even come close…Awesome…..

Guess what. A pin and a spring of my Time pedals broke and disappeared.  Fortunately I discovered it before I ascended. The good news was there was a bike store nearby.  The bad news is they did not have the pin and spring I needed to repair the pedal.  I had to buy a new set.  My direct replacement was $199.99.  I only had a C Note so I had to buy the lower end model.

What would have happened if I had a replacement plan with accidental damage?  I could have called and got authorization for replacement, got the better pedals and have been in good shape….Did my bike store offer me a comprehensive replacement plan?  No.  Did the selling bike store offer me a pedal replacement plan?  No…

The bike industry is begging for our industry to help out.  This industry does $16B a year….

No Visible Bike Warranty Programs at Interbike

We attended Interbike this week… www.interbike.com

Fantastic show….Exciting show….lots of flashy carbon fiber racing bikes….new lighter versions of our favorite mountain bikes…tremendous electric bike selections…..hosts of other versions of things on wheels….most noticeably to me besides the e-bikes was the attention to the women’s market. This industry seems to have taken notice and is spending a lot of money to relate and serve the female industry…Smart.

What was missing was a focus on customer service programs and warranty programs…There is a huge opportunity here….I did not see booths with warranties, service center advisors, software for service, pretty much nothing in this regard.  When I ask myself why, the only answer I can come up with is that the industry is focused mostly on the independents and they make their money doing service and repair…..Even some big boys like Sports Authority and REI do their own service, but nevertheless, why has this not been developed and marketed in a big way? Maybe everyone assumes that bikes can be fixed by consumers?  This can’t be.

Why are there no replacement plans for the big retailers that do not do service?

Why are there no service plans for people that are traveling with their bikes and need a reputable service center?  Who manages this network?

Why are there no maintenance agreements for people out there to offer or buy?

I think I may take this bike opportunity for a ride…anyone want to tandem with me?

Programs for Bikes

I am at Interbike today and tomorrow.   www.intebike.com

Last year I did not notice a single extended warranty player there…..

If I was an IBD, (Independent Bike Dealer) it would make sense to offer an annual tune up or some kind of maintenance agreement for every bike I sold….Especially in the light that electric units are taking off….That would keep my bikes sold and get customers visiting more often for sure. Even if I was not an IBD and was a major retailer, this still holds true….

I’ll check today as to what I find out and report back in as to the state of the 15 million units per annum industry!

Drafting a Warranty, ESP or Maintenance Program Business Plan

• P&L’s
• Cash Flow and Balance Sheet
• Revs and Forecasts
• Ops
• Insurance
• G&A
• S&M
• Summaries and Recaps
• Etc.

All this stuff has to be  looked at.  Most importantly though:

Are you offering a warranty you should if you are looking at an OEM program? Does it give the purchasers confidence to buy your product?

Are you offering a warranty that people want to buy if you are offering an extended warranty program? Is it the right coverage at the right price?

Are you offering a maintenance program that insures the business or consumer you are serving can keep on operating?

Yes, you should not be in the business if it doesn’t pencil out so drafting a business plan and in depth financials are important, but why bother penciling it out if your programs won’t sell…

What is your vision to make your warranty program a benefit and how will you differentiate yourself from your competition?  What will it look like?

Warranty programs can be powerful….This is where you want to start before you can even put a pencil to the paper with financials.

This month, we will be taking a closer look at some great ideas and what financial questions have to be asked to make them work….

Guarantee = Commitment

In Warranty Week this week http://www.warrantyweek.com/  there is a discussion about the blurring of Warranty and Insurance.  Simply put, warranty is generally thought of as protections against defects or failures and insurance as protections against damages or accidents.  I think that is pretty universally understood though most customers will try and bend it to work in their favor which is also universally understood….that is why God made fine print!  Just kidding.

Here are a couple of words that should not be misinterpreted by those that use them….Guarantee and Commitment.  When one stands behind their word with a guarantee or a commitment, there better be no difference.

If a customer is told you will guarantee anything for any period of time, you are committed….End of story.  They have to be able to trust you….. If you start to put exceptions that “protect” you from standing behind your word, you have lost credibility and there is no fine print or incident that will let you regain that trust.

I guarantee it.