For years I have worked alongside, and relied upon, service networks and independent service centers. It is a fact that without people and organizations to repair consumer electronics, computer products, major appliances, lawn and garden products, tools, furniture, automobiles, rv’s, and a host of other consumer products manufacturers, retailers and consumers would have a far different relationship. It should also be noted that without the service side of things the entire extended service industry would not exist. That is a fact.
I bring this up because recently I was contacted by a long time friend and acquaintance to see what I could do to help him and his industry put together an extended warranty program that will enable them to offer their own plans because many of the TPA’s are ruining his industry. Eloy is a member of the PSOC. Here is the link to his group. www.psoca.org. Apparently it is now the norm to try and negotiate such low flat rates and pay such a small mark up for parts that the professional service centers can not afford to do the work. I believe when it comes to service that you truly get what you pay for and that can have a plethora of meanings. I will explore this subject for the next few blogs, but in the interim, if you are a TPA, please read this and think, is this what you want? Is there another way to be profitable? It seems you are forcing your service network to consider starting their own warranty program, setting up marketing and sales and competing with you. Careful.
I copied this from the latest PSOC newsletter.
EXTENDED WARRANTY COMPANIES
Third Party Administrators or Extended Warranty Companies.
Recently I have heard a lot of Servicers complain that they are being "screwed" by TPA's. I want to address this issue in the best way I can. TPA's used to give Servicers a reasonable rate plus a parts markup. This changed several years ago when one company decided to cut their costs and increase their profit margin. (assumption on the latter) Many other TPA's followed that lead and started offering the same low labor rates and no parts markup, and either told you where to buy the parts, or sent the parts to you with no parts markup. The end result is poor quality customer service. Servicers who do not know their cost of doing business sign these contracts and slowly die on the vine.
Now are you being "screwed" ? The answer is no. You are only being "screwed" if you let yourself and your company be "screwed" by accepting this kind of business. Simply and nicely just say no to these companies. In most cases it's below your cost of doing business or right at it.
What can we do to try and better the industry and bring back business relationships that we once had?
We need to educate our competitors and members in KNOWING WHAT THEIR COST OF DOING BUSINESS IS. I encourage all members to try and recruit our competitors to the association so that they can learn how to run a business and to know what their cost of doing business is. By doing this we will have far fewer companies accepting contracts from TPA's with substandard rates.
A simple equation for me is Fair labor rates + a reasonable parts markup ='s quality work at an affordable price, making a fair profit and my company staying in business.
Learn to say NO thank you!
I hope this helps.
Tim Ory
Paul's Certified Appliance