Is there a small space in the back of your dealership near the service department, filled with piles of paperwork patiently waiting for your warranty claims processor to process them? Don’t be disheartened, this is a common occurrence in most stores. However, it doesn’t have to stay this way. It’s time to take action.
These stacks of paper represent a collection of unredeemed checks. When every other aspect of the dealership has been optimized for speed by leveraging technology — acquiring vehicles, reconditioning them, selling them and repairing them — shouldn’t we also strive to receive faster payment?
Your service department generates revenue from two main sources: customer payments and warranty claims. Warranty claims have been a significant contributor to service revenue for most dealerships, and their importance is expected to increase as new platform vehicles enter the market. However, the existing process for handling warranty claims has proven to be inefficient and costly. Many stores lose 12% of their service gross on the cost of processing warranty claims, not to mention the additional funds tied up while waiting for the warranty administrator to work through the stack.
If that wasn’t reason enough to consider ways to improve, it’s important to note that continuing with the old process may no longer be feasible. The younger generation shows little interest in this type of work, and staffing the claims processing position is already a challenge for many dealerships. Technology has revolutionized various aspects of dealership operations, including sales, service, finance and insurance, and parts businesses. Now, the time has come for the warranty claims processing office to embrace technological advancements.
We spoke with Jim Roche, founder and CEO of WarrCloud Inc., a technology and service solution company that is transforming automotive warranty processing.
To watch the video version of our interview with Jim Roche, click HERE.
“With a challenging vehicle sales environment and upcoming FTC regulations hitting F&I, dealers need to lean more and more on the service department to bolster profit,” Roche says.
“We’ve been tracking the number of human beings that are working at dealerships that do claims processing, and they are on the decline. And the decline is accelerating.” Roche notes that claims processors either retire, depart automotive or leave the workforce altogether, but their positions are not being backfilled by the younger generations.
“We have a problem with people wanting to come into automotive generally, and specifically that particular task,” Roche says. “So, the demand for warranty processing over the next couple of years is increasing at exactly the same time that the human beings that have done it are on the decline. There is a significant scalability problem there.”
Automated claims processing can benefit the dealership in this area as well as will assure that the claims are done correctly and efficiently so the dealership is correctly paid and in a timely manner.
“Warranty processing is essentially the memorization of hundreds, if not thousands of codes that are constantly getting updated and changed,” Roche says. “And those codes determine how much the dealer gets paid. And there’s a lot of complexity to it.”
To see how the WarrCloud system works in dealerships, we spoke to Jake Lebowitz, the managing partner/dealer operator of Raceway KIA of Freehold, Raceway KIA of Conshohocken, Raceway Nissan of Freehold, Allentown KIA, Raceway Chevrolet and Audi Wyoming Valley; and Justin Pomeroy, the vice-president of fixed operations and income development at Foundation Automotive Corporation.
Lebowitz and Pomeroy shared how their dealerships are harnessing the power of cutting-edge technology to reduce warranty processing costs and improve gross profits.
“We are a rapidly growing dealer group,” Lebowitz says of the Raceway dealerships, “and we like to leverage new technology to give us a competitive advantage. Utilizing technology with warranty gives us an infinitely scalable solution at a compelling price point and allows our service leaders to focus on the guest experience instead of administrative tasks.”
“WarrCloud is the only technology platform that I’ve found that automates the very complex area of claims processing,” Lebowitz says.
He notes that making the switch to WarrCloud was an easy one. “We outsourced our warranty claims processing. WarrCloud is not a tool that our people use to process claims, so the implementation is very easy. There’s no equipment to install, no training or certifications that we have to accomplish so it’s a quick and painless process. Additionally, WarrCloud just introduced a mobile app called Chirp that helps our people easily deliver supporting documentation for some claims. It’s a real time saver.”
“We only want the dollars that we’re entitled to per our OEM policies, and we’re very confident that we’re maximizing those dollars while being compliant,” Lebowitz says. “WarrCloud technology knows all the rules and regulations and applies those every time on every claim, so we no longer have to worry about people remembering this or that rule.”
“We were having difficulty finding qualified people to process warranty at a cost that made sense for us,” Pomeroy notes. “Plus we wanted our service leaders to be less involved with administrative tasks and much more customer focused. Since WarrCloud takes over all aspects of warranty processing, it was a perfect fit for our situation.”
Pomeroy says that Foundation Automotive Group has seen many benefits from its partnership with WarrCloud. “What stands out as number one is the increase in warranty revenue. WarrCloud’s technology knows every rule and allowance, so we ensure we recover every dollar that we’re legitimately entitled to, and that adds up to a lot of money. We also don’t have to worry about coming in one day and a warranty admin quit or didn’t show up, and then the warranty claims start to stack up. It’s a great relief that we can focus on customers without worrying about the claims being processed.”
The historical methods for warranty claims processing are not efficient or cost effective. Talented team members are difficult to find, and dealerships should have these superstars on the frontline engaging with customers, not hidden away in an office bogged down by paperwork. After so many areas of the dealership have been tech-enabled, there is now an alternative enabled by technology that can remove the headache of managing warranty claim processing in-house and protect and enhance the vital revenue and profits that come from warranty work.
