Implement an Unconditional Warranty to Build Customer Loyalty
By Jay Binkowitz
An unconditional warranty, with a co-payment of $25, increases customer confidence and loyalty. It lets them know that you are providing exceptional support and services–and that yours is the best place to purchase eyewear. Chances are, your competitors are not delivering this level of service, which gives your practice the edge you need to compete.
At American Eye Care, in Astoria, NY, the warranty is prominently displayed.
Make Your Warranty Unconditional
We call our policy The WOW Frame & Lens Warranty, which means even $800 frames chewed up by the dog two times are eligible to be remade for a $25 co-payment.
Patients can use this warranty as often asthey likefor 12 months from the original date of purchase.The only stipulation we give patients is the policy may vary according to insurance, union or vision care plan, or if their vision plan provided the products. The warranty alsodoes not cover loss or theft. We further explain to patients that when they use their warranty, they must returntheir old frames.
We waive the co-paymentfrom time to time. If a patient has spent a lot of money with us, or their entire family comes to us, we will let them know that we are waiving the co-pay of $25 “this time” as a special thank you to them. It is important to have the $25 value for them to understand what you are doing for them. If you just say, “No problem. We’ll take care of it,” they will not understand the value. We will also occasionally extend the warranty when it is appropriate. As you examine the box below (A Case Study), the warranty is more than a break-even for a practice; last year, our practice came out $680 ahead.
In calculating your own ROI, note that laborcould vary from 20 to 40 minutes. Figure 30 minutes at an average pay of $18 per hour, and we arrive at $9 per job, multiplied by the number of jobs.
Warranty Bottom Line: A Case Study
WOW Warranties in 2010
173
Co-pay waived
22 lens only
Revenues
151@$25: $3,775
Shipping costs
173@$6: $1,038
Labor costs
173@$9: $1,557
COG
2 frames & lenses not covered by vendors:<$500
Total costs: $3,095
Net profit: $680
Use the Terminology of Co-Payment
We are not selling them the warranty. It is a free warranty. We use the terminology of co-payment because patients understand they are entitled to a “free” exam, but have a co-payment. It is the same with their warranty. We don’t want to tell them they are paying shipping or lab fees since these costs are our problem, not theirs. They only pay the co-payment when they use it. This is a great gate keeperthat establishes value while ensuringthepolicy isnot abused.
I do not support 24-month warranties. Offering a patient a one-time service in 24 months, or in some cases more often, does not provide exceptional customer service–even if the labs or frame companies give you flexibly to do it. There is no benefit to us to make a new pair of glasses in 23 months and see a patient once in four years.
The most important rule of thumb with customer service initiatives is not to punish 99 percent of your patients because of the 1 percent that may take advantage ofyou, whether or not the companies will give you credit. Don’tcreate rules and policies that abuse all of your patients because of a few.
Treat Patients as Consumers
We instituted the WOW warranty over 10 years ago. It has been an incredible success for us, both as a customer service initiative and as a revenue model. Frame warranties are more important than ever. With the onslaught of availability from purchasing eyewear online and the consistent pressure from low-end retailers, we have to carve out a value that far exceeds our patient expectations. We need to remember that once a patient walks over the threshold from our examination rooms they become consumers. And we have to make sure we communicate this value by incorporating a scripted model for our staff and support materials for the consumers. We have to engage a more well rounded culture to support outstanding customer service.
ROI Is Increased Customer Loyalty
Talk the Talk
Your staff should discuss the warranty at the initial sale and at the dispensing. It must be done both times. My staff has “fun buttons” with the picture of a dog chewing on the glasses that says “No Problem.”
Protect your Investment
“You have invested $400 in a great pair of glasses. We want to protect your investment. We will repair or replace your glasses at any time for any reason for 12 months. Even if the dog eats them! No matter what happens to yourglasses, we will replace them with a $25 co-payment. You only pay the co-payment if you use the warranty.
Our Exceptional Customer Service
“We believe our unconditional warranty separates us from everybody else. It supports the exceptional customer service we guarantee you. We want you to know we stand by the products we sell, and that we respect your investment.”
Never use your lab or frame company as an excuse for not providing a liberal warranty policy. We replace frames evenin the rare cases when our lab or frame vendorsdon’tcover replacements. The co-payments we collect cover the occasional lab or frame vendor replacement fees.You can easily keep track of the co-payments collected, but your warranty ROI should be measured as a customer serviceand marketing initiative.We need to protect the investment consumers make when we provide products and services.
Jay Binkowitz is the President & CEO of GPN, exclusive provider of The EDGE. During the last 30 years he has had extensive experience in retail operations, merchandisingand marketing, manufacturingand distribution, technology development, national sales and on-site interactive consulting. For more information:www.gatewaypn.com. Contact him at: jay.gpn@gmail.com
