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Joined: 02 May 2012
Posts: 108

Kudos [?]: 74 [0], given: 34

Location: United Kingdom
WE: Account Management (Other)
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New post 03 Nov 2012, 09:58
"We are spending too much on free customer service after a sale has been made; we need to limit our warranty to two years in order to improve our profit margins. The current lifetime warranty can lead to costs decades into a product's life cycle. Also, we pay our customer service employees a premium because they must possess expert skills across the entirety of our very diverse product line, including products we no longer sell."

The author in this argument states that his or her company is offer a warranty that is excessive and should be limited to two years. Stated in this way, the argument fails to take into account many relevant facts, does not acknowledge that there may be alternative ways of offering a two year warranty and fails to balance the drawbacks of offering such a warranty with its benefits. In this manner, the argument relies on assumptions for which there are no clear evidence. Hence, the argument is weak and has several major flaws.

Firstly, the author assumes that the lifetime warranty offers no commercial benefit to the company. It may be that a lifetime warranty differentiates this product from others in the market, leading consumers to prefer this product over other similar products. Therefore, while the warranty may certainly be costly, overall it may drive profits to the company. Furthermore, customers may have a positive experience utilising the lifetime warranty and therefore become repeat customers for some of the companies other products.

Secondly, the author assumes that the current lifetime warranty model is the only viable way of offering a lifetime warranty and goes on to assume that the company therefore must limit its warranties to two years. The author has failed to acknowledge alternative models for offering this service that may reduce the cost to the company whilst still delivering the same warranty to its customers. Such an alternative might be to have product specialist, rather than paying a premium to product generalists. Under this model, the company may reduce its costs while still offering the same service.

Finally, the author has failed to recognise that there may be other benefits to offering a lifetime warranty such as utilising the time a customer spends with a product specialist to upsell the companies other products or keep the customer informed of product developments. These fringe benefits may increase sales long term and by limiting the time spent with customer services emploees, the company is limiting its opportunity to increase sales.

Without addressing these assumptions and shortcomings, the argument remains weak and relies on unfounded assumptions. It could be considerably strengthened by demonstrating that there are no other viable warranty models which can deliver a lifetime warranty and that by limiting such a warranty, the company will not loss revenue or product reputation. Without this information, the product remains unsubstantiated and open to debate.

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Kudos [?]: 74 [0], given: 34

Rate me!   [#permalink] 03 Nov 2012, 09:58
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