Goodwill-A Delicate Balance

Goodwill presents OEMs with significant opportunities for addressing problems that have the potential to cause customer dissatisfaction. Stories about major product failures occurring at the exact time of warranty expiration are the stuff of urban legend. The telling and re-telling of such stories can cause a downward spiral in future product sales. Also, products that repeatedly fail within the limited warranty, and then continue to fail after the warranty expires can project an image of bad engineering or poor quality. If these failures are considered unsolvable, they can cast a shadow over all the company's products, with the threat of customer boycotts in the future.

When Warranty is managed well, customers are confident in the reliability and quality of the product. Goodwill can add to this confidence by avoiding troublesome situations on the edge of the warranty boundaries.

When goodwill is managed poorly, it creates an environment where fraud can flourish and the number of claims can soar. In many cases, it is easier to process a goodwill claim than to face an angry or disgruntled customer. But mismanaged goodwill can also create a string of calls up and down the management hierarchy with no final resolution.

How does one effectively manage a Goodwill Process? 

It starts with a separate designation of all goodwill activities. Any claims submitted as part of the goodwill process must be categorized to assist with claim response and analysis. Typically these claims contain valid feedback on problems and must be addressed faster than standard warranty claims. Establishing separate categories allows the creation of special rules, workflows, queues and approval levels to streamline the processing of these claims.

Next, you need to create a plan with policies, budget and approval levels for each of the people in the approval hierarchy. There should never be a question of who can approve how much and for what. Goodwill claims should also have a defined path for processing, with a corresponding ascending level of authority. And Goodwill claims should also be governed by escalation rules to ensure they are processed within the allotted time.

Finally, you need a predefined course of analysis. Goodwill claims are highly susceptible to customer pressures and the risk of fraud. A program of special reports must be in place to quickly identify repetitive occurrences and recurring stakeholders. This information must be in the hands of each member of the approval chain at the moment of approval decision.

With an established goodwill process that manages claim categorization, approval, and analysis, OEMs can skillfully maintain the balance between customer satisfaction and product profitability.