0 Warranties and Guarantees

Warranties and Guarantees - Are they worth the paper they are printed on?

DuncanMcGilvray.jpgIt is my intention, over the course of this article, to give everyone as much information as possible regarding what warranties and guarantees are, why they were, and still are, used to great effect in most industries and professions, so that you can make judgements of your own regarding their worth.

The concept

Although they sound rather legal, upmarket and friendly all at the same time (no mean feat on its own) and a bit like an insurance policy if things go wrong. In fact, it comes over as much better than that as it is sold as free. Warranties and guarantees were really brought in as selling tool.

If you think about it, when you buy something, you are taking a chance that it will work or do what the person selling it says it will do - from small pieces of gardening machinery through to all types of large expensive cutting equipment to complicated IT technology right up to large contracts where there is a need for you to bring in contractors to fulfil a large project.

It is known by the seller that, if potential buyers are sure of what they are getting and it will do what the buyer wants, the seller will be pretty confident in the sale. The promise of a warranty or guarantee on a product is, therefore, a very powerful selling tool and does that very well. We are assured and, therefore, more comfortable on what the seller is selling.

So, does it work?

Well, it must do because they have been around for a very long time and we are not that gullible. So, yes, they do work.

What we do have to be careful of is how they are being used in a given situation and the true worth of what is on offer. A guarantee may not cost in specific terms but could cost a lot in time wasted and customers becoming frustrated and disillusioned.

The real world

Here's a real incident which happened to me concerning a warranty - and I thought I was a great buyer who never made mistakes (you certainly learn that no-one can be that good!).

I spent most of my professional career as a golf course manager with responsibilities for large budgets and answerable to accountants who were, in the main, trying to achieve what I was trying to achieve - a great golf course in the most cost effective way possible, so that our customers could have a great experience and feel it was worth the cost.

So, keeping that in mind you will understand there is great pressure put on you to do just that - provide the goods!

Some time ago then we purchased a sparkling new golf greens triple mower. We went through all the processes to ensure we were purchasing the right machine for the job - trials on the course, all staff taking part, and we even did a points scoring system on the four machines we trialled.

The machine we bought came top of our scoring system table and, because it had a three year guarantee, we could not go wrong - utter nonsense!
Not very long after it arrived we found out it would not last twenty greens without breaking down. The local dealer was very helpful but that does not matter even if a fitter comes out within a few hours. If a piece of equipment breaks down, the job is not completed in the timescale set, so unhappy staff and, moreover, very unhappy customers.

Following many conversations and heated discussions with the manufacturer over a long period of time, and all the time experiencing breakdown after breakdown, they offered an extra two year guarantee and also offered to service the equipment free of charge for the same period. Wow, I hear you say - what an offer!

It may not have cost us anything in maintenance and servicing over a five year period, but the machine could not do the work it was designed to do and, if it cannot do that, no amount of guarantee is going to fix it.

So, warranties and guarantees, though making you feel more secure, may not be all they are cracked up to be.

It was a very difficult time for the dealer too as, through no fault of their own, they had to be called out continuously to try to fix the unfixable, and I am certain they were not fully reimbursed for their trouble! A few situations like that can put a good company out of business.

I am certain, in hindsight, that we should have done more homework before making the final decision to purchase. It was a new model in the range and not tried and tested over time.

We did contact previous users, as every purchaser should always do, but they were using older models which were much more reliable, so our research was simply not good enough.

But, no matter what we did wrong, we would never entertain any equipment from that manufacturer again - an instance when a guarantee worked in a very negative way. I have been somewhat wary of them since that time, as a buyer at least!

Looking at warranties and guarantees as a seller

As some of you may know, I now work on, what is laughingly described as, "the dark side" where our company serves and sells to you as customers.
We now look at warranties and guarantees in a more positive light - well, we would do, wouldn't we? It's a very strong selling tool and we would be stupid to ignore it!

However, what we must not do, as a company, is get into a situation, which I described previously, or our business would no survive.

When I was considering working for a Japanese company I found out about the Japanese 'guarantee for life' philosophy which is, indeed, what it says. In this instance they constructed a golf course and guaranteed it for life! A phenomenal promise and, as far as I am aware, they are still in business and thriving.

In this case the company makes absolutely sure that what it does is right first time and, if there are any problems, it fixes them immediately, without argument. The proof that it works comes from the success of the company. It could not survive if it had to continually return to a previous construction to fix problems.

The company is confident in what it does and stands by the quality of the products and workmanship which it uses.

Summary

So, in summary, have we learned anything?

1. Should we be looking for a warranty or a guarantee of quality on workmanship and product before we decide to buy?
2. If we are offered a warranty or guarantee is it the main reason for purchasing from that company?

In my experience the answer to 1 is definitely yes - even going through what I had gone through.

And to 2, I would also say yes. If a company offers a warranty or guarantee it is a way of saying "we are confident in what we do and we don't mind saying so".

What buyers must do, however, is research the company, ask them for the names and contact details of present and previous customers to ensure what you buy is not something you will regret.

Prelude - the financial situation and staying positive

I have had quite a direct response from my previous article regarding the reluctance to accept the financial downturn. Thank you all for your positive feedback!

Many of our customers had large projects in mind to improve their golf courses and sports grounds and, because of restrictions in budgets, cannot move forward which is very disheartening. We are a very proud profession which, in some ways, does not do us any favours (we hide the problems and make do and mend).

A better way is to call in the company which was earmarked for your project purchase and ask them what they can do to help you get what you want - you may not get it as quickly as was first thought but, with their help, you will get there in the end.

If you fix things, rather than working to a well thought out plan for replacement, you are just throwing good money away and nobody can agree with that, particularly your employers.

At this time employers are looking for help to maintain and increase standards without increased costs and/or money wasted. There are always solutions to problems if you make the effort.

Working to a budget plan for the future may just come out cheaper than repairing what you have - it is worth looking at, at least!

Duncan McGilvray
Managing Director,
Enviropro H2O Ltd
duncan.mcgilvray@enviroproh2o.com

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