Claims Study: Fix it fast, follow procedure... leave them happy, retailers say
In the Flooring Retailer Claims Study conducted by BNP Market Research/ National Floor Trends on behalf of the World Floor Covering Association, we look at the retailers' procedure/policy for handling claims, in-place training programs and steps to resolution.
Retailers hold a mixed view as to the trend in the number of claims received over the last five years with a relatively equal percentage indicating they have increased or decreased. (Chart 1)
The survey panel cited defective product as the most frequent cause of a claim, while installer-labor is cited a distant second, followed by jobsite conditions, buyer's remorse, and inappropriate product specified. (Chart 2)
Nearly two-thirds (65 percent) of retailers surveyed have a specific procedure/policy in place for handling claims. When a claim arises retailers say it is essential to handle the claim quickly beginning with an immediate inspection.
Even so, only 33 percent of retailers conduct training on a regular basis with their sales staff relative to claims resolution. And, just 33 percent of retailers believe claims handling/resolution offers an opportunity to enhance customer service.
Carpet is the leading generator of claims, according to the survey panel, followed by resilient and laminate. However in terms of claims expense, carpet and hardwood rank number one. The carpet segment has the largest number of claims per 100 completed jobs at 16; followed by hardwood and resilient, 6; laminate floors, 5; ceramic tile, 4; and stone, 1.
Installation repair and product replacement are the two most common methods of resolving claims in the reviewed product categories. Replacement is the most common resolution method in the carpet, laminate and resilient categories with installation repair most common in the ceramic tile, hardwood and stone segments. A discount/partial refund is also commonly used in resolving a claim. (Chart 3)
Interestingly, about one-third (32%) of retailers surveyed say they absorb the cost of replacing a defective product. Still, most indicate the manufacturer absorbs the cost when a product is found to be defective.
Further, most respondents reported having a policy in place for the inspection of the jobsite/materials before, during and after installation. (Chart 4)
Nearly half of this retail panel (48%) feel that claims involving manufacturers should be resolved within 14 days. Yet, most state that product defect-related claims require upwards of 22 days for resolution on average. (Chart 5) Not surprisingly, the promptness of a claims resolution varies somewhat depending on the size and stature of the retailer involved.
Also, for a sizable majority of retailers, (72%), approval of claims has not varied during the past year. Nine percent said the number has increased while 19 percent had fewer claims approved.
Shaw (68%) and Mohawk (50%) were rated as the two best companies at resolving carpet claims. In the ceramic tile category, Dal Tile (50%) was rated best at resolving claims. Mannington (29%) and Bruce (26%) topped the wood category as the top manufacturers resolving hardwood claims.
Wilsonart Flooring (31%) and Mannington (30%) were the top two manufacturers perceived to be best at resolving laminate floor claims. Mannington (59%) and Armstrong took top spots in the resilient floors category for claims resolution.
Many retailers agree the claims process can and should be improved. Suggestions for improvement include: better communication between manufacturers and retailers; streamlining/standardizing the process; education and training across all segments of the industry; and more focus on the end-user/consumer by the manufacturer. Retailers also agreed that shorter response times and quicker resolution will improve the process.
Other key findings in the survey
Claims handling and resolution upon installation is a basic and common practice among retailers.
• The primary goal of retailers is to resolve customer complaints /problems as quickly as possible. The process begins by immediately phoning or visiting the job site to review the issue and determine how to resolve it to the customer's satisfaction.
• When product-related claims are an issue, most retailers say they contact a sales or customer service rep at the manufacturer/mill via telephone or complete a complaint form electronically via a website.
• Overall, the claims process is not viewed as adversarial. Retailers say it is essential to leave the customer feeling positive about the claims process and outcome. Retailers concur that even one dissatisfied customer can negatively impact future business.
• Retailers agree that flooring manufacturers should be more responsive and replace products or reimburse costs incurred as a result of a customer claim in a timely manner.
The primary cause of claims is defective products, not installation issues.
• Retailers report that about 56% of claims are due to poor/defective flooring products.
• Installation problems are viewed as the responsibility of the retailer and not a true claim. Retailers indicate employing or contracting quality labor is critically important to avoid problems.
A claim is an opportunity to enhance customer satisfaction.
• Addressing a claim the "right way" is the retailer's mantra because doing so creates goodwill. Retailers have found that satisfied customers will do business with them again and will refer them to friends, family and neighbors. lnft
About the survey
The Flooring Retailer Claims Study was conducted by BNP Market Research, which is a unit of NFT's parent company, BNP Media, for the World Floor Covering Association.
The study was conducted using the mail and online survey methodologies. A representative sample of respondents was selected from WFCA membership, National Floor Trends domestic subscriber base and the database of RFMS retailers.
The primary focus of the study is to identify claims best practices in the retail flooring industry and the identification of specific areas where retailers are successful. Questions covered the following topics: How is the claims resolution process handled/managed by today's flooring retailers?; What trends relate to the cause and frequency of claims by product category?; What improvements can be made industry-wide to better manage the processing of claims?; How do individual manufacturers rate on processing claims?; and How are retailers handling installation and installation-related claims?. The research also measured acceptable claims resolution timetables and historical claims resolution by product category and manufacturer.
The survey was sent as follows: 3,903 by email and 1,963 via postal mail. The mail recipients were selected on an Nth name basis from the NFT qualified, domestic circulation retailer/contractor subscriber base and the WFCA list. The email recipients were culled from National Floor Trends retailer/contractor subscribers with an e-mail address on file, WFCA retailer members with an email, and RFMS participating dealers.
The email effort yielded 249 usable returns, creating a response rate of 6 percent. The regular mail effort generated 279 usable returns for a 14% response rate. Analysts from BNP Market Research concluded there was no discernable difference in the answers supplied by the two groups.
In addition to a series of multiple choice questions, respondents were also invited to submit anecdotal information about their experiences with claims resolution. The information enabled the study to include qualitative as well as quantitative information.