Is the Warranty Process Broken?

Integrator argues that manufacturers should pay integrators for their labor time spent on warranty replacement, similar to what is done in the car business.

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Is the Warranty Process Broken?

For many custom integrators, warranty administration is a pain in the butt, to put it mildly. It’s also a pain in the wallet and can be a vicious drag on the bottom line. But should it be?

At least one veteran integrator doesn’t think so. Indeed, he thinks the entire warranty process needs to be turned on its head, because integrators are currently getting the short end of the stick.

Marcos Lipkovicius is CEO of Audio Impact in San Diego. His award-winning custom installation company has been in business for 18 years providing complete sales, design and installation of dedicated home theaters, multiroom audio, TV displays, outdoor entertainment systems, smart home automation and more.

The company is a stalwart example for the custom electronics industry. It has a full slate of CEDIA-certified technicians, is bonded and insured, and carries both a California C-7 license for low-voltage and a C-10 license for high voltage. Audio Impact also provides 24-hour service response for its installations. It plays by all the rules.

But Lipkovicius is tired of “playing by the rules” when it comes to warranty administration. He sees the current warranty process as one that is completely broken, with integrators carrying way too much of the financial burden.

Using a broken AV receiver as an example, he recites the sequence of events for a warranty situation can go something like this:

  1. If a receiver stops functioning, the customer does not call the manufacturer directly — he contacts the integration company that did the installation. The integrator has to roll a truck, remove that broken receiver, and ship it to the manufacturer for repair. Labor time spent.
  2. While the technician is there, he usually installs a “loaner” receiver for the client, which — along with the remote control and other interfaces — needs to be programmed in order keep the client’s system functioning during the interim. More labor time spent.
  3. When that repaired receiver comes back from the manufacturer, the integrator once again rolls a truck to the client’s home, removes the loaner receiver, connects the repaired receiver, and again reprograms the system and the interfaces. Even more labor time spent.

“And I am getting paid nothing for all that labor time. That’s crazy,” exclaims Lipkovicius angrily. “The manufacturers should be paying integrators for their time spent servicing faulty equipment that falls under warranty.”

Like most integration companies, Audio Impact has an installation warranty that covers its clients for installation defects… and Lipkovicius has no qualms doing that. Of course, he believes it is important to guarantee the quality of his work, but when the issue is caused by a flawed component, he thinks the suppliers should be compensating dealers for those repairs. Indeed, he believes the entire process needs to be upended.

He points to the automotive industry as an example. Although vehicle warranty programs differ widely, in general the dealership is compensated by the automaker for the warranty work they perform. Yes, the car dealership gets paid by the automaker.

That warranty administration system in the car business is not perfect by any means. The auto dealership must follow a very specific set of rules and timetable in order to by paid. (That timetable is why sometimes it can take a long time to get a car repaired in a warranty claim.) In the end, it is a somewhat tenuous juggling act the car dealership must play between getting paid by the automaker and satisfying the customer, who is impatiently waiting for the car. If the dealer takes too long, it is doubtful the customer will buy his next car there.

It is unlikely integrators will find many clients willing to wait a prolonged time with a non-functioning home entertainment or smart home control system if the integrator is required to follow a slowed-down timetable set forth by a manufacturer. But perhaps that tradeoff is worth it for the potential compensation?

You can count Lipkovicius, and I am sure many other integrators, among those who would rather see the consumer electronics industry adopt a different warranty system than the current model. What do you think?

About the Author

Jason Knott
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Jason Knott:

Jason Knott is Chief Content Officer for Emerald's Connected Brands. Jason has covered low-voltage electronics as an editor since 1990, serving as editor and publisher of Security Sales & Integration. He joined CE Pro in 2000 and serves as Editor-in-Chief of that brand. He served as chairman of the Security Industry Association’s Education Committee from 2000-2004 and sat on the board of that association from 1998-2002. He is also a former board member of the Alarm Industry Research and Educational Foundation. He has been a member of the CEDIA Business Working Group since 2010. Jason graduated from the University of Southern California.

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