5 Guidelines for Providing Product Warranties

Consumers want to know that their purchases are protected, which can be a selling point for your business.

By Jensen Lee

Opinions expressed by Entrepreneur contributors are their own.

When customers buy products, they want to be reassured that they're making the best decision possible. They need to know that what they spend their money on will last, and that if it doesn't, they can reach out to the company for support.

That's where warranties come in.

Related: The Magic Words Customers Want to Hear

Product warranties are beneficial to both the customers and the business owners because:

  • They set expectations. Customers know what they're getting into if they ever need to fix or return the products.
  • They protect both parties. Customers know that if there's trouble with the products, they can turn to the companies. The companies spell out what they'll cover, so customers can't claim anything not in print.
  • They give businesses a leg up. If customers have the choice to buy two products of the same price, and one company offers a warranty while the other does not, they're going to buy the product with protection.
  • They encourage repeat sales. If customers know that they can trust certain businesses, they're going to go back to them over and over again.

Before you provide warranties on your products, however, you have to determine if it's worth it. The following are some tips and guidelines for composing your product warranties.

1. Follow the rules expressed in the Magnuson-Moss Act.

The federal laws laid out in the Magnuson-Moss Act must be followed by businesses that choose to provide warranties. As a warrantor or a seller, you must say whether the warranty is full or limited, state specific information about the warranty in one easy-to-understand document and provide warranties to customers before buying, if they request them.

Always include the warranties when customers make purchases, whether they're doing so in-store or online. To guarantee that you're following all the rules, you should consider hiring a lawyer who has expertise in business.

2. Clarify what the warranty does and does not cover.

Be specific when writing out exactly what the warranty does and does not cover. For example, if your product malfunctions, write out whether you will pay for new parts, as well as labor.

Do customers have to go to you for repairs, or can they use outside vendors? How can customers reach you in case they need the products fixed? Specify that you will not cover misuse of or alternations made to your products by customers. For a sample warranty, click here.

Related: Why Customer Support Stories Spread Like Wildfire

3. State the length of time that the product is covered.

Customers need to know exactly how long they have to return or ask you to repair products. You have to determine how long you want to be held accountable for said products.

If you sell large items that are intended to last a long time, you may want to consider providing longer warranty periods. For example, a clock radio might only have a 30-day warranty, but a large, flat screen TV should come with a one-year warranty.

Keep in mind that the length of time can also be a competitive advantage.

4. Give customers the option to extend.

If customers have the choice to extend their warranties, they will feel more comfortable spending a lot of money on large items. If you offer extended warranties for extra money, there is a chance that customers will never use them, and you will make more money on the products.

Many businesses will state at the time of purchase that customers must decide on the spot, or give them a few more days or weeks to return to the store and purchase the extension.

5. Set up a department for handling warranty concerns.

Customers need to be able to call someone at your company to follow through with their product returns and complaints. There needs to be an address where customers can send the products back as well.

You should designate people at your business to deal with these issues to make sure that customers are completely satisfied with their purchase experiences.

Are you ready to write your warranty? What would you include in it? Let us know your thoughts in the comments below.

Related: How to Talk to Your Angriest Customers

Jensen Lee

Founder and President of bidetsPLUS

Jensen Lee is founder and president of bidetsPLUS, an online retail store specializing in bidet toilet seats. Prior to bidetsPLUS, Lee held management positions in technology-related fields, including serving as product manager of global network services for British Telecom. Most recently, he held the position of executive director of product marketing for AT&T Interactive, AT&T's online advertising division.

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