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Connected Customer Experience

Setting Standards: Demystifying Warranty Fraud

Author Bruce Burke on May-16-2014

M-W.com defines the word Standard as; “something set up and established by authority as a rule for the measure of quantity, weight, extent, value, or quality.”

As an example; a standard that has been set up and closely followed by companies and consumers alike is the credit scoring scale. In this scale a single number summarizes a person or entity’s credit history, this method of measure is universally accepted everywhere.

Individual credit bureaus use a different name for their score, even if it uses the same algorithm as the other reporting bureaus to generate the score. A similar model may be used by the warranty industry to manage risk.

Detecting and Preventing Warranty Fraud Using Predictive Analytics

During the most recent mize sponsored webinar; Detecting and Preventing Warranty Fraud Using Predictive Analytics, CEO, Ashok Kartham spoke of a new initiative aimed at establishing a scoring model and methodology by which to measure fraud related to warranty claims.

In today’s society everything from the amount of hours you sleep, to your social media standing is being quantified. The warranty fraud scoring mechanism is a new idea, whose time has come.

Scoring is a way to streamline the claims process by providing enterprise organizations a simple way to quickly and easily discern if a claim is suspect, is an anomaly, or has a high risk potential.

To assess you need two scores; first the Service Provider Risk Score (SPRS) and secondly a Claim Anomaly Score (CAS). Scoring is a simple 1–100 numbering - the higher the score, the more likelihood that fraud is involved.

Scoring warranty claims fraud 1 to 100

A service provider's risk score is based on analyzing and benchmarking dealers on many factors like costs, frequency, repair profiles, parts/labor, etc. The score is also impacted by how many times claims were manually adjusted or rejected in the recent past.

The claim anomaly score is used by manufacturers based on past claim patterns and audits in new claims. Additionally, you’ll want to know the reasoning behind the score and contributing factors.

Even though the scoring is simple, the methodology used to assign the score must be robust. It is complex behind the scenes, but it is important to simplify fraud scoring for warranty groups. Scoring provides a super simple decision framework which may be adopted by any organization.

Service Provider Risk Score & Claim Anomaly Score (SPRS & CAS)

Actual thresholds may be different for each organization; however you can decide to audit a dealer, put them on a watch list, or require more information based on the resulting score. On the other hand it is important to demonstrate incentives for lower risk scores by providing faster payment or better margin on warranty services.

mize is currently enrolling companies in a pilot program meant to begin setting this standard. The mize Warranty Anomaly & Risk (WAR) pilot is being created around the idea of importing and analyzing an organization’s entire history of warranty claim data.

Thereby creating a benchmark the organization can begin working from. As more data is becomes available it’s continually assessed and refined resulting in purer and purer outcomes.

The pilot is setup using a cloud-based predictive analytics engine; there is no need to change existing business processes. The analytics are integrated with the companies’ current infrastructure and routines by providing a layer of services that floats above the existing processes kind of like … well – a cloud.

Traditional methods are augmented with predictive analytics - without upsetting existing model or processes

This eliminates the need for investment in expensive new infrastructure hardware, and doesn't call for any new skill sets or training to deploy these new capabilities.  

Groups such as the Global Warranty and Service Contract Association (GWSCA) can help bring more consistency to this new methodology, resulting in an industry standard. Because it is a standard methodology it can be benchmarked within the industry, or even across other related industries.

We would like to invite all relevant associations, vendors and groups to participate in setting this scoring model and associated methodology which would help warranty divisions to become standardized, vastly reducing and eradicating fraud.

To ensure consistency the predictive analytics cloud and scoring methodology is initially being piloted with a single major manufacturer. mize is currently considering additional companies for a second phase pilot which will be limited to five total companies.

We would like to participate in the pilot program

If your organization would like to be considered for participation in the mize WAR pilot program please feel free to contact us for details about this opportunity to combat fraud.

Comparing Leaders & Laggards in Customer Experience Management

Author Bruce Burke on Apr-30-2014

Harvard Business Review Analytic Services recently released a report entitled Lessons from the Leading Edge of Customer Experience Management.

The group studied more than 400 executives around customer experience management – the collection of processes an organization uses to manage customer interactions across an enterprise.

Harvard Business Review Analytic Services

Highlights resulting from the study found 53% of the respondents stating they believe that customer experience management provides a competitive advantage, and 45% view customer experience management as an important strategic priority.

However 45% of those surveyed found tying customer experience investments to business outcomes very difficult.

The report asserts that leading-edge companies face the same customer experience struggles as the laggards do, but differ in how they respond to the challenges. These organizations aren’t waiting for someone to solve the problems for them.

Customer Experience Management

They’re dedicating the resources to figure these concerns out for themselves, ahead of the competition. They’re putting the capital, procedures, and strategies into place to overcome these hurdles and emerge victorious.

Customer Experience Management is more important now than ever before. Organizations have to optimize their customer experience across multiple channels, methodologies and platforms.

Customers eagerly share, compare and rate brand experiences on social media, at the same time, demanding real-time information and services on their mobile devices. With customer experience set to become even more intensified and defining, it’s time for enterprise to harness emerging tools and tactics.

Growth from Customer Experience Management

According to the research, a little more than a third of the respondents say that their company is forward-looking with respect to customer experience management. Lack of industry standards and integration of new systems of engagement with legacy systems of record seems to be a common hurdle many organizations are facing.

People, processes, systems and data lie at the heart of customer experience management difficulties. Corporate data silos make it difficult to assemble and share a single unified profile of the customer across the entire enterprise.

Each division has its own data that it’s deemed important about the customer, but few departments understand how their data could help another aspect of the same company.

Enterprise networks have always been segmented by types of users and divisions, and few network administrators have allowed one segment to access another company segment’s data. Optimizing an end-to-end customer experience dictates that organizations assimilate previously disconnected channels.

Challenges in Customer Experience Management

Almost half of the respondents acknowledged that multichannel management is a significant challenge to their organization. The key concerns with creating a consistent customer experience are systems integration, multichannel complexity, data issues, and company structure.

Statistics from the survey indicate the biggest obstacles in providing a consistent customer experience to be:

System Integration | 46%

Multichannel Complexity | 37%

Organizational Structure | 33%

Data Issues | 33%

Lack of Strategy | 32%

Customer experience management is more important to leading-edge companies when compared to laggards. Seven out of ten surveyed said it’s a significant strategic priority for their firm. In contrast almost half of the lagging organizations responded that customer experience is not important.

A comparison of business outcomes derived from customer experience management including both leading and lagging companies indicates a clear win for those organizations that institute these solutions. While this is only a small cross section of the economy it is nevertheless illustrates a significant point.

Experience is key in the age of the customer

Numbers don’t lie – a whopping 60% of leading-edge companies in the survey reported heighted profitability while the laggards came in at 35%. Company growth and revenue – another significant measurement, showed 60% by frontrunners but only 28% from the slackers.

Market share and other aspects also measured in favor of those companies that focus on customer experience management; with 54% customer growth from leaders, while only 20% was reported by those who didn’t deem customer experience management important.

Six lessons emerged from taking a closer look at the practices and metrics these leaders employ:

  1. Create a customer-centric culture
  2. Think like the customer

  3. Give the business control of customer experience

  4. Tame channels and data

  5. Embrace analytics

  6. Expand the definition of customer experience success

In summary, organizations can no longer afford to wait before making customer experience management a strategic priority. It’s become an imperative to those companies wish to remain market leaders in the age of the customer.

Detecting and Preventing Warranty Fraud Using Predictive Analytics

For more information about embracing analytics to improve processes and grow revenue register to attend the upcoming webinar: Detecting and Preventing Warranty Fraud Using Predictive Analytics on Wednesday, May 7th at 1:00 PM Eastern Standard Time.

Register For Webinar & Download Content

 Register today and receive a complimentary copy of the recent report Customer Experience Management: Strategies to Succeed as well as webinar video and associated content. 

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