Midcurrent Warranty Piece
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Hey guys –
As promised, here’s my open letter to rodmakers about the current warranty system we are in:
http://www.midcurrent.com/articles/gear/matthews_rod_warranties.aspx
I can’t say I’ve got all the answers yet by any means, and there are a lot of ways the manufacturers could go with this concept, but the bottom line is: no one has any flexibility right now and we all pay the same for a rod warranty regardless of how careful we are. I’ve heard some surprising estimates about how much money the manufacturers might be able to knock off if rods were offered free of the warranty burden. It’ll take time and analysis to see if that is actually feasible, but I definitely think it’s something we customers shouldn’t just be accepting like sheep.
Read the piece and get back to me.
Zach
Great piece Zach. There’s a lot of sense in what you are advocating. The biggest difficulty lies in getting one of the top-end rod-makers to change course. Also, I don’t think you could get anyone to eliminate the short-term limited warranties against defective materials and workmanship. That said, buying aftermarket insurance is nothing new in the consumer products space. Every time you buy some piece of electronic equipment or appliance, the retailer offers some sort of extended warranty for a fee. The key here is that the FEE is a known amount, and the consumer can assess the risk/reward for that specific consumer good and the details of the specific warranty. Sometimes the value is there, sometimes it’s not. It makes for a smart buying decision.
Unfortunately with rod warranties, the cost of that warranty is hidden (truly) in the price of the product. The consumer can only judge one-half of the equation—the details of the warranty, not the price. The consumer can only assume the VALUE is there. I suspect that there is ample industry history with these lifetime warranties such that manufacturers know exactly how much they cost, as well as how much they are worth relative to the VALUE being provided. Given that knowledge, there are probably additional warranty alternatives for rod-makers that might not only be profitable, but drive more customers to their products. First, they need to separate the warranty price from the rod price regardless. The consumer needs to know what the warranty costs up front. The market will tell the consumer whether the price is worth the value of the warranty. Second, warranties should be an aftermarket buying decision. I am buying Rod A for $XXX. I also want the unconditional 25 year replacement warranty for $ZZ or I only want the 3 year conditional replacement warranty for $Z. Since many high-end rods are serial numbered, it’s an easy task to tie a specific warranty to a specific serial number. If I know the price of the warranty, and the Value the specific warranty brings, I make a better informed buying decision.
For the rod-maker, they would have a lot better understanding of their long-term and short-term warranty commitments, because each warranty was a specific consumer purchase at a price that ensured the rod-maker makes a profit and the consumer is getting value paid for.
Zach-To the best of my recallection-Rod prices doubled within a few years of the “Lifetime Warranty” debocle.
I know that I was told by someone I trust (that would know for sure) that a rod company he worked for charged what it cost them to replace the rod- i.e. you pay X ammount of dollars for the warrany service and the rod company Y
The greed and excess of the 90’s is coming to bite us all in the but.
PJ,
Oh how I wish this were true.
Zach,
Good article. I’m interested to see if things change going into the future. I’ve always thought that the unconditional warranty is a nice piece of mind on a $650 fly rod. However, I also think that I would much rather pay less for a rod and get it insured elsewhere, especially with the added benfit of protection against theft and loss.
I’ve heard some surprising estimates about how much money the manufacturers might be able to knock off if rods were offered free of the warranty burden.
Do you mind sharing some of the numbers on what portion of the cost of a fly rod is attributed to the warranty? I know that you used the $75 figure in the article, but I get the impression that was just for examples sake. I’ve heard figures that are much larger than that (up to 50% of the cost of the rod). Any ideas on what the actual figure is?
Thanks,
TimTim –
I haven’t gotten any hard numbers from anyone, but $75 was intentionally conservative based on what I have been told.
Good stuff about the warranties, but also an excellent point about the property insurance. Need another reason to get your own insurance? How about it will make you resist the temptation to do what this guy did (make sure you read the last two sentences):
All it’s going to take is one company not playing ball and keeping the warranty. I can see the ads now – “those other companies don’t believe in their rods. We’ve got your back. We still offer a lifetime warranty” We’ll all be back on this wagon in short order, IMHO.
This is a valid point – I live in LL Bean country, so they’re the first ones that popped into my head – it’s unlikely that they’d make flyrods the exception to a companywide policy, so you’d still get a warranty on any LL Bean rod (or any Sage or Loomis you bought at Bean’s).
Tim –
I don’t think very many companies even bother to track who is returning rods so they can identify repeat offenders.
ZachI have a St Croix rod that I have sent back twice after the second time I received a pamphlet in the mail on how to care for the rod.
A few years back I tried to get the Scott rod line in the store and the rep at the time mentioned that about $100 dollars of the cost was because of the warranty. I’m also guessing that most folks here know what that $650 rod cost the fly shop to buy, that doesn’t leave the manufacture much wiggle room. When I’m talking to a customer the warranty is a huge selling point. I have $80 Echo rods with a lifetime warranty for $30 additional when you use it.
I wouldn’t have a problem with them amending the warranty, if they would publish the amounts they would charge for necessary repairs, even updating it annually.
IE: replace eyeletHey Mark –
I want to address you specifically because you’re a shop sales guy. Not to pick on you; you just raise some common objections that I anticipated.
You mention that the warranty is a selling point in moving the rod. The point of my letter was to illustrate other ways to get the rod covered against breakage, aside from the rodmakers themselves. The end result to the consumer, whether he breaks a rod and files a warranty claim or he breaks a rod and files an insurance claim, is the same: he gets his rod fixed.
From your perspective as a shop guy, the sales advantage would be that with insurance, the customer also gets protection against loss or theft. Assuming the insurance is offered as a package deal at the counter (maybe that would happen, maybe not, but it’s one scenario), then the presentation would be this:
“Hey customer, on the one hand, you can pay $675 for this rod and get a manufacturer’s warranty that will cover you against breakage alone. On the other hand you can pay $675 for this rod and get an insurance policy that will cover you against breakage, loss, and theft.”
Which does he buy, A or B?
There are legitimate reasons why it might not work out that way. The #1 roadblock is the over-the-counter sales scenario. Selling an insurance policy over the counter (or selling a 3rd party warranty company’s policy) doesn’t really let the customer tweak the system to his advantage. The advantage comes when the customer goes to his local insurance agent and buys rod coverage attached to his existing home or auto policies. That’s when the insurance agent is willing to oblige the customer and cut him a better deal. The over-the-counter insurer may not have the same incentive.
The smartest possible move for a buyer would be to buy a warranty-less rod for a discount, then insure it with a personal articles policy through his own insurance company. Then he gets coverage against loss, breakage, and theft, with no deductible, for less money than he would have paid the rodmaker for the warranty.
Zach
I haven’t had time to read zach’s article, but one potential problem with a personal arcticles policy thru a private insurance company is that you really only get so many strikes, whether they tell you that or not.
An interesting and thoughtful piece. The first downside for me is that I dislike dealing with insurance companies, even my own, despite the fact that my agent lives down the street. I also hesitate to make claims because I don’t want my rates to go up. Next, insurance companies can charge way too much for a rider on a given item. (for example, $300/year on an overpriced watch). Finally, some carriers might get the concept you propose but others would not. I don’t want to change my insurance carrier just because they are clueless about my fishing rods or anticipated experience rating.
Moving directly to the rod industry, maybe there is a middle-ground solution in the position that “I don’t want my rates to go up.” Seems to me that the “problem” consumer is the problem. The retail price can absorb one replacement but not several.
Maybe a rod mfg could benefit by limiting a fisherperson to one replacement for each registered rod. This could build brand loyalty, too. For example, a Wxyz owner could replace his/her 9 ft 5 wt two times, but doing so that second time would mean he/she is cashing in the warranty on some second Wxyz rod in the registered arsenal. Perhaps it could also be possible to buy additional replacement warranties once the first is used.
At the end of the day, since there is a real marginal cost to the mfg for each replacement, why not have an appreciable marginal cost to the consumer (maybe 30 to 50% of the new rod price), too? For practical purposes, insurance companies would reach the same result by raising rates in the face of too many claims.
Interesting conversation. Thanks for thinking about these issues and proposing some ideas.
Short of a manufacturing defect which I haven’t seen yet, when I eventually break a rod chances are it will be my fault. Personally I feel like I should pay for the repair, which seems to be the case even with most lifetime warranties.
My question is, if I take good care of my gear, what is my incentive to buy the $700 rod versus the $350 rod given that they both have the same guaranty? Read that domestic vs. import if you’d like.
It seems to me that Zach’s suggestion could help our domestic rod manufacturers stay competitive if they are able to drop the warranty costs from their retail prices. At some point price matters, whether you have a mortgage, or a rugrat, or you don’t want to eat pasta every night because half of your income goes to toys.
Cheers,
Rob
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