Warranty Claims; a Chaotic and Time-consuming Problem for Many Brands in the Retail Industry

Michael Kruse Sørensen
September 16, 2022
8 min

Dealing with claims is associated with a lot of negativity – it’s time-consuming, expensive, and causes a lot of frustration for customers and personnel.
Despite that, few retail brands work with claims on a strategic level, as it’s often unclear how it even affects the business. 

This article kays out how the consequences of manual claim handling are calculated, and how the right digitization can turn claims handling into a value-creating activity. 

Challenges with the manual claim handling process

All retail brands know about claims. It's a premise, but it varies across industries; in the furniture industry, you typically see few complicated claims, while in fashion you see higher volumes of less complicated claims.

However, one thing is indisputable; claims handling is extensive and involves many stakeholders, external as well as internal, making it very complicated.

The customer can be either a consumer (D2C) or a wholesaler (B2B).

When claims are handled via e-mail, Excel, or simple web forms, it causes a number of challenges:

  • The customer can’t figure out the process, often resulting in a lot of missing data that creates unnecessary delays
  • The internal handling becomes very manual and cannot be automated, which is expensive in hours and longer response time 
  • Data is decentralized, making it difficult to keep an overview, and almost impossible to create effective knowledge sharing internally, including basing decisions on data.

A typical claim involves more than 10 manual steps plus a longer email dialogue with a customer and supplier. It is inefficient and typically takes between 10-45 minutes per claim – which will surprise most leaders, as it is difficult to measure.


How claims affect your business

As a rule of thumb, the claim rate in most companies is between 1% and 3%. It seems like a small number, and therefore rarely calls for much attention from the management. But a "low claim rate" should not stand alone, as it’s not a relevant measuring unit for whether a company needs a digitized claim handling process.

Instead, focus on some other quantifiable statements, for example:

  • The number of claims per year (registered incoming)
  • Average time spent on handling (can be calculated or estimated/assumed)
  • Total cost of handling (with all involved)
  • Average cost per claim (calculated)

Based on these specific figures, a calculation can be made of what claims cost in hours (FTEs). In addition, there will be a large number of 'hidden' expenses; for example, depreciation, transport, and lack of reimbursement from manufacturers.


So, are there any opportunities to improve? Yes definitely! And this is without taking quality improvements and compensation into account.

Achieve big savings by digitizing

The claim handling process can be divided into five phases, where large savings and gains can be achieved through optimization:

  1. Submitting of a claim (external to internal)
  2. Handling of a claim (internal work process)
  3. Completion of a claim (internal work process and internal to external)
  4. Data & reporting (internal work process)
  5. Quality improvement and compensation (internal work process)

The first three phases all brands have to go through. The last two arise as additional opportunities with high data quality.

Five phases for transforming claim handling into a value-creating activity

The purpose of digitization is to streamline the entire process in order to:

  1. Make it easy and effortless for the customer to submit correct information (phase 1)
  2. To streamline and automate the internal handling of claims (phases 2 and 3)
  3. Becoming data-driven so that you take full control of the business (phases 4 and 5)

1. Submitting the claim; put the customer at the center

It is dangerous to assume that ‘it should not be too easy for the customer to make a complaint. All customers today, both B2B and D2C, expect you to be easy to do business with.

The claim handling system should be easily accessible and guide the customer through the process. Only demand the most necessary documentation. A good solution takes the customer's reality into account.

2. Create an overview and streamline processes

When a claim is received, it’s important that customer service has a perfect overview of all ongoing cases, and tools to further enrich the cases. The objective is:

  • Correct product data
  • Correct serial number / batch number
  • Correct photo documentation
  • Correct error code(s) (used for statistics)
  • An accurate description of the fault

High data quality also enables effective ERP integration, to automate heavy manual workflows like issuing credit notes. 

3. Use data to optimize your business

Large excel sheets cause you to lose the overview, as the business is growing. It is difficult to spot trends, analyze underlying quality challenges, and share insights. High data quality offers unprecedented opportunities to optimize the business.

Start by focusing on the two areas with the greatest tangible impact on the business:

  • Improving quality to reduce the number of claims. 
  • Ensuring correct financial compensation from suppliers for errors 

Be sure to automatically share reports with relevant stakeholders – and often! With full visibility, internal teams have the best prerequisites for spotting quality challenges at an early stage. 

Read how Sebra has achieved a large efficiency saving of 50% and turned claim handling into a value-creating activity.


Claims are not just 1% of your business. It's a recurrent cost and an obstacle that will just grow with the business.

With the right strategic focus and willingness to digitize the process, most brands in the retail industry can reduce their direct costs for claim handling by at least 50%. In addition, there are big gains in improved product quality, better customer relations, etc.

The first step on the road to successful digitization is to understand the customer's reality. Make it easy for them. Following this, it's all about taking control. Customer service should be able to constantly track all cases and can enrich claims with additional data. It enables the final integrations to the ERP.

With a strategic transformation of your claims-handling process, you can take control of your business and save loads of resources – every year.

Michael Kruse Sørensen
September 8, 2022
8 min

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