Why Warranty Adoption Is Critical To Customer Loyalty

How many of us remember the neighborhood mom-and-pop shops from the old days? These family-run businesses, often grocery stores or soda shops used to run almost exclusively on the loyalty of their regular customers.

While business models like that may seem like a thing of the past, customer loyalty and retention is a major focal point for retail businesses. And trust plays a major role in building customer loyalty.

Warranty plays a major role in establishing that trust between customers and brands. Multiple studies have shown that 81% of all customers are more likely to buy again from a brand that they’ve had positive warranty claims experiences.

Let’s take a detailed look at why warranty adoption is critical to customer loyalty.

What is warranty adoption?

what is warranty adoption

We all know that when we purchase products, especially electronic or household products, they come with warranties. These warranties usually state that if something were to go wrong with the product within a period, the seller would either replace the product or return it to its original, fully functional condition at no extra cost to the customer. 

An extended warranty, also called a service warranty or a maintenance agreement, is a warranty offered to customers beyond the extent of the original warranty. This may be offered by the manufacturer, the seller, or the warranty administrator. Often, extended warranties are offered to customers at the time of sale, and have a cost attached to them. 

Getting people to see the value of these extended warranties and getting them to sign up for them is what warranty adoption is all about.

Why is warranty adoption crucial to customer loyalty?

Let’s begin by listing out the ways warranty adoption enables customer loyalty. 

  1. Increases customer trust

  2. A sense of security

  3. Demonstrates commitment

  4. Encourages repeat purchases

Why is warranty adoption crucial to customer loyalty?

Here’s a more detailed look at why warranty adoption is important to building customer loyalty.

Increases customer trust

A warranty demonstrates that the manufacturer has faith in the build quality of their product, and is willing to stick their neck out to ensure their customers have a trouble-free experience with their product.

This approach builds trust in the customers for the brand, and customers are known to buy again from brands they trust.

A sense of security

Knowing that a product comes with a warranty and that the manufacturer, retailer, or warranty enforcer will pay to replace or repair it under the warranty period makes customers feel more secure about purchasing from those brands as well. 

Demonstrates commitment

The fact that a product is covered by warranty demonstrates a commitment on behalf of the manufacturer to both building high-quality products and ensuring a satisfied customer base. 

Both of these aspects have strong influences on building customer loyalty. 

Encourages repeat customers

All of these aspects, building customer trust, making them feel secure with a brand, and showing commitment towards customer satisfaction all help build loyal customers who will buy from the same brand again. These are the type of customers who are likely to recommend their favorite brands to their friends as well. 

Challenges to warranty adoption

Challenges to warranty adoption

There are two main challenges faced by businesses when it comes to warranty adoption. Let’s quickly delve into what these challenges are.

Cost of implementing and managing warranties 

There is an obvious cost that is incurred when a brand needs to collect its customer’s primary data and reach out to communicate the value of investing in extended warranties. 

Similarly, there is also the cost of enabling proactive customer service, which the brand needs to offer to manage warranties and address claims, ensuring satisfactory customer experiences. 

Conveying the importance of warranties to customers

While extended warranties do come at a cost, that cost is much lower than the cost of repairing or replacing products without coverage. However, convincing customers of the value addition warranties bring to the customer service experience is easier said than done. 

Strategies for successful warranty adoption

strategies for warranty adoption

Here are four ways brands can push for more successful warranty adoption.

  1. Different warranty options for different customers

  2. Effective communication of the benefits of warranties

  3. Setting up a seamless and hassle-free claims process

  4. Leveraging customer feedback to improve the claims process

Let’s dive a little deeper into each of these ways brands can push customers to adopt warranties. 

Different warranty options for different customers

While it is necessary to ensure all warranties a brand offers fall under the Magnusson-Moss Act, it is always good to be able to tailor warranties to fit different customer needs.

While some people may not mind paying for annual servicing as long as the product gets replaced when it's under warranty, others prefer paying a premium for free servicing over some time.  

Effective communication of the benefits of the warranty

Businesses often cannot communicate the benefits of their warranty plans to customers well enough. Often, the reason is that they do not have the primary contact information of their customers. This is often the case with businesses that sell on third-party marketplaces.

When businesses have access to their customers’ contact information, it becomes easier for them to market their warranty programs more effectively, and communicate the benefits better.

Dyrect not only helps capture the primary information of customers with every sale, but we also seamlessly integrate with your existing marketing tools. This way, we enable effective warranty marketing through push notifications, messaging, emails, and social media.

Setting up a seamless and hassle-free claims program

A customer with an easy experience filing for a warranty claim is more likely to buy again from the same brand and recommend the same brand to others. 

When your brand starts using Dyrect, we’ll help your customers reach out to you for warranty claims more easily, and enable you to give them an easy and fulfilling claims experience. 

  1. Leveraging customer feedback to improve the claims process

Customer feedback is probably the best way for any business to judge the efficacy of its claims process. 

Be sure to always proactively ask your customers about how their warranty claims experience was, and use their feedback to streamline the claims process further. 

Sign up with Dyrect to drive up warranty adoption today

sign up for a demo

Dyrect is your one-stop shop for everything your brand needs to capture customer data and use it to drive warranty adoption rates. We’ll help you set up a stress-free, seamless claims process, ensuring the customer experience is at an all-time high and getting you hordes of repeat customers.

Learn more about how to leverage Dyrect by requesting a quick demo with our experts today!


Repeat customers are among the biggest contributors to the revenue of any business, and there is a direct correlation between warranty claims and customer retention.

In this informative read, we look at what warranty adoption is, why it is important to customer retention, what the challenges to warranty adoption are, and how to successfully drive warranty adoption.