Claims resolution: Distributors ramp up efforts to aid dealers

Home Inside FCNews Claims resolution: Distributors ramp up efforts to aid dealers

By Ken Ryan

Flooring distributors are uniquely positioned to facilitate claims for their retailer partners, and that success often hinges on “the three things that matter most.” So said Jeff Jaeckle, president of Madison, Wis.-based Jaeckle Distributors.

That trio includes:

1. A mindset of claims-handling as a valuable service rather than a necessary evil.

2. Streamlining the process to involve as few steps as possible.

3. Getting manufacturers to operate with the same degree of urgency as their customers.

One important function of a distributor is to relieve dealer “pressure points,” Jaeckle noted. “We’re close enough to our customers to understand the pressure points that exist in our market and we’re close enough to our manufacturers to gain their cooperation in relieving the pressure points within our market or even within an individual customer.”

Claims can represent the unpleasant side of the distributor-retailer relationship, or it could mean an opportunity to further strengthen an alliance. “As a distributor, if you have a claims problem, there’s no talking the retailer off the cliff. So don’t have a claims problem,” said Jeff Striegel, president of Owings Mills, Md.-based Elias Wilf.

Preparation and vetting

Some claims turn out to be merely issues that can be easily resolved, and some issues can be prevented before they become concerns, according to several distributors.

Jeff Hamar, president and CEO of Sante Fe Springs, Calif.-based Galleher, said his West Coast distributorship has, for the past five years, worked diligently to reduce the potential of claims rather than continuing to deal with them when they occur. “This approach has resulted in a nearly 70% drop in the number of claims as a percent of our sales. It all starts with proper vetting of all suppliers and a careful review of their manufacturing philosophies and approaches to quality control. Much has happened in recent years in areas like Six Sigma and lean manufacturing, which many leading suppliers have adopted to increase the quality of their products and reduce manufacturing defects.”

Galleher’s vetting process includes several pages of spec sheets outlining its “tolerances and expectations” for every aspect of the product.

Hamar said his company must be very comfortable with the supplier before it will add it to the list of approved vendors and introduce its products to dealers.

“We will arrange for outside inspectors to visit the factories and review products produced for us on a periodic and varied schedule,” he said. “We also randomly inspect incoming products for moisture content, finish adhesion and gloss level, among other things, to ensure that products are produced to specification. While we rarely find noncompliant products, this sends a message of strict quality control throughout our supply chain.”

Galleher has moved away from selling installation supplies (adhesives) from each manufacturer to selling branded adhesives from leading adhesive manufacturers (Bostik and Franklin). Hamar said this has made it much easier for installers to understand the installation process. “In addition, we make sure all the products we sell conform to standard installation steps as we don’t want to sell products that are infrequently used but have unique requirements—this can cause installation-related problems.

Training expertise

Successful distributors staff their claims resolution teams with experts who often possess multiple certifications and go through continuous education.

Last year, Elias Wilf faced an issue related to a type of adhesive used. “The manufacturer told our claims manager the adhesive was not working and needed to be replaced with a different one,” Striegel said. “Our claims guy knew the product, and he told the manufacturer, ‘I don’t accept your answer.’ So my claims manager went out on his own and tested the product, saw that it worked, took digital photos and the next day showed the manufacturer how the adhesive worked on porous and non-porous surfaces.

“Our claims manager brings a level of expertise to the job that a retailer wants,” he added. “In our dealer satisfaction surveys, claims are near the top.”

Derr Flooring in Willow Grove, Pa., staffs two certified wood flooring experts who are trained to deal with a multitude of issues, said vice president Rick Holden, adding, “We’re the eyes and ears for our customers.”

Galleher employs certified inspectors and technical experts to train employees and provide support to customers. “We are moving to an environment where all our reps will be iPad enabled with devices full of technical information,” Hamar said. “When the rare claim occurs, we respond quickly to determine the problem and resolve it.”

At CMH Space Flooring Products, Wadesboro, N.C., reps are trained on product knowledge and performance of all products the distributor sells. In addition, it has the equipment to test for moisture in the subfloor.

Handling and resolving claims

The best distributors look to turn a negative (claim) into a positive (a resolution that strengthens the relationship) by being responsive and accountable.

Scott Roy, vice president of sales, marketing and customer service at J.J. Haines, Glen Burnie, Md., said Haines views claims as a competitive advantage, and the distributor has invested the resources to make it work. “We have created a more efficient claims process by spending an inordinate amount of time trying to work with customers so they can fill out their own claims report,” Roy said. “By doing that, they can expedite the process. Plus, we have established our own internal claims department with two folks who can support the customer and are just a phone call away. They help customers fill out the claim form, answer questions and address issues with suppliers. They man the phones all day and are accessible to customers much more than even their sales reps.”

Holden said Derr Flooring takes a long-term approach to handling claims because of the importance it places on the dealer relationship. “We’re willing to give up a little bit [in profit], even if it may not be the appropriate thing to do, for the long-term relationship with the retailer. Most manufacturers don’t have claims people. We often act as the mediator on resolutions between retailer and supplier. Some of the claims are cut-and-dry; others are iffy. We look for an amicable resolution that works for everyone.”

For John Anderson, vice president of Memphis, Tenn.-based BPI, the claims process is an important function of being a full-service distributor. As such, BPI approaches the claims process seriously.

“Our goal is to be fair to all parties, process the claims quickly and satisfy the consumer,” Anderson said. “Most of the time our account managers inspect jobs that may appear to be warranty-related matters. During these inspections, always with a dealer representative, we use our knowledge to gather the facts, samples, pictures and recommendations to send to the vendor.”

BPI’s Support Services team monitors the process and information flow. The distributor’s regional managers review every claim. “We process claims, denials, appeals and credits to our dealers,” Anderson said. “In a few cases the vendor may want to also look at the claim or send an independent inspector.”

Hoy Lanning, CEO of CMH, said the distributor is quick to respond to any claims on products it sells. “First, a dealer looks at the floor and if he cannot determine the cause of the problem, he calls our rep to look at the floor,” Lanning said. “A record of each claim is put on file in our claims department and followed through to conclusion. This helps provide a record, should there become a legal issue for the retailer. If a resolution isn’t achievable, we can bring in an independent inspector. Claims are not a fun side of our business. We try to help the dealer find an agreeable solution for all.”

Elias Wilf’s Striegel said walking the retailer through the process is important because the dealer may not have a claim in the end. “A retailer carries a plethora of items; there is no way he can be an expert in everything. There are nuances with so many products. Sometimes, there may be an issue with the material or the installation and not be a claim.”

Doing the dealer right

Jaeckle said dealer surveys have indicated a large frustration is the lack of timeliness in bringing claims to resolution; consequently, his goal is to beat the deadline on every claim.

“A couple of years ago, a World Floor Covering Association retailer panel suggested a 30-day turnaround time is acceptable, but it noted the vast majority of claims are not resolved within that time period,” he said. “We track the open time of every claim we process and have consistently met or exceeded our 15-day goal of bringing claims to resolution. We post our ‘Average Days to Resolution’ on our website and have averaged 13.2 days over the trailing 12 months.

“Often, when we know the manufacturer agrees the claim is a product defect, we’ll take care of the dealer before the manufacturer is finished processing the claim so our dealer and his customer can move on,” Jaeckle explained. “More complex claims can obviously take longer than 15 days to resolve, but even then—and especially then—speed of resolution remains the priority. The longer a claim remains unresolved, the less likely a fair resolution, and the more upset both the dealer’s customer and the dealer become. Reputations are tarnished along the entire supply chain from the manufacturer to the dealer and nobody wins.

“Dealers have a right to expect distributors are working for a quick and correct resolution, and they’ll accept the resolution, whatever it may be, as long as they trust this is happening,” Jaeckle said. “Viewing the claims function as a valuable service that helps protect a dealer’s reputation is critical to improving this industry-wide problem.”

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