Sears Maintenance Agreements - Pro

Sears Maintenance Agreements • Pro • Con --- •Sears Complaints

"Zeener" of Hoffman Estates IL writes (6/30/03): In response to Sears Maintenance Agreements - Con by WW, I offer the following. I have attempted to answer some of the accusations presented by the author and have confirmed some points he attempted to make but have provided a more complete picture.

WW provides some good information on Sears Maintenance Agreements. Unfortunately, he provides just as much misinformation and confusion in his expose. In my 13-year career with Sears, I’ve sold appliances and electronics, worked as a sales manager coaching other associates in their sales techniques, and have done a stint in the company’s home office in Hoffman Estates, Illinois. I think I’m duly qualified to offer a few points that WW missed, and to clarify some errors in his report.

Done before it starts?

The obvious conclusion that’s inherent in WW’s report from the start is that a Maintenance Agreement is a bad buy. That’s only half right. A Maintenance Agreement, just like any other product sold at any other retailer, is a bad choice for some, and a good choice for others. The reason that Sears sells over 200 types of refrigerators is that one refrigerator won’t fit every customer’s needs – but each refrigerator will fit some customer’s needs. The choice is the customer’s.

The Maintenance Agreement works the same way. It’s certainly not for everybody. But it is for somebody. And it’s clearly for more than the “small minority” that WW suggests must experience a product failure within 3 years of their purchase. Here’s why. Extension? WW is correct when he points out that Sears wants to distance itself from “extended warranties.” But he fails to explain why.

An “extended warranty” is just that. It extends the basic warranty on a piece of merchandise. Most every item on the market today has a limited warranty and comes with a list of things that are excluded from warranty coverage. Coverage on the labor to repair something is usually excluded. So are consumable parts (like filters, batteries, toner, etc.). And since you only have warranty service when something goes wrong, an extension of that warranty is little more than insurance against failure, something you buy expecting the worst but hoping for the best.

The name “Maintenance Agreement” defines exactly what Sears wants this agreement to be: maintenance. Every mechanical product requires some form of maintenance. With a Maintenance Agreement, Sears assumes the responsibility for the regular maintenance of a piece of merchandise, taking much of that responsibility from the customer. That means that coils on a refrigerator are cleaned annually, maintaining the refrigerator’s energy efficiency and prolonging the life of the compressor by keeping it from having to work so hard.

That means that spark plugs in a lawn mower are replaced at Sears’ expense, not the customer’s. That means that lint in the dryer vent is removed by Sears, allowing greater airflow through a dryer, drying clothes more quickly, and using less electricity. That means that the customer is actually getting something for their money, rather than buying a “pig in a poke” that they may never see.

Is a Maintenance Agreement for you?

Maybe it’s not, if you know how to find the coils on your refrigerator and clean them, enjoy tuning up your lawn mower each spring, and can move your dryer and disconnect its exhaust for inspection. Sound too daunting? Sound too time consuming? Then maybe a Maintenance Agreement actually is a good buy for you. Beyond normal maintenance, a Maintenance Agreement also serves as that basic extended warranty. It puts the responsibility for repairs on Sears’ shoulders for the life of the agreement, meaning that a customer doesn’t have to call GE for repairs on a refrigerator, Murray for repairs on a lawn mower, and Maytag for repairs on a dryer. There are no surprise bills when it is discovered that the reason a dryer won’t dry is that a lost sock has blocked the lint filter. There are no extra fees for a “trip charge” for a service call to discover that a repair may be more expensive than replacing a well-worn product.

For someone who’s comfortable looking over the shoulder of a service technician and understanding what he’s doing, a Maintenance Agreement may not be a good purchase. For someone who’s uncomfortable with mechanical repairs and never can quite be comfortable that a repairman is being completely honest when he presents his bill, a Maintenance Agreement may be a wise purchase.

A Maintenance Agreement also covers repairs that wouldn’t normally be covered by a limited warranty. The previous sock example is just one such instance. Most anything that occurs during normal use (though not for commercial purposes) is covered by a Maintenance Agreement with no additional expense to the customer. Having trouble unlocking your oven after running the self clean cycle? Can’t get your washer to raise the amount of water it pours into the washtub? Can’t keep the microwave from burning popcorn? These types of calls are also covered at no additional charge – not even the proverbial “trip charge.”

Again, the benefits of a Maintenance Agreement are obvious to some customers, worthless to others. But clearly, there is a difference between a basic “extended warranty” and Sears’ Maintenance Agreement. Changed Mind? In his essay, WW suggests that customers with Maintenance Agreements cancel them and get a portion of their money back. An excellent point!

WW correctly highlights an important difference between a Maintenance Agreement and a run-of-the-mill “extended warranty.” When you buy a warranty, you’ve paid your money, you’ve taken your chances. Not so with a Maintenance Agreement. Sears’ Agreement reads “You may cancel at any time for any reason.” If the manufacturer’s original limited warranty hasn’t expired and you haven’t used the agreement, Sears will refund 100% of your money. Right up until the day the agreement expires, Sears will still refund a prorated portion of the cost of the agreement. Who else in retailing will do that? (Hint: nobody.)

Satisfied?

WW makes the claim that 70% of Sears customers are actually dissatisfied with their purchases of Maintenance Agreements. He asserts that he has researched internet message boards to arrive at his conclusion. This simply contradicts the known facts. Such methodology is clearly not scientific in its approach and does not present a valid statistical sample. WW rightly points out that the company is aware of exactly how many customers cancel the plan. If those numbers were high, certainly Sears wouldn’t offer that option. If few customers cancel the agreement, can 70% of customers really be that dissatisfied?

The fact is that the company continues to offer and sell what the customer continues to buy and keep. A product with a high failure or return rate doesn’t stay on the shelves long; no retailer wants to sell things that won’t stay sold. Maintenance Agreements are subject to this simple logic, as well. History says that 70% of customers who buy a Maintenance Agreement will buy another one in the future.

Conflict?

WW makes the point that the customer and the salesperson are put at odds by Sears because Sears pays commission on the sale of Maintenance Agreements. But WW failed to complain that the company puts the salesperson and customer at odds when Sears pays commission on the sale of merchandise. Why does he see a problem with only one type of commissioned sales? A salesperson will generally make more commission by selling an item that is more profitable to the company. In no way does this put the salesperson at odds with the customer, however.

Sears trains all of its salespeople to sell the way it wants merchandise sold. Over the years, the process has had many names, but it has always been the same basic process. The salesperson is taught to ask questions of the customer to discover their needs, then show the customer the merchandise that has the features and benefits that that customer wants. The salesfloor of every Sears store is even arranged to facilitate that process, making it easy to narrow down the myriad of choices to just a few. The company researches its customer base with exit surveys of customers who didn’t buy, focus groups of customers who shop elsewhere, and more. Salespeople are taught that three out of four customers come in to the store with a brand name in mind; of those customers, more than half will walk away if a salesperson tries to push them to another brand.

The message is clear: understand what the customer wants, and sell it to them. The training emphasizes that the customer is in the driver’s seat, not the salesperson. Strong arm tactics and “brainwashing” aren’t taught and aren’t encouraged. Again, the logic applies to Maintenance Agreements as well.

WW is correct, however, when he explains that salespeople are taught that most customers will refuse to buy a Maintenance Agreement more than three times before they’ll agree to buy one. The reason is simple: they’re used to valueless “extended warranties” and don’t want any part of them. Just like the sales process for physical merchandise, the sales process for intangible goods requires the salesperson to understand the customer’s needs. The salesperson is performing a service for the customer when she understands fully what the customer wants and advocates a product that provides fits the bill. A salesperson is doing a disservice to the customer by limiting that customer’s choices. Again, the same logic applies. A salesperson is doing a disservice to a customer by failing to explain the differences between an “extended warranty” and a Maintenance Agreement – but as always, the choice is the customer’s, not the salesperson’s.

Misleading?

WW suggests that Sears is misleading its customers by comparing the company to fly-by-night scam artists. He fails to mention, however, that the full terms of the agreement are given to the customer in writing, and that the same terms apply to all customers who buy the agreements. There is no uncertain risk involved. Few multi-level marketing companies provide a money back guarantee. Even fewer get-rich-quick schemes pledge in writing to allow a participant to “cancel at any time for any reason.” Sears does. The comparison is inadequate and inappropriate.

If there is any misleading going on, it is WW’s juxtaposition of Sears against companies of questionable integrity. Common? Unfortunately, WW’s attitude is a common one among many Sears salespeople. That attitude seems to stem from the fact that a Maintenance Agreement is an intangible. You can’t see it, taste it, touch it, or smell it. Any intangible is a tougher product to sell than one that the customer can see and feel. It requires a salesperson to know every detail about that intangible, to understand its features and benefits, to be able to answer a customer’s natural concerns about buying something that they can’t see. It’s also noteworthy that WW is a former Sears employee – something else that’s common among salespeople with his attitude about sales.

In my career, I’ve seen many come and go quickly. No salesperson who thinks he knows what’s best for the customer and disregards the customer’s wishes can be successful – and he shouldn’t be. If a salesperson were to decide that he knew side-by-side refrigerators were a bad choice for every customer, or that top-loading washers were useless, he’d quickly find himself unable to make many sales and would be answering his sales manager’s questions about his refusal to sell those particular product lines. This is precisely how WW describes his relationship with his own sales manager, revealing much about the success of his short-lived career at Sears. Again, the parallel to Maintenance Agreement sales hold true. If a salesperson isn’t giving the customer an option, he’s doing the customer a disservice. Worse, he’s limiting his own opportunities to satisfy customers and turn a sale into a lifelong relationship.

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