        |
12
Reasons Why Sears Maintenance Agreements are a Scam
By Winston Wu
A former
Sears Brand Central Salesman
(Note: The
following applies to my experience as a
Sears Brand Central Salesman back in 1998)
Here are the reasons why
I think the Sears Maintenance Agreements and other types of extended
warranties
are a scam, rip-off, and
sucker bet:
1) The
main reason is that most brand new
appliances don't usually break during the 3 year period of the MA. They
usually last without any problems up to
7 or 15 years or more.
That's why most
people who have the MA will not need to use it, and Sears knows that,
which is
why the revenue generated from the MA far exceeds the cost of it. That's
the KEY to understanding the
profitability of MA's and other extended warranties.
Of
course, if everyone's product actually
broke during the 3 year period of the MA, then Sears' costs would belly
up and
they'd no longer be able to afford to offer the MA! lol
2) There
is a term in the product reliability
field called the bathtub curve.
It reveals that during a
product's infancy, a spike of errors has a
chance of occurring if you remember to often run the product
continuously for a
few days at a time to test it out. Any
defects should come out during this stage if you do that, and would be
covered
by the basic warranty.
After this
infancy stage comes the long period of the product's main life cycle
where the
product works with very little failures.
Then as the product reaches
near the end of its useful life cycle,
failures begin to increase.
When the
probability of product failure is graphed out according to these stages
of the
life cycle, it looks like the shape of a bathtub. The
lowest chance of problems occurring with
the product is during the long period between the infancy stage and
near the
end of the product life cycle.
This long
period where very few problems occur is what the MA's and extended
warranties
try to cover.
They are essentially
overpriced for the amount of risk.
Sears and other
companies have calculated all this out, and that's why they know the
majority of
people will not need to use the MA during its 3 year term.
THAT'S
why it's so profitable for them.
3) For
most people the MA ends up being a waste
of money, because they either don't use it or forget to use it. After
all who has time to remember to get an
annual maintenance check, especially if it's a shop MA where you have
to bring
it into the repair shop, as in the case of a portable item like a
microwave?
4) Think
of it in terms of tradeoffs. If
the MA really benefited the consumer, then
Sears wouldn't be offering it, because if it actually saved people
money, then
Sears would be losing money!
For
example, if it saved people the high cost of repairs, then for Sears it
would
be a lost opportunity to charge people with the high cost of repairs,
which it
already still has because most appliance failures occur AFTER the term
of the
MA!!!!!!!!!
You see the tradeoff analogy
now?
5) So
you see,
the MA
is really a sucker bet.
Suppose you were
at a casino table and you had $100 worth in chips.
In
front of you are two bets you can place
the chips on, one marked "10 percent chance of the product breaking
within
3 years" and the other marked "90 percent chance of the product
breaking well after 3 years."
When
you buy the MA, what you're essentially doing is placing the chips on
the 10
percent circle.
If you win, then yes it
might save you some money.
But if you
lose, which there's a 90 percent chance of, then it'll just be another
hundred
dollars for the casino to collect in its big scheme program to
brainwash you
into thinking that the 10 percent bet is for your own good and will
"save
you time and money, and maybe even your sanity." (exact
words from the MA brochure)
Either way,
the odds are heavily stacked against your bet.
Therefore what the MA
essentially is is a "sucker bet."
6) Now
after the 3 year term of the MA, you can
renew it for either another term of 1 to 3 years at the same price you
originally bought it at or even more! (depending
on
current policy)
But if you do the math
though, you would find that if you were to renew it for every term,
eventually
you would pay more for the MA's than you would if you were to buy
another brand
new appliance!
Of course, some people
will actually do this even though they know that because they've
develop a
sentimentality for their product since it's been with them for so long,
and
that sentimentality is fantastic for Sears because those customers are
willing
to pay more for MA renewals than for a brand new product!
Unfortunately
for them though, Sears reserves
the right to deem a product non-MAable when it reaches a certain age or
condition, such as near the end of the product's useful life cycle. This
means that those customers eventually
get jipped because they won't have MA coverage during the product life
cycle
when product failures begin to increase.
7) The
fact that the MA can't sell itself, but
instead has to be sold with persistency, brainwashing, and inserting
fears and
worries into the customer testifies right there that it lacks any
inherent
worthiness!
It also says that the
motives for selling it are not entirely honest to the customers! The
MA obviously can't sell itself
because:
a) The public obviously
has a negative opinion of MA's and extended warranties, and most people
don't
want to buy them, which is why Sears has to push so hard to sell the MA. As
a rule of thumb, if most people think
negatively about something, then there obviously must be a very good
valid
reason for that kind of public perception.
b) The sales associates
resort to fear tactics and inserting worries into the customer to sell
the
MA.
They do this by describing
the worst
possible scenario to the customer about what an appliance failure could
do to
their lives by resulting in expensive repair costs and huge
inconveniences.
If we were to always assume
the worst about
all their appliances' reliability, then why should we even buy any of
their
appliances at all? lol
c) The fact that Sears
tries so hard to sell MA's and even holds a weekly mandatory MA meeting
for the
associates to get them to sell more MA's is another tell-tale sign that
it's
all about profits for the top.
d) Sears
tries so hard to sell the MA that if
you buy an appliance or electronics product without an MA, then a few
weeks
later the Sears MA office will call you to try to sell it to you again! Some
have even said that they've been called
twice already!
Obviously they are trying
hard! lol Now
do you think they're trying that hard to benefit you, or them????? lol
8) Sears
policy and procedure for selling MA's
directly violates its philosophy of "The customer is always
right."
Here's how: If
the customer objects to the MA, we are
taught to try to overcome the objection and take up to 3 "No's"
before giving up!!!!!
Now
how's that
for respecting your intelligence and judgment???? lol I
guess their philosophy of "The
customer is always right" obviously doesn't apply to selling MA's does
it?????
What could be a more obvious
tell-tale sign of Sears' true motives than this?!
Now let me share with
you the steps we are taught to try to overcome an objection to an MA. The
steps are as follows:
1. Clarify the objection
- meaning that you restate the objection in your own words to show that
you
understand the customer.
2. Cushion the objection
- meaning that you soften the power of the objection.
3. Answer the objection
- meaning that you explain it away by solving it.
4. Seek Agreement -
meaning that you try to get the customer to agree with your answer to
their
objection.
So for example, say that
the customer's objection is "$99
for an MA?
Now that's kind of expensive!" So
I would clarify the objection
by
saying "So you're doubtful as
to the value of the MA right?"
and then cushioning
it by saying "Well I
understand, no one
should have to pay an extra cost for something without knowing why."
and answering
it with "However, the high
cost of repairs these
days can run into the hundreds of dollars and become a huge
inconvenience.
The Sears Maintenance
Agreement would spare
you from all that, and give you peace of mind as well.
Furthermore,
our annual preventive
maintenance check will keep your product running smoothly and help
extend the
life of it." and finally I would
seek agreement
by saying "Now
don't you agree Mr. and Mrs. Jones that the value of saving time, money
and
inconvenience as well as extending the life of your product are well
worth the
small price of the Maintenance Agreement?" You
see how that works now?
Now, if I get another
objection after that,
then I am to start the 4 step process all over again and to take up to 3
"No's" before giving up!!!!!
Of course, most associates
know better than to have to take 3
"No's" but that is Sears' official policy on overcoming objections to
MA's.
What do you all think of
that?
Is that a sign that Sears
respects
your judgment and intelligence?
Is that
even consistent with Sears' philosophy that "The customer is always
right"?
9) Furthermore,
Sears also considers any
customer who doesn't want the MA to be "uneducated" about the
MA!
More like "unbrainwashed"
about the MA to me! lol
They
actually assume that educating you will convince you that
the MA is worth your money, when in fact the reverse is actually true. In
fact, the more people become educated
about what MA's really are (from reports like this), the less they want
them.
So even if a real
"educated" person doesn't think they need the MA, Sears considers
them "uneducated"!
Now again
how's that for respecting your intelligence?
What Sears actually means in
not so direct words is that if you don't
want the MA, then you've got to be "brainwashed" into wanting
it!
But any critical thinker can
tell
that their "brainwashing" claims have no real validity.
Sears'
claims about the MA objector being
"uneducated" is based on a false assumption that the MA has intrinsic
inherent worth that needs to be discovered, when in fact the more you
dissect
the MA, the more you see its uselessness.
10) Even
my Brand Central Manager in not so many
words commanded me to "brainwash" my customers into needing the
MA!!!
One time I wasn't getting any
$30
MA's on any $100 to $150 microwaves, and when the manager came up to me
about
that I said,
"Yeah well I'm
trying to sell the MA's on these microwaves, but the customer just
doesn't
think that it's worth it to buy a $30 MA on something they can easily
replace
if broken."
This got him mad and he
replied,
"No you can't think
like that!
It's your
job to
convince them to see the value of getting the MA. You're
doing them a great disservice to them by
not giving them the MA.
Who do you think
they're going to blame when that microwave breaks in a few weeks?"
How closed minded can
you get?
Is he even allowing me to
respect you, the customer, in how you think????? Gee
whiz!
I wanted to blast him with my
logic and rationality, but I couldn't do
anything cause
he was my boss.
And this was the same guy who
told me during
the job interview that it is wrong to sell the customer something they
don't
need!!!!!!
What a hypocrite! Now,
I can accept being told what to
"do" by my boss, but being told how to "think"? That's
where I draw the line!
Wouldn't you agree?
Personally, I hated
trying to sell the MA's because most customers just don't want them. And
it made me feel
guilty
when I have to try to pressure them into wanting it in order to fill my
quota
and be at standard.
And I felt that that
was kind of sleazy.
I felt that if the
customer didn't think they need the MA, then we should respect their
intelligence and judgment on that. But
that kind of thinking is unacceptable to Sears, according to my Brand
Central
Manager!
11) The
more people learn about the MA, the less
people want it.
But Sears continues to
desperately push it in order to make huge profits.
As
people learn about the MA from experience,
they eventually discover that it's just a way for Sears and other
companies who
sell them to profit off of people.
12) In
fact, the public already has a negative
opinion about MA's and extended warranties, and most people don't want
to buy
them.
That right there is an
obvious
tell-tale sign.
If MA's were really good
for people, there wouldn't be so many negative opinions and criticisms
of
it.