Buying Extended Service Contracts

We are increasing the prices of our service contracts effective August. Quite simply, we are spending more money fixing products than the actual warranty. I would like at least to be even after cost of repair.

The question is: Should you buy one? The answer is maybe, depending on what products and who is selling it.

Couple of considerations:

1. Do NOT buy an outsourced extended warranty. Typically, they are call centers with no actual service providers. Check the Better Business Bureau for some pretty shocking info about these companies before you buy.

2. Do not buy an extended warranty from an out of state company....unless they have a service presence.

3. The most expensive products to repair are a washer and refrigerator. The least repaired items are microwaves and hoods. Buy the warranties accordingly.

4. Ask what the warranty covers. We will cover $250 in food loss for a refrigerator. What do they do if the product cannot be fixed 2 years into a warranty.

Again, do not be pushed into buying an extended or after market guarantee. Do some research to insure the work will be done if there is a problem.

You want to be confident the warranty is worth more then paper and ink.

Extended Warranties

I find extended warranties interesting. Then again, I have a strange sense of humor. These slips of insurance really run the gamut of consumer emotion. From people who think it is expensive(which it can be) and a waste of dough to customers who are irate for not buying one and having to pay for service.

Here is the skinny: If a company does not have a service department, do not buy it ever. I don't care if they return a portion of your dough after the contract expiration. The contract is worth nothing, and the seller is banking on breakage and non redemption. We spend 10,000 per month in contract redemptions. The rough percentage is 20-25%, but when you need service...the average call is more expensive than the contract.

Skinny Part 2: Be very wary of third party contracts. Often times, a dealer will hand you a contract, which is backed by a warranty provider. I have a healthy respect for most of my competitors...But in this case, run the name through the Better Business Bureau. The results can be shocking.

Skinny part 3: Do not be oversold and do not overpay. You should pay $150-$250 for a basic appliance and $250-350 for a professional piece...Some of the rates can be outrageous. Look for ancillary benefits, refrigerators can have a food loss guarantee. (ours is $250)

And remember...it is your decision.

My Most Interesting Post

It isn't all champagne and caviar being the CEO. Sometimes the best intentions dont quite work...So now you are now me(minus the issues)...What would you do? Before you read the complaint a couple of points

1. Unit is out of warranty. There is very little recourse from the manufacturer

2. We dont push warranties. Our sales percentages are less than 8%.

3. Average length of life is just that. For every 20 year old product, there is a few that do not

Winning solution receives a $25 gift card...Here goes

Dear Mr. Sheinkopf,

I purchased a stackable washer and dryer, a stove and a refrigerator on September 14, 2005 and like all of the people who commented on your blog I was very happy with the sales and delivery process. The hinge on the stove broke and was replaced while under warranty and is already not working properly again, but my main complaint is with the refrigerator. It is only three and a half years old and the "mother board" is broken according to your service man. I had to pay $99.00 to find that out and your customer service department wanted to send the serviceman back for another $280.00 or more.

I lost about $300.00 in food and I don't believe the life of a refrigerator should be three and a half years old. Apparently the craftsmanship is worthless and that is the reason you all push extended warranties. You advertise that you stand behind the products you sell but you don't mention the additional fees. I spoke with GE and they at least will send me the part for a fee but I would like my $99.00 refunded, I don't know why the refrigerator I purchased would have a mother board nor was I told that it did or that there were other options. A few months after this purchase my 20 year old extra refrigerator died and I purchased an inexpensive one from Sears which still runs perfectly and much colder than the GE ever did.

My purchases may be small in your eyes but replacing appliances is an investment for us
and we expect they will last at least 10 to 15 years. I will wait to for your response.

A $1200 Pendant?

This post is more about what not to buy. Most of what we sell is of this variety:



Cost is between $85 and $300 on average. Lighting is intriguing and so different than appliances. Instead of dealing with major industrial companies like GE and Whirlpool, we buy from individual owners and simple partnerships.

As you can imagine, the quality can differ greatly, and once a light flickers, malfunctions or hangs crooked, consumers usually have no warranty (we warranty in home for life). Even if you did have a warranty, electricians loath these types of jobs.

Which brings us to a $1200 pendant....Why





Extreme quality....Hand blown glass, authentic details and great components. Would I buy it? In the right room, it certainly would be a consideration.

The Harder Side Of Service

Lets perform a little experiment....If you are so inclined, Google LG(or any other manufacturer) service and call the service providers. Ask if they perform service in warranty. The answer should be a resounding no.

The reason: For $80 per completed call, that provider must answer the phone, diagnose the issue, order and pay for any parts and then go to your house. If the original diagnosis is wrong, that provider must pay again for more parts and return to the house. For nothing.

Sounds like a deal....The hardest part of the appliance business is warranty service. The numbers are downright scary. The average technician is now over 60 and retiring, and the amount of stores actually providing service is now under 20%.

The purpose of this post is not to scare you. If you are investing in a new kitchen, ask this question:

Who will be providing warranty service? Then prepared to be shocked

Extended Warranties

Interesting article in The Journal today about extended warranties


http://online.wsj.com/article/SB122057908752702305.html?mod=hps_us_whats_news



GE is selling their extended warranty business to an insurance company Assurant. Although the basic math behind an extended warranty is simple, smaller payment to avoid a theoretical larger payment later. It seems to be a hot button topic with consumers.

MY Take:

A. Never be bullied into buying a service plan. Many companies require their associates to sell a certain percentage of their products with warranties

B. NEVER buy a service plan from a company that does not have an actual service company. How will this product be fixed without actual repair people.


The math works in theory. Just insure the actual service does

Good Bye SubZero

You are looking at the SubZero 650 bottom mount refrigerator.



This is the dominant built in refrigerator. In fact in 2003, this was the number 7 sold refrigerator in the country. At over $6000 a product, that is eye opening. Magnetized crispers, vacuum seal, 2 compressors and the industries best warranty are the functional reasons to buy a SubZero. The name also has cache, which is a plus in an unstable real estate market.

However, SubZero is discontinuing its best product. The new line will be integrated or totally flush to the cabinets and will feature an air freshener to keep food fresher for a longer period of time and a water purifier. New products will be shipped August or September.

Lighting Warranty

You know the warranty on your car and appliances...I have to ask this one intrigueing question: What do you think the warranty on a light actually is?

I have already posted today....I can ask a question or three.

The Best and Worst(Repair)

No pictures today(I have an arsenal for the remainder of the week), but a pretty valuable post for appliance shoppers. In 2006, Yale completed 15,000 service calls under warranty.

As I have posted previously, there are also very similar products available. Thus, service records can be similar as controls are outsourced, and the same products can be packaged with multiple labels. Whirlpool, KitchenAid, Maytag and Amana have an identical refrigerator with...an identical service record.


However, with such a large database, you can also see deviation between good and ..not so good. We will look at both.

The Best: Miele

Not surprising at all. When you manufacture the product and outsource nothing you can expect quality(or somebody will be fired). This company is so fanatical that all customer complaints are logged in New Jersey. The problem is then traced by serial number to the factory, the line and the people responsible. Imagine that.
Of course, without cheaper outsourcing(and the strength of the Euro versus the dollar), Miele is also expensive.


Not So Good: LG

First, I like this company. LG has become a major force in the appliance industry almost overnight as a brand. The product is innovative and stylish, but this result is hardly surprising as well. If the goal is to sell as much as possible quickly, then invariably product quality and customer satisfaction will suffer. Typically fast growing companies will outstrip their support capabilities(like parts, customer service, technical support, warehousing and logistics), and this is the case. You should still consider LG as a brand, but just find out if there is a repair agent in your local area.

Buying On the Internet

Everyone has purchased products on the internet. It is easy. I buy frequently books on Amazon. I click order and it generates the request at Amazons' warehouse. The book is picked, packed and UPSd in a day or two.


What happens to appliances and lighting? Well, if it is small, the process is the same as outlined above.

If it is not...Be careful. The company will third party the freight to a low cost independent. It will be shipped to a couple warehouses then to the final shipper.
Unlike a simple book, the chances of damage to product and premises, miscommunication
and misunderstanding have increased greatly.

If you are considering buying any non UPSd product over the internet, protect yourself...


Here's how:

1. Check third party sites like epinions. Most of these companies advertise on the sites, but look at the reviews...

2. Check the local Better Business Bureau

3. Delivery is a major problem for any vendor, and it is deliberately ambiguous. Is it curbside or does the service include delivery of the product in home? Does it include installation? Are power cords provided? Is the old product removed? I am not cynical by nature, but this should be written on the invoice/sales contract

4. NEVER sign for anything without thoroughly checking the product. If it takes 3 hours, so be it. You lose your recourse with these companies with a signature

5. Never buy a extended service plan from any out of state provider. They have no way of fixing a problem out of warranty


Trust me, a little early protection will save aggravation later

Our Next Advertising Campaign

I really don't like traditional advertising. I just can't do it yet it is my job. Personnally, I like blogging better. I like talking to people rather than screaming at them. If I can teach 150 people a day to ask stores difficult questions than perhaps they will shop at Yale. Then again, half of you are from out of our market.


Anyway, I have 2 concepts for our next campaign. Feel free to comment, I will post a survey later.


The first is a more traditional campaign. Its about selection, expertise, warranty(we warranty lighting purchases for as long as you own your home)







The second is more of a direct comparason with a little humor....The possibilities are endless. Service, delivery, price(hey we don't have to pay the CEO 750 million)

How To...Buy an Appliance Part 5

I spend a portion of my free time blogging and answering blogs. If something is written about Yale, I will respond. I have been watching you.

There seems to be a pricing misconception in the marketplace. When you shop for appliances, shop the whole purchase. So much of the charges are hidden yet substantial. You should ask the following questions:


Delivery Charge
Removal charge per piece
Cord charge($25 is still a charge, right)
Extended Warranty Charge
Who fixes the product when it breaks(guess what most manufacturers do not fix anything)


You should also ask for this in writing. Only then will you have an idea of the true cost of your purchase


Have a nice weekend,


Steve

Consumer Reports(again)

As I said previously, Consumer Reports is a good guide. In this months edition, they discuss extended warranties. Two years ago, we did not sell extended warranties. At that time manufactuers had a five year limited warranty on parts, so a five year warranty was not a good value for the consumer.

Then Whirlpool bought Maytag, and dropped all the limited warranties. Frigidaire and GE followed, so now the average warranty is 1 year full. Now it is a legitimate consideration for products over $550.

The math is easy. The average completed service call is $129 plus $75 to 150 in parts versus a $99 five year warranty. For high brands, it is more expensive. Also, with gas and health insurance rising, these numbers are expected to increase substantially. The average service rate within the first year is 16-18%. We completed 15,000 service calls within the warranty period in 2006

A couple of pointers:

Do not buy a warranty from a company that cannot fix the problem. If we are to believe blogs, the Better Business Bureau and internet surveys, consumers are mad when discovering a product cannot be fixed due to an apparent lack of support. Be very wary of 1-800 numbers that are not company owned.

Do not overspend. (stop snickering), it is amazing to me when I see people spending $350 for a service plan on a basic product. The maximum should $150 for a regular product and $300 for an expensive professional

How To Buy An Appliance Part Three

Its a cool 66 degrees in Boston and raining. There will be no fireworks this year on The Charles. As it is unseasonably cool, my global warming rants are not nearly as effective as the 96 degree days of last week.

My fourth favorite blog topic is buying appliances and the many pitfalls thereof. Some of this is familiar. For the newer readers looking to buy products for their new kitchen, this post will be beneficial. It can also assist in other purchases such as bath plumbing and furniture shopping.

One assumption: You have already decided on the items(my second favorite blog topic)

Now the fun begins(again)

Delivery: We know to ask how much...But where is an even better question. Most internet based companies will drop products on the sidewalk. That's not terrible if you are buying a microwave, but how about a refrigerator. Next question is who...As in who are you letting in your house. If it is an independent operator, ask and run a quick check with The Better Business Bureau...Its easy.


Removal of Old Products: This must be negotiated BEFORE the sale is consummated. Letting the delivery guys handle the transaction is tantamount to adding $200 to your purchase.


Service: Or what happens when the product breaks down....About 16% of new products need service within the first year. You are entitled to a 1 year warranty, but who fixes the product is always a good question to ask. If it is the manufacturer(heaven forbid), ask for the phone number and call to see what experience can be expected for your future product problems


Extended Warranties: The how much is the easy part. Who underwrites and is responsible for the maintenance is an important question...For example, a leading warranty company teamed with an internet sales group has had 200 complaints lodged against them in a 36 month period...(Its hard to fix anything without service techs it seems.)


The small print....How much is a cord? What happens if a product does not fit or cannot be delivered(like in a brownstone in Boston)...Does delivery include hookup as well....

Am I paranoid, hardly...cynical maybe, but ask these questions before your purchase and have the commitments in writing. A drop of protection may save you a ton of hassle and expense in the future.

Buying Lighting

Buying lighting can be difficult. Lighting companies have no brand awareness, so consumers have no benchmarks. Unfortunately, there are all types of lighting products.

Here are a few common sense tips to navigate the lighting spectrum:

1. Check the Finish. Finishes should be metallic not painted. Painted finishes over time will fleck

2. If it flickers on a display, forget it. On low voltage fixtures, the main component is a transformer. There are good and bad transformers. A bad transformer will effectively cause the light to malfunction.

3. Check the fit: Simple stuff really...Does a fixture hang straight on a display.

4. Not all the glass is the same: Murano or Evianne glass shades project a better light than painted shades

5. Warranty? Only a few companies will provide a comprehensive guarantee in case the light fails

How to....... Buy a Light

In the appliance posts, we talk about Viking, Wolf, DCS and Thermador in the ranges as well as Jenn-Air, KitchenAid and Miele. Appliances have similar specifications to a certain degree, and the performance is likewise.

It is exactly the opposite in lighting as there does not seem to be any uniformity in specification or design. Thus, there is a real disparity in quality. Most consumers know generally about appliances. In lighting, however, most people do not know about different companies as well as what to buy and the pitfalls of avoiding bad products. Until now:

Lets take the pendant:



We warranty fixtures for as long as you own your home, because a good fixture should last. It is not that difficult as long as the product has integrity. I am in no way advocating that you need to spend a fortune for decent product, but you just do not need to pay an electrician twice to remove a bad one.

Buying Appliances on the Internet

There are tons of choices when buying products on the internet. I think that it is good for the consumer and the marketplace in general. It adds a level of price transparency...Sort of. You have to consider the ancillary charges when buying on the internet especially delivery and removal.

There is another element to purchasing from out of your immediate area. The value of your time will be compromised somewhat in dealing with common carrier freight as well as returns and damages as well.

Lastly, you really should research who the merchant on the other side of the transaction really is. Epinions is a good source of information. Better Business Bureau is a better source. The leading appliance online retailers have 176, 124 and 42 complaints lodged against them. To be more accurate the one with the 42 complaints uses a warranty company with over 200 complainte. For perspective, we have a higher appliance volume with 2 complaints filed over 12 months(both handled) on over 30,000 sales, delivery and service transactions.


This is not an anti internet rant, because we have a big site and are actively building a bigger one. But to the 40 hard core readers and the occasional visitors of this blog, please educate yourself before buying on line.


Have a nice weekend

How to buy....A front load washer

As I have mentioned in previous posts, front load washers will pay for itself versus a top loading machine in a very short period of time.



But which is the best? That really depends.


Perhaps the best overall machine for fine washables is the Miele. This machine has a honeycomb drum so the clothes "glide" on the drum with minimal contact. It also has an incredibly intuitive control panel, so you can customize wash, rinse and spin cycles. Because Miele manufactures almost every part down to the component level, typically there are less service issues with this brand in general. Out of 15,000 total warranty service calls performed by us last year, less than two dozen were Miele.



If you are placing machine on a second and third floor, then you should consider the Duet Sport by Whirlpool. The Duet Sport has a six point suspension system that keeps the machine balanced during a spin cycle. Front loaders spin at 2-3 times of a top loader, so floors will vibrate. (For people building homes, consider this and move the studs closer, so it will not be a problem). Whirlpool has always manufactured great laundry, and The Duet is no exception.



For energy efficiency and capacity, look at the Bosch. Bosch is huge and incredibly water efficient(10% less than comparable pieces). It has the number 1 rating in Consumer Reports, which is good for any brand(but should not be taken as gospel).



I like Frigidaire. Their products are always well priced and designed. The machines are a tad smaller in internal capacity and the water usage is 17 gallons, which is still good. The price for a washer and dryer at $1099 is outstanding. Look at the ATF6000 and ATF7000 models....Excellent values.

Buying Appliances at The Best Price

So you want the best price?

The unit cost should be easy enough to calculate. It is the other services that are next to impossible to figure. A few companies are smart enough to list a low price and then inflate the necessary services...But here is the skinny:

Delivery costs...Anywhere from 0 to $300 on the same item

Removal Cost: $0 to you have to negotiate with the driver....You should be very wary of removal fees

Electric cords(dryer and range):$0 to $25 dollars...for a $5 dollar item?

Service Warranties: $99-350 for a 5 year warranty...You should only buy one of these from a dealer who actually performs service....


I hate to admit it, but not a good week for the blog. My picture guy was on vacation, but we have some very interesting posts for next week, so give us another look

Buying Service Contracts

Service contracts are extensions to the manufacturers warranty, which can be either parts, labor or both. The most common warranty in the appliance industry is a 5 year, which is actually 4 years plus the manufacturers original 1 year. Think of it as year 2-5 coverage.

There are many people who believe good products should work. I respect that. That thinking would bankrupt the insurance industry, but in theory, good products should operate for longer than 5 years. Statistically, our service department completed 15,000 service calls in warranty, so there are a good fraction of new products for whatever reason need repair.

The pricing structure should be very simple. usually a 5 year warranty will cost $99-199 on basic products and more on expensive products like SubZeros and professional products depending on the store

The question of whether to actually purchase a service contract becomes strangely complicated. You buy a service contract from anywhere. The first question is: Who fixes it? The number 2,3 and 4 volume appliance dealers have limited appliance service technicians in their organizations. On the Internet, it is even worse. How can an Internet store from New Jersey service an appliance in Boston or Boise. Think about it. Yale is one store and completes over 15,000 calls per year. Can you imagine a chain of stores. My point is do not invest the money on service when a company cannot by its very nature can complete the transaction

I do not want to turn this into a service rant. My purpose is to educate, so don't plunk down your hard earned money on a contract that may be worth only as much as the paper and ink