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Protection Agreements


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8 replies to this topic

#1 of 9 OFFLINE   CaseyLS

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Posted January 31 2006 - 07:16 AM

I have been a member of HTF for a few years but haven't posted here in quite a while. I recently got a job with a major retailer that includes optional service plans with the products we sell.

I basically have a few questions about them:

Do you buy them? (Why or why not)

Are you happy with it?

Also if you did buy, what store did you buy it from?

Were there things that the salesperson said they would cover, that are in fact not covered?

#2 of 9 OFFLINE   SethH

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Posted January 31 2006 - 08:28 AM

If you do a search in the various sections of this forum you'll find several threads dealing with this subject. They can get fairly heated.

Personally, I do not buy them. Also note that I spent about a year working for a large electronics retailer and I sold these to many customers.

I don't think they make sense. Sure, there are TONS of examples of them paying off for people, but the bottom line is that the companies make money off of them, otherwise they wouldn't sell them. If you question how much the companies make, just look at the commission percentage they offer you on the warranties.

My theory as a consumer is that if I bought warranties on all my electronics I will probably have wasted my money. Why? Lets say I bought a $1200 television and spent an extra $120 on an extended warranty. Two years later something goes wrong and it has to be repaired. Well if that repair would have cost $200 then I've saved myself $80, right? Nope, because I also bought a warranty on several other pieces that did not break, which probably cost more than $80. None of that includes potential savings rates during that 2 year period.

As a salesperson, you've got to sell them if you want to keep your job. But that doesn't mean you have to be overly aggressive. When I would start into my pitch, if the person said "no thanks" I would drop it. I also NEVER made any false claims about the warranties, although I worked with several salespeople who did.

#3 of 9 OFFLINE   chris_everett

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Posted January 31 2006 - 10:30 AM

I almost never buy them. I bought one on my car, because I have a Jeep, and they don't have a great record of reliablity. Also recommended that a guy that I speced a computer for buy one. (He wanted to buy a cheap retail box, and I was worried about reliablity) In both cases they have paid off. (The computer one paid for itself, not yet on the Jeep.)

I try to buy stuff with a good record of reliablity. Also stuff with a long manufactures warrenty, as I think that says something about the quality of the gear.

If a salesman gets pushy about it, I'll walk. (3 strikes and _I'm_ out)
--Chris Everett

#4 of 9 OFFLINE   Robbie R

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Posted February 01 2006 - 04:35 AM

As a rule I don't buy extended warranties, but I made an exception when I bought my Panasonic CRT Rear Projection TV a few years ago. The only reason I bought the extended service plan was because "Consumer Reports" recommended them for CRT Based RPTV's at the time. (about 3 years ago). Having "In Home Service" was the big selling point for me. Just the thought of having to move my RPTV gives me a sore back.

My Panasonic has been fixed once already under the extended warranty, and I still have 3.5 more years of coverage. I bought 5 years on top of the 2 years the TV came with, giving me a total of 7 years. I think the extended service plan was good value in this case, but I do not buy extended warranties for any other products.

I would suggest you check if "Consumer Reports" recommends them for any products right now. That would be a good selling feature you could mention to customers when trying to sell them.

Quote:
Were there things that the salesperson said they would cover, that are in fact not covered?




The first salesman I was going to buy my TV from tried to tell me that the "Extended Service Plan" would cover any damage from "Burn In". After I confirmed that it DID NOT cover burn in with the store Manager, I chose to buy my TV from another salesman Posted Image

#5 of 9 OFFLINE   Hunter P

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Posted February 01 2006 - 05:13 AM

I never buy them. If the unit is working fine for the first month then 99% of the time it will work for the expected life of the product. Most failures occur within the earliest stages of the product's life. Warranties usually only cover manufacturer's defects and most of those are discovered within the first few days.

The companies know their failure rates far better than the average consumer. They also know the expected life of the product and try to offer a warranty that will end before the failure rates will sharply increase. Warranties offered by the manufacturer are built into the MSRP of the product. If their failure rate is 1-2% then they are making a lot off of warranty costs because they never have to pay back to the 98-99% satisfied customers. (Your company's failure rate mileage may vary.)

The retail store is just jumping on the bandwagon by offering on their own extended warranty. They know that if the product survives the manufacturer's warranty period then it is a good gamble that it will be able to bang out another year or two. Some don't but most do so it more than makes up the cost. Especially since by the time the warranty period reaches its end, some customers would rather buy a replacement with the lastest and greatest model rather than repairing their old clunker.

Warranty is like insurance, if only 10% of the customers ever make a claim then that is 90% of customers who are basically just giving away their money for nothing. I play the odds and always assume I am one of the 90% that will buy a product with no issues.
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#6 of 9 OFFLINE   MarkHastings

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Posted February 01 2006 - 08:27 AM

Quote:
I never buy them. If the unit is working fine for the first month then 99% of the time it will work for the expected life of the product. Most failures occur within the earliest stages of the product's life. Warranties usually only cover manufacturer's defects and most of those are discovered within the first few days.
That's my exact reasoning for NEVER buying them. Those things are SO specific that they basically only cover manufacturers defects. And since most defects will show themselves right away, it will almost always be covered by the stores "free" protection policy.

I do the same with my cars. I never buy the extended agreements because they too usually deal with manufacturers defects and if my car goes 5 years without a defect, it's pretty safe to say that the car is going to be ok.

A funny story, I was once buying a TV and the guy was trying to get me to buy the extended warranty. I kept saying no, and he thought he was being swift and said "You wouldn't buy a car without an extended warranty Posted Image' - and seeing how just 3 months earlier, I had bought a brand new car and not the extended warranty, I told him how so. Posted Image

I doubt he believed me, but I still thought it was funny, because it was true!

p.s. I also agree with SethH's point. If you always bought the extended warranties, you'd be losing out at some point even if you WERE able to use the warranty to cover a defect that you normally would have had to pay for.


Oh my! I just remembered another great line. I was buying a DVD player and the guy was desperately trying to get me to buy the warranty. It was like $80!!!! Posted Image I said "If the thing breaks, I'll just throw it out!"

His eyes got real wide and couldn't beleive I'd actually throw it away. It was SO funny! But again....SO true!

#7 of 9 OFFLINE   Hunter P

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Posted February 01 2006 - 09:53 AM

One other thing, I recently bought some RAM from Newegg. They come with a lifetime warranty from the manufacturer but Newegg still wanted me to click the box for their extended warranty. Um...yeah.Posted Image
GIR, UNLEASH THE MONKEY!
MONKEY!
"I am the Doctor of Death, and I have come to cure you of your life." --Endless Mike, The Adventures of Pete and Pete

#8 of 9 OFFLINE   Steve Felix

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Posted February 01 2006 - 12:08 PM

In the long run, the house always wins. The only time it would make sense is if I couldn't afford to replace the item. And in that case, I probably shouldn't be buying it anyway.

By the way, I thought this thread was going to be about dealing with the mafia.
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#9 of 9 ONLINE   Carl Johnson

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Posted February 01 2006 - 12:29 PM

About ten years ago I had an unsuccessful stint as a commissioned salesperson at Circuit City. My salary was so dependent on selling Extended Service Plans that I reached a point where I didn't really care if I sold anything because the only way that I got paid is if they bought ESP. Often times the commission for selling a piece of equipment that was in the ad was less than a dollar but I would make an additional ten bucks if I could talk the customer into buying a $30 ESP.





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