Why don’t people buy Service Agreements?

I ran across this question in a Linked In Group and thought that I would address it in more detail in this blog.

So, why do people say No to service agreements? All of us in the service industry know that there is great value in service agreements for our customers. Why don’t they see what we see?

I think that most people steer away from service agreements for numerous reasons. One reason is that people in these fast paced times tend to be more reactive than proactive. There thought process is along the lines of - I will address the problem when it presents itself. You and I know that by this time it is too late. The customer pays a hefty price for not having the contract. Unfortunately, they don’t see the value until they see the repair bill.

Another reason is that people want to know that purchasing a service agreement can be justified. This is especially evident with people living in large homes. Why should I purchase an agreement when it would cost just as much to buy a new dish washer should mine go bad? What the customer fails to see in this situation is that, yes you could buy another dishwasher, but what if it isn’t the dishwasher that breaks? These types of customers also fail to take into account the total costs associated with a repair, specifically Time and Materials. Everything adds up quickly and usually in favor of a service agreement. Should of – Could of – Would of…

Lately, there has been a lot of bad press about service agreements (see Negative Press on Service Contracts?? Bantha Poodoo!!) and people are thinking that they are a waste of money. I see a lot of complaints about things such as - I never read the fine print – what do you mean it isn’t covered? They are afraid that if they purchase the agreement that what they need fixed will not be covered. In these cases, I blame the service company for not doing a better job of informing the customer before they purchased the agreement. Although, I have known too many people also who have said just give me the contract and never read the terms of the agreement and/or totally ignore the sales person when they are explaining the coverage.

This list could go on, but I am going to end it with one last reason. Simply put, I would say that people tend to say no to service agreements when they receive poor service from the service company. Unfortunately, there are too many service companies out there that do not see the value in providing near perfect service. As the saying goes, the first impression is the lasting impression and if your technicians do not provide exemplary service to your customers, your customers won’t think twice about saying no to a service agreement.

So, how do you respond to each one of these reasons? I have my opinions, but I am interested yours. Let us know below.