TALLAHASSEE, Fla. — You’re about to put the holiday turkey into roast … but the “pre-heated” oven is cold as ice. You gather your buddies to watch the Big Game … and the TV is on the fritz. That end-of-year report you spent the weekend cranking out from home is due in 10 minutes … and your laptop goes black. As Americans prepare to embark on Black Friday shopping, the haunting memories of past product failures and the quest for peace of mind are the biggest drivers of service contract purchases.
With Black Friday and the holiday shopping season on the horizon, the Service Contract Industry Council (SCIC) and Motor Vehicle Protection Products Association (MVPPA) earlier this month asked consumers to share their stories about a time when a product stopped working at the worst possible moment. The number one culprit: kitchen appliances. And the worst possible moment? Right before or during a holiday – most commonly Thanksgiving or Christmas!
“It never fails – appliances or other consumer products seem to sense when we need them the most, and that’s when they choose to stop working. A service contract may not be able to stop the breakdown, but it will make replacing or repairing the failed product so much more simple and more affordable,” said Tim Meenan, SCIC and MVPPA executive director.
In the survey of 1,000 American adults, peace of mind was cited as the single biggest reason (40%) for purchasing a service contract on a consumer product. When asked to describe their horror stories about when a consumer product stopped working at the worst possible time, the most common response was broken kitchen appliances (38%).
Here are some actual consumer comments received in SCIC and MVPPA’s open-ended survey:
- “Right before Thanksgiving! My oven lost its heating and then my dishwasher went out!”
- “Laptop broke while trying to submit a paper for college 10 minutes before it was due.”
- “Water heater went out in the middle of showers & laundry while getting ready for my wedding!”
- “TV died while watching the Superbowl!”
More than half the respondents (54%) reported that a product broke on them right before or during a holiday or while on vacation. About one-third had a product break just as a work or school assignment was due. Technology – laptops, cell phones, TVs, and more – was cited by 1 in 3 respondents as the consumer product that failed them at the wrong time.
And then there’s losing an electronic key fob in a crowded mall parking lot while doing holiday shopping. Without a key fob protection plan, a consumer’s holiday budget could be blown buying a replacement key.
“There’s no way to know when a routine failure or worse may hit your essential appliance or consumer electronic device, so it’s vitally important to have a backup plan you can turn to,” Meenan said. “Consumers value the predictability that service contracts provide in an unpredictable world.”
Survey respondents who had purchased a service contract on a consumer product in the past were asked their primary motivations. Topping the list was peace of mind (40%), followed by cost and hassle of repairs (23%), more affordable than replacement (21%), and Murphy’s Law – if I didn’t, it WOULD break (14%). Peace of mind was cited most often by consumers ages 18-34 (45%), while those ages 55 and older were the most likely to cite the affordability of a service contract compared with the cost of repairs (27%) or replacement (24%).
Service contracts are sold at the point of sale or after purchase, and can even cover smaller products such as e-readers and video games. Consumers purchase millions of service contracts annually, citing peace of mind and time saved tracking down repairs. And while Black Friday is all about impulse purchases, many service contracts provide a “full refund period”, allowing consumers to cancel a service contract without penalty for a certain period of time after purchase.