Brand Mismanagement: How to Double Screw a Customer Without Really Trying

Maytag and Whirlpool Combine to Damage Two Brands Irreparably

Most of my observations have so far been from a safely removed distance of objectivity. Unfortunately, I must say that this exposure to stupid marketing and pathetic corporate decision making comes from first hand experience.

Maytag: The Rise and Fall of an American Icon

I'm guessing that many of you are aware of the problems that Maytag has had over the past few years. But, for generations before that, Maytag was reputed and advertised as the maker of top quality washers and dryers.

Maytag was known for solid dependability, long service and good old American values. So much so that the company engendered a fanclub dedicated to preserving Maytag collectibles and memorabilia.

The company grew quickly on its reputation for quality washing machines, and by 1924, 1 in 5 washers sold was a Maytag. This enthusiasm for Maytag products survived the Depression, with Maytag remaining profitable throughout, and through the transition from Maytag family control in the 1960s to professional managers with no family affiliation. But by the early 1980s, Maytag went on a acquisition spree and lost touch with its past, becoming just another conglomerate.

Never really an innovation leader, in 1997, Maytag aimed to reinvigorate their long since commoditized washer and dryer line with a new line of "high end" front load washers branded Neptune. Although front load machines had long been offered in Europe, they had mostly disappeared from the North American market by the 1960s.

Maytag's new brand used 40% less water and 65% less electricity than traditional models, and although expensive compared to an American-made top load machine, was significantly less than the premium European brands, and ideal as an eco-friendly upgrade for the mass consumer market. Well, that was the idea anyway.

Not so High End

It quickly became apparent that Maytag's innovative new machine was flawed and that its wax motor, electronic door latch and circuit board control unit were defective in design. Thousands of owners were reporting the same problems, sometimes multiple times for the same machine after it was repaired, including:

• door lock not engaging
• washer will not enter spin cycle to drain water from clothes
• large amount of water remains in the wash drum
• washer will not complete wash cycle
• odor, mold and mildew problems forming inside machine due to mechanical malfunctions

A class action lawsuit ensued, and Maytag negotiated a settlement (of course, with the requisite denial of design flaws). The cash portion of the settlement totalled $10,250,000 with $8,250,000 going to attorneys, and the remaining $2M going to consumers as compensation for repairs. The settlement also called for free repairs (including redesigned replacement parts, although the original parts design was, of course, not defective!) for class members and/or purchase certificates for replacement machines.

All this distraction and loss of reputation cost Maytag dearly in new sales across all their brands, and ultimately led to significant losses in market share, earnings and share price which were exacerbated by problems consolidating their acquisitions and competition from better quality lower-priced imports. The result was the end of the line for Maytag as an independent company, and after a long battle between different suitors, including the Chinese giant Haier, for control, and they were acquired by Whirlpool in 2006.

The iconic image of a lonely Maytag repairman opining about never getting a call because the machines were too well made stuck to this brand for two generations. It was the brand your mother wanted to own, and her mother, and her mother's mother.

My Story

I have a Maytag Neptune washer and dryer. One of the models affected by the class action, in fact. Unfortunately, we didn't use the machine quite as much as other class members, and so our machine failed from the exact problems described above just a few weeks ago. The class action settlement was agreed to almost 2 years ago, and the claims deadline was August 9, 2005, just over 1 year ago.

For whatever reason, I did not receive any notice of the class action, and didn't know anything about it until the service person we had out to diagnose the problem told me he had fixed hundreds of machines with the same problem and that Maytag had been sued over it. I went searching on the Internet for the peculiar symptons we were having, and sure enough, there it was, exactly my problem described in lurid detail along with information about the lawsuit.

Call to Maytag/Whirlpool

Although the claim deadline had passed, I called Maytag's Neptune service hotline thinking surely they would help out with this well known problem. How naive I was.

The chat went like this.

Me: I have a Maytag Neptune washer, model number MAH3000AWW, one of the ones affected by the class action lawsuit, and I have experienced exactly the failure described by the suit -- my door won't lock, the spin cycle won't start, the water won't drain -- basically I can't finish the wash cycle.

Them: I'm sorry sir. Claims were closed against that lawsuit a year ago. I can't help you.

Me: Yes, I saw that when I researched the problem on the Internet. There are literally thousands of people posting complaints about these machines and the defective design of the affected parts. But, I never received the notice of the suit that you sent out, so I didn't know that I was a member of the class.

Them: But you are a member of the class, and you didn't file a claim.

Me: You're right. I didn't file a claim because I didn't receive the package and didn't even know about the lawsuit or my rights to compensation.

Them: I'm sorry, but the terms of the settlement said that you had to file a claim by August of 2005. You didn't opt out of the settlement, therefore you are bound by its terms.

Me: But, I didn't receive the information that you sent to everyone else, so I didn't know there was a lawsuit, or that I had to make a claim by a particular date or opt out of the settlement. I didn't even know there was a settlement.

Them: Yes, but you were a member of the class, so there's nothing I can do to help you.

Me: What!?

Them: Legally, we are bound by the terms of the settlement. Since you didn't make a claim, you aren't entitled to compensation.

Me: But you sent the package to everyone else. I see from the documents online that you mailed them out to members of the class. You didn't mail a package to me. Since I never received them, I never had an opportunity to make a claim or opt out.

Them: There's nothing I can do sir.

Me: What do you mean there's nothing you can do? I have the exact model that the suit names as having design defects in the parts. Those parts have failed in my machine, and I am experiencing exactly the problems that the lawsuit claimed compensation for. I was quoted almost $400 for repairs. In settling the suit, you acknowledged that there were problems -- how can you say "There's nothing I can do?"

Them: I can't do anything sir.

Me: You could offer me replacement parts.

Them: No sir, I can't.

Me: Why not?

Them: Because we legally can't.

Me: That's ridiculous. Of course you can. I'm not making a claim against the lawsuit, I'm saying that you've already acknowledged a design defect in these parts in settling the suit, and I shouldn't have to pay half the cost of the machine to replace those parts. Why would I ever go out on my own and pay for those parts, knowing that they were designed with a defect and that this could happen again in another year?

Them: We didn't acknowledge that the design was defective. We settled the claim to avoid the risk of going to court. However, those parts have been redesigned and no longer have the problem you are having.

Me: So, if the design wasn't defective, why did you redesign the parts to avoid the problem? That sounds like a lot of doubletalk to me.

Them: You said you didn't know if the parts would fail again in a year. They've been redesigned, so you shouldn't have that problem again.

Me: Right. So the parts in my machine had a design defect, and failed because of it. My machine doesn't work anymore. You claim that you have redesigned those parts to solve the problem that you don't acknowledge that you had, but even though my parts were defective, you won't replace them with parts that aren't?

Them: I've already told you sir. We aren't legally allowed to replace your parts.

Me: Of course you can. There is nothing "legal" about this. I'm not making a claim under the lawsuit. I'm just asking you to do the right thing and replace these defective parts. Automakers don't issue recalls on defective parts and then stop replacing the bad parts because not everyone brought their car in when asked. They do the right thing and replace the parts when the car comes in for service.

Them: We didn't issue a recall.

Me: I understand that. But you built my machine with major components that you have acknowledged to be defective. My wax motor has failed and because of it, moisture has gotten in the control circuitry. As a result, the door won't lock, the machine won't start the spin cycle to drain the water, and the wash cycle won't finish. The clothes end up sitting in 4 inches of water. That is exactly the set of problems that the lawsuit you agreed to settle describes. You have redesigned the affected parts, to avoid the problems that you don't acknowledge were caused by the defective parts. So why don't you do the ethical thing and issue the repair shop a set of complementary parts. This has nothing to do with your lawsuit. It is about living up to your brand promise. I bought a premium machine because it was a dependable Maytag. But, it turns out it was a lemon, and you knew it was a lemon, and you were sued because it was a lemon and you redesigned the parts because it was a lemon. But you won't help me fix my lemon?

Them: I'm sorry sir, there's nothing I can do. Is there anything else I can help you with?

Me: What do you mean "Is there anything else? You haven't helped me with the only thing I've asked that you could help me with."

Them: We can't replace your parts for free.

Me: You understand that if you don't, you haven't lived up to my expectation for the brand nor to my expectation of ethical treatment of a customer, and I will never buy another Maytag again, nor will I ever buy any Whirlpool product of any kind? You are trying to save pennies, but you're committing brand suicide.

Them: I'm sorry you feel that way sir. I can't do anything.

Me: Can I speak to your manager.

Them: Yes sir. But they will tell you exactly the same thing.

Me: Let me talk to the manager please.

So, eventually they let me speak to the manager, and the conversation largely repeated itself, except that I asked that my displeasure be noted officially and that the top executives should understand that however many millions of dollars they were spending on marketing, it was all wasted if they treated customers like this. Of course, no comment.

So, What Could/Should They Have Done?

Well, for starters, they kept a polite customer on the phone a long time, only to end up with him blogging about his negative experience and telling the world that:

• No one should ever buy a Maytag. Ever. They are not only not the reliable, dependable machines of yesterday, the company refuses to stand behind the machines, even when they've acknowledged selling them with defective parts. If you need help, you'll get legal mumbo jumbo, not service.
• Whirlpool is about cutting costs, not about solving customer problems. It is not a company or brand to be trusted. Customer service people, and even the management are not empowered to do what is right. Caveat emptor. Buyer beware. This is not a company that stands behind its products.

Obviously, not a very smart outcome.

At the minimum, offering replacement parts was the reasonable thing to do, and not nearly as expensive for them to provide as they are for me to buy. That's the least they could do, but it doesn't leave me with a warm fuzzy feeling. Especially after listening to 1/2 hour of legal doublegoodspeak.

But this was not a case where the minimum was the smart thing to do. A smart marketing company would have looked at this problem situation and figured out how to turn it to their advantage. I was a purchaser of the most expensive wash machine that Maytag sold. Someone who had purchased two Maytags before that. Now, I will never buy another, nor will I buy any Whirlpool brand. Ever. Consider the long-term cost of a deeply dissatisfied customer.

I didn't think of suggesting this at the time, because I was too caught up in the Catch 22 Kafkaesque nonsense of a customer no-service person telling me why it was my fault that I had a machine with defective parts that had failed. But, what if Whirlpool had said:

"Alright sir. We understand your frustration, and we can see that you purchased a top of the line model. You had a right to expect that it would perform as promised. Let me offer you one of two choices. First, we'll replace the parts with the new design, and we'll also cover the service cost to install them. Alternatively, we understand that you might not feel comfortable with your Maytag machine any longer, and the machine you have is already a few years old. So, I'd like to offer you your choice of brand new front load Whirlpool models for half price."

Marketing Opportunity Missed

So, there you have it. A simple solution. Ultimately, had Whirlpool offered this, I would have opted for the 1/2 price machine, which is probably pretty close to their cost, so in effect it would have cost them nothing. Instead, they have soured me on their ethics as a company and their willingness to stand behind their products. And, the result is that not only will I never buy another of their products, I will tell as many people as I can of my experience, and advise them to do the same. Besides, I understand that the Chinese and Korean brands have now passed them in quality.

Had they done the right thing, they would have me trumpeting their brand for treating a customer beyond his expectation, and continuing to consider other Whirlpool brands when making major appliance purchases.

A lesson in brandicide. It should be a crime.

Comments

[jojo]

http://toafk.blogspot.com/
As you can see by my recent post's I have the same problems with Maytag that you have. I too missed out on the suite. I know it's an older post, but the problems just keep on happening! jojo

[SONIA JOZA]

WE HAVE THE SAME MACHINE WITH THE SAME PROBLEM,BOUGHT IT FROM SEARS AND THEY TOO DECLINED TO BACK IT UP.THE MACHINE GAVE US PROBLEMS FROM THE START AND WE GAVE UP AFTER SEARS TOLD US WE DIDN'T HAVE ANY COVERAGE FOR THE WASHER.ANYWAYS,THE WASHER IS SITTING IN MY BASEMENT FROM WHEN IT WENT BAD,IT LOOKS LIKE I'M GOING TO EAT THIS ONE(850.00 DOLLARS WORTH OF NOTHING)IN THE FUTURE THOUGHT I WILL NEVER BUY FROM SEARS,WHIRLPOOL,AND MAYTAG EVER AGAIN!I HOPE THE MONEY THEY GOT FROM ME AT LEAST HELPED OUT SOME PEOPLE.BYE.

[Mark]

15 year old Bosch front loader still - working.
10 year old subzero - still working.

Whirlpool and Maytag appliances in recent years....failing frequently.

I have higher-end rental properties, so my appliance choices are different.

Maytag front loader, purchased as new in 2006, still has spin problem and door issues. It was a bargain/clearance and I went in with eyes wide open. Keeping under service contract (utility company repair plan) until they decide to drop this sorry machine.

Don't use Sears for extended coverage, they'll charge you a small fortune for this model. You can also write a small book about how many times they have to show (or no-show) to repair a problem...or you give up....whichever comes first. I agree with author above. No more Sears, Whirlpool or (Whirlpool-Maytag).

If we passed consumer laws that required 10 year warranty coverage on larg & small appliances and water heaters, we'd find that, amazingly enough, these appliances would last for 10 years and 2 days. (Note the water heaters that are offered in 6yr, 9 and 12 year guarantees. Same for auto batteries. Sure, we might pay a little more, but the landfills wouldn't have as much waste.

Then, if we passed laws that required energy efficiency of appliances to be increased 10% every other year, in 10 years we'd be able to replace our failed appliances with something worth having for the next 10 years.