5 Keys to Creating a Profitable Planned Service Agreement

By: Joe Crisara

5 Key Components to Creating a Profitable Planned Service Agreement

Recently, we published an article on why your company needs to abandon the old-school emergency culture of this business and adopt a Planned Service Agreement Culture instead. If you missed it, you can get all the details here.

If 67% of your calls on a month to month or year to year basis are emergency calls (meaning people who called you when something crucial breaks), then your company is operating in an emergency-based culture.

I get it.

We’re in a traditionally seasonal business. One month you’re starting early and working late trying to get to all your calls, and the next month you’re lighting candles and holding prayer vigils to try and make the phone ring.

Maybe that’s just the way it is. You’re stuck with that wild scramble one month and then sitting on your hands hoping someone calls the next month. You just have to accept it, right?

It may feel that way sometimes, but I assure you do not have to accept it.

A Planned Service Agreement (PSA) can not only help you smooth out those seasonal ups and downs, but also make your business more profitable, and create a more positive company culture in the process.

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How Planned Service Saved My Company

Back when I was running my own shop, I was no different. Initially, I did what everyone does. I fixed things that broke. I waited for things to break, and then hoped when they did break that the homeowner would call me to fix it.

Just like you, some months a lot of things broke and the phone rang like crazy. Other months, things stopped breaking and the phone didn’t ring. What a way to live.

But after a while, I implemented a PSA and it made a huge difference.

Remember how I said that if you’re doing 67% or more in emergency calls, that you have an emergency culture? The opposite is also true: If you’re running 67% or more Planned Service calls, you’re doing great and you have a Planned Service Culture.

Over the years I tested, tweaked, and fine-tuned my company’s PSA to the point where 80% of our calls were planned service calls.

The result? Our calls evened out, and seasonality wasn’t such a big deal anymore since we had planned service calls year round.

We got to work with customers in a non-emergency capacity, consulting them and providing solutions before something bad happened to them.

And because we were solving problems before they happened and making recommendations as trusted consultants, my company was more profitable than ever.

That’s what becoming a planned service company can do for you. It makes you economy proof and weather proof.

Sounds like Contractor Utopia, right? Not so fast…

All Planned Service Agreements are not created equal. You can’t just throw one together off the cuff and hope it works.

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5 Key Components of a Great Service Agreement

There are 5 key components to a great PSA that comes with all those great benefits I mentioned. If your PSA doesn’t have all of these components, it won’t be as effective.

Key Component #1: Your Entire Company Must Abandon the Old Emergency Culture and Embrace Your New Planned Service Culture

You can’t just change the culture in your mind. It has to be very intentional and very visible to your entire staff. You’ll need to hold meetings about it, provide training around it, and constantly remind your company that you’re a PSA first company. People who don’t embrace your new culture don’t work for you. Make it clear and lay down the law.

Key Component #2: Planned Service Agreement Customers Are Priority Over Emergency Clients

You have to start changing the culture somewhere, and the first place you change it is with your CSR’s and Dispatch. Make it clear that PSA customers get scheduled first, and after you’ve run all your PSA calls for the day, only then do you get to the emergency calls.

I’m not going to lie. At first this is going to be hard. This is the point where you and your staff are going to be tempted to put emergencies first. Don’t do it. Planned service calls first. Always.

Key Component #3: Planned Service Clients NEVER Pay a Diagnostic Fee

What? No trip fee? That’s right. Planned service customers have pre-paid for their call. They never pay for trips or diagnostics. It’s a benefit of being a PSA customer, and in the long run it will serve your company well, too.

Key Component #4: The Planned Service Agreement is NOT a Discount Program – it’s a Higher Level Premium Service

I know a lot of shops position their PSA’s as a discount program. Don’t make that mistake. Instead, position it as a higher premium service you offer customers. Focus on the financial benefits they get like not having to pay for a diagnostic or trip fee ever, and the fact that they’ll have less repairs because they’ll be getting regular checkups.

Your customer is able to use their service agreement any time – even at night, weekends, and holidays. That level of service doesn’t sound like a discount program, does it? That’s because it’s not. It’s a premium service, and those who join receive special perks.

Key Component #5: Planned Service Agreements Include Prepaid Maintenance and Consumables Only – NOT Repair Coverage

It’s also a mistake to position your PSA as some kind of insurance policy. It doesn’t include repairs. It covers trip fees, diagnostics, regular prepaid maintenance and consumables only.

Having the opportunity to be in front of your customers on a regular basis this way means that not only will you be able to save them from breakdowns and other major problems before they occur – but you’ll also have the opportunity to talk about replacement and other solutions before something catastrophic happens.

And because of that, if you position it right, you will make more sales and have happier customers in the process because you’ve fixed their problem before it became inconvenient, overly expensive, or dangerous to their family.

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Enjoy the Benefits of Your Planned Service Culture

So even though it will take some discipline and training to install a Planned Service Culture in Your company, the end results will be more than worth it – for you and your customers.

You’ll no longer be a slave to weather, or the economy or any of those other cyclical factors in this business that drive you crazy.

Your operations will run more smoothly when your staff is all on the same page and working toward the same goal. You’ll have more opportunities to talk about solutions and replacements with customers when they’re in a receptive state of mind instead of in a panicked emergency state of mind.

And because you take such good care of them and prevent big problems from happening, your customers will tell everyone they know to call you.

A strong PSA is the best thing you can do for your customers, your employees, and ultimately your bottom line.

If you’d like to learn more about how to set up a simple, profitable PSA for your company, click below and grab my FREE 33 Point Planned Service Agreement Strategy Checklist!

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One thought on “5 Keys to Creating a Profitable Planned Service Agreement

  1. Good info thanks, got 4 out of 5 my challenge is our psa’s are 200 with 2 visits but if they don’t sign up its 90 diagnosis and 105 tune up. I priced tune ups high to keep from losing money on customers just wanting a quick fix but just looking at that from cust. Point of view our PSA may appear a discount product.

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