Agreements Are Lifeblood Of Any Service Company

By: Joe Crisara

Agreements Give Life

Maintenance or service agreements are the lifeblood of every hvac, plumbing or electrical service company that is in business today. In a nutshell, they formalize the relationship between clients and your company. Agreements allow you a loyal base of fans that not only want to receive your marketing message but actually read this massage as well.

The carnage created by not having such agreements in place can cost you in many ways. Loss of clients and employees are just the beginning. Without service agreements to supply a steady “lifeblood” of loyal, returning clients it can eventually create an environment where companies can go out of business. Basically this program to sell service for the future at today’s price in exchange for payment today creates a circulation of cash needed to run every business that does service for residential or commercial clientele.

It’s beyond a good idea to start a customer loyalty or service agreement program. Is is completely necessary to sustain growth. Not to mention the challenges that you inevitably face in the tough service business world in holding on to existing market share. Why are maintenance or service agreements so important? There are lots of reasons. Here are a few…

1. Reduces Impact Of Slow Times – Selling pre-paid maintenance creates a “bank” of cash-flow to stabilize the off-peak seasons. Keeps employees working year-round and banks revenue to pay the basic expenses until things pick up again.

2. Creates Loyalty – It formalizes the relationship between the client and the company. Whenever their is a problem they will most likely call and buy from you first before calling your competitor. You can reciprocate this loyalty by giving this customer priority service, offering bonus services or preferred pricing structures.

3. Customers Finance Your Future – Your customer can finance your growth. If 1000 agreements can be sold at $250 each that is $250,000 you now have to fund capital improvements without going to the bank. You simply pay the “real” cash value of this loan back to your customers at a timeframe that fits your convenience, by doing the maintenance or inspections throughout the year. Basically, you collect money at “retail” and pay it back “wholesale” at your cost of labor. It’s like getting a “reverse interest” loan.

4. Keeps Your Top Performers Sharp – Can you afford to lose your top revenue producer? Service agreements keep your top people in selling shape by practicing the skill of creating interest and desire on pre-paid inspection calls. Your people need constant face-time to stay sharp for when the busy season takes place. It also maintains the investment you have made in customer service and sales training as well.

How To Begin

It is important that you begin this process immediately or you may find that you will never do it. There is little or no risk to get started. Here are some tips to create, price and sell maintenance agreements…

1. Keep It Simple – When creating an don’t turn into a Philadelphia lawyer. A maintenance agreement is just that. An agreement to do maintenance tomorrow at today’s cost. Just create a price to do them and then start to offer them. No document or contract is needed to begin. Just sell a maintenance call for next year on today’s call and go back and schedule it for next year as well, and voila! You have just begun your maintenance agreement program.

2. Give Bonuses Not Discounts – Discounts as part of your agreement send the wrong message. An agreement is a premium service not a discount service. Instead of giving 10% or 15% off repairs or equipment, include enhanced bonuses that add value. Give an extra year of warranty or include late night calls at no charge. Do more instead of less. After all it is a SERVICE agreement.

3. Bundle It – Offer your maintenance agreements by creating bundles. Do a 3 year bundle and then a two year bundle and then a one year bundle when you offer it. You can do this with or without a repair. Just like a fast food place ask your buyer which NUMBER option they want. Most likely they’ll say, “I want a number two with the fan motor included.”

4. Offer It Every Time – Offer agreements with every repair. Offer to do a maintenance agreement with every repair as a follow up service to make sure the repair is working properly in the future. Kinda like a doctor does when he does surgery or any procedure. He prescribes the solution then tells you to come back for a follow up visit to make sure things are fine.

Not Just Good Idea, It’s Essential

Maintenance agreements in today’s world are not just a good idea, they are essential in the operation of any service business today. You will eventually find that 80% of all purchases will come from this group of loyal followers. Your only regret in implementing a maintenance agreement program was that you waited so long or that you never got started.

Start today!

Just take the price for your normal maintenance or tune up and that is the price for your agreement. If you don’t do maintenance right now then charge for one hour of your time and that is your agreement price. The only failure you will have with hvac, plumbing or electrical maintenance agreements is your failure to get started. So begin now and you are on your way!

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