It doesn’t take long after you join or start an HVAC service business when you begin to realize that this business has a “bi-polar” disorder. Opportunities to serve customers come sporadically in sudden bursts of either “way too busy” or “way too slow” periods. The ability to do everything from making weekly payroll to paying your supplier’s invoices depends on a consistent supply of opportunity to perform paid service work on a daily basis.
With that in mind, in the modern era of high performance service, a “Planned Service Agreement” program is simply the lifeblood of every company that is smart enough to have one. So with something so important, how could so many experts have gotten this so wrong for so long?
The importance of maintaining your focus on why the program even exists is paramount to the survival of any company that wishes to sustain the program.
Client-Focused, Not Self-Focused
Let me explain what I mean by getting it “wrong.” Most articles like this start out with the long list of benefits that HVAC service contractors will get from such a program. If you are sending your people the message that planned service is primarily good for us and then sharing client benefits as an afterthought, then you’ve got it wrong.
For years, the focus has been on these benefits to sell service agreements:
1. Year-round work for the service contractor.
2. Discounted pricing to service clients on any repair.
3. Maintaining equipment to avoid breakdown.
Although the above reasons why having a service agreement are correct, they tend to focus on the very minimum that it does for a customer. Is a discount really the best we can do for clients? The importance of maintaining your focus on why the program even exists is paramount to the survival of any company that wishes to sustain the program. However, some of the above reasons have flaws built in that may be costly to both the customer and the company. Let me dispel the myths of the “old school” benefits above.
Drowning in Year-Round Busy Work
At first, this sounds like a great idea to stay busy year-round to keep employees working. The problem is when the “Year-Round Work” becomes an entitlement and NOT an opportunity. Too many companies lose money on service plans because they take the task of performing an agreement and turn it into more of a janitorial job rather than the service engineer job that it was designed to be.
DO NOT mistake activity for accomplishment. If these calls do not introduce new solutions to clients that generate revenue, then this point becomes more and more of a liability instead of an asset. A liability that has driven many companies into debt by staying “busy.”
Selling Yourself Short with Discount Pricing
What type of company offers a discount on its service? A very simple question which is very revealing when you think about it. What position does your company take in the marketplace? Are you a discounter that attempts to lower the price of your service? Or is it a higher investment company that positions itself to provide higher quality, safety, health, reliability and customer service?
If these calls do not introduce new solutions to clients that generate revenue, then this point becomes more and more of a liability instead of an asset.
Systematically giving a discount throws a wrecking ball through the hard work it took to brand your company as a leader and a high-end service provider. Does Whole Foods, Rolls Royce, Nordstrom’s, Tesla or Apple offer discounts? Are you more like those stores? Or are you more like K-Mart, Little Caesar’s or the Dollar Store of HVAC? Think about scrapping the discount if you are focusing your team on doing great service.
Missing Out While Maintaining Equipment
You know you may have a problem if your people are walking to the front door of your client’s home with a bucket of rags and a vacuum cleaner in their hands. As a high-end service professional, your job is to be a “window” that shows clients new possibilities not a janitor that just maintains the status quo of the equipment.
Engineering new solutions for better airflow, cleaner air and even high building performance is now the new norm for high-level HVAC service techs. I agree that at a minimum, we do need to maintain the HVAC equipment BUT doing the minimum in service, always leads to bad outcomes like callbacks and un-necessary warranty claims. So, put down the broom and start talking to your clients about the heart of what you do – pure motive service.
The New Rules of Service Agreements
World-class service means to anticipate the needs of your client by providing service before it is actually critical. With that in mind, here are the new rules to either evaluate your service agreement program or to even start a new one that go beyond just giving clients a lower price or giving your people something to do during slow times.
1.Bundle It with Your Services
It really doesn’t take much more to create a service agreement than just offering it as a bundle that is included with one of your services. Bundling the service in with your solutions just makes sense to most consumers. If you are giving a 10-year warranty on parts and labor, bundle in a 10-year service agreement to go with it.
The program should be so simple that the newest person in your company will understand it and then be able to explain it to your clients.
That’s right, just multiply the price of the agreement times 10 and you’ve done it! Matching the amount of years of service you provide with the amount of warranty works because some consumers appreciate the fact that they don’t have to keep purchasing the service every year or every month. It’s just paid for up front and now everyone is taken care of.
2. Complimentary Diagnostic or Trip Fees
Instead of offering a discount on service agreements, think about giving a more tangible benefit such as 24-hour “Can’t Write a Check” service that includes the travel and diagnostic time. This single item is a BONUS for your clients and NOT a discount. You are featuring something that is a high value without any strings attached. Everyone sees the value in the peace of mind that we get with this high value benefit.
3. 'Front of the Line Pass'
Giving “executive access” or a “front of the line” pass to clients as part of the agreement is something that many contractors already do. They just might be branding this benefit with less value by calling it “priority service” instead. All the high-end retailers have programs that provide higher access to their service for those who make the investment to get it. Let your clients know they go right to the “front of the line” when they are in your program.
4. Equipment Replacement ‘401k’
A great tangible benefit which also creates continuity is to give clients a portion of the agreement investment back to them in the form of credits to purchase or replace the HVAC equipment. For instance, if the investment for your service agreement is $250 per year then you could provide $100 of that investment back to the client for every year they remain an agreement customer. Basically you are helping them to save for the future “retirement” of their furnace and air conditioner as you would do by having a 401k or IRA when you hang it up. After 10 years of being a loyal client, they would have $1,000 to apply towards the replacement of a complete new system, which would be something that no other provider could offer them.
5. Make It Easy to Remember
One of the biggest mistakes that service companies make when creating a planned service agreement program is that it becomes too complicated. The program should be so simple that the newest person in your company will understand it and then be able to explain it to your clients.
One way to do this is to brand the program with a unique name that everyone can remember. Names like the “Peace Of Mind Service Club” or “Extra Care Planned Service” can make it easy to remember and communicate the reason for the program to both clients and those on your team. Amazon Prime Membership, My Best Buy or AppleCare are examples of brands that have made it easy for their employees and the public to remember they are all part of their programs.
6. Keep It Simple
Remove as much complexity as possible when creating this program. The rule is no more than 3 benefits are needed to create value.
• 24-Hour Diagnostic & Trip Fees 100% Covered
• Annual Heating & Air Conditioning Inspections 100% Covered
• Front Of The Line Priority Service 100% Covered
On day one, make sure that every employee knows and understands what the name of the service membership is and also what it includes. Also, put accountability measures in place so that employees MUST at least offer it to each customer from the time they answer the phone to when they offer solutions in the field, to when the final work is being done. Each and every customer touch point should be a communication of how the program benefits each client.
Above all, make sure that your service agreement is offered as an option with every repair or installation. What the main reason that all growing service companies are successful in selling thousands of agreements? Their success comes simply because they offer it to every customer, every time and on every call. Hold yourself and your team accountable to that, and you’re on your way to creating a planned service agreement that will allow sustained growth for year to come.
