In past issues, we have established that you need to do more for your customers to get more from your relationship with those customers. We also know that our industry should not be weather-driven and that successful contracting businesses are not weather-dependent. To help your dealers improve their businesses, you will need to determine what areas will help your dealers most.
Education Is Key
The best way to help your dealers is to educate them on the need to diversify their product offerings to provide steady work in their contracting businesses. For years, consultants in the industry have preached to dealers at national and regional conferences about the need to have a good service-to-installation ratio, a good product mix, a solid offering of ancillary products and a consistent effort to market and sell service agreements.
In all of this, service agreements are the key component. Once again, your territory managers' involvement in the education of your dealers is very important. And if he genuinely believes in the benefits of the program, it will be easy to promote it to his customers.
Service agreements build a strong customer base and generate repeat business. One very successful contractor determined several years ago that each service agreement customer generated on average $700 in revenue every year for his company. Not surprisingly, his full list of service and installation offerings came into the mix in the $700 per customer he billed. The simple math of multiplying the number of service agreement customers times $700 quickly brings us to the true value of a properly implemented service agreement program.
However, it is service agreements that so often pose the biggest challenge. Developing a successful service agreement program is easier said than done. Surely a dealer can more easily focus his attention on the concept of service agreements. The number of scheduled maintenance appointments, checklist of service items, and the appropriate fee for the service agreement are the easy part. The hard part is inspiring your employees to sell the service agreements consistently. As you know, selling any product takes a consistent effort.
Getting Technicians Involved in the Process
Since service technicians are presenting repair pricing, the greatest opportunity for your dealers to sell service agreements is through their service technicians. That's where a service agreement program and a properly implemented flat-rate pricing system come together. Service agreements can be sold more easily from a flat-rate service repair guide where a discounted fee for repairs is available to service agreement customers. All the technician needs to do is to know how to properly present that discounted price to the customer.
Often the technician is the only face a customer can associate with a contracting company, and therefore technicians usually carry the most credibility with HVAC customers. Customers generally place faith in the technicians' opinion about the repairs or other recommendations. Consequently, when a technician makes an offer to a customer to save money on needed repairs, the customer will listen. Unfortunately, technicians generally come up short in their confidence to effectively sell, unless they have been educated on the value of the service agreements and coached to improve their confidence level.
Sales Training and Role-Playing for Your Dealers and Their Technicians
That's where you come in. Earlier, we discussed the need to provide dealer meetings. They provide the opportunity to also offer sales training and role-playing. Sales training provides the opportunity for a dealer and his technicians to learn how to present the features and benefits of their products to their customers. Role-playing allows technicians the ability to learn to communicate the features and benefits of their product and to handle questions and objections.
Role-playing before a group will be difficult for some, and that's the great opportunity it provides! If a dealer or his technicians are uncomfortable while role-playing in front of a group, how will they gain the confidence needed to make a simple product presentation, in this case a service agreement, before a customer?
Role-playing gives technicians the opportunity to gather their thoughts, draw from the knowledge they have gained about the product and to think on their feet. It exposes technicians to new ideas and thought processes and ultimately boosts their confidence level. If done properly, role-playing can build self-esteem.
Your Customers, Your Territory Managers and You
By placing your customers' needs as the focus of your programs, you ultimately place your company in a stronger position. Educating and making an effort to involve your dealers in developing a service agreement program will have a lasting effect. We have already established that dealers who offer service agreements to their customers tend to make more money per customer than those that don't. Certainly, there is a trickle-down effect for you as their distributor since those dealers will buy more add-on and replacement products from you. Therefore, what is good for your dealers is also good for your territory managers and you.
The important thing here is to recognize that the role your territory managers play is a key component. Your TMs can get your dealers out to your meetings or they can bring the message to your dealers by working one-on-one with them. When your dealers see the benefits of their involvement with your programs, they will continue to buy from your company. A dedicated TM will see the advantages of training his dealers for the opportunities that present themselves by way of higher sales per account. His enthusiasm in his role as consultant and coach will make it happen.
The biggest advantage is your customers will view their relationship with your company as a partnership to improve their business, and that's good!
Jim D'Amico and Ken Cederquist are partners in Profit Strategies, a provider of retail pricing systems for service and installation for the HVACR and plumbing trades. Jim is a former HVACR contractor and is available at JimD@ProfitStrategies.net or 800/353-4393. Ken is a former distributor and is available at KenC@ProfitStrategies.net or 800/808-4586. Their main office line is 888/229-4100. www.ProfitStrategies.net.