Meet your company's new best friend — maintenance agreements. We talk about them all the time, but it's important for your company to really embrace maintenance agreements in order to grow your customer base and drive sales. According to a key performance indicator, 1,000 maintenance agreements should generate at least $1 million dollars in residential business; equipment sales, accessory sales, service calls, and the price of the maintenance agreement are all included in that revenue. Let's take a look at maintenance agreements by the numbers:

1. Renew your customer base. Assuring that there is at least an 86% renewal rate annually is also necessary, and extremely beneficial. The renewal of the agreements should increase every year, which also helps boost equipment sales.

2. Use your own resources. Let’s say four technicians bring in 500 agreements. The revenue is $702 per customer. If you multiply $702 by 500, the yearly revenue is $351,000. The following year, if you count on the 86% renewal rate plus 500 agreements — you end up with 930 agreements. Multiply that number by $702 and your revenue for the second year is $652,860. If you continue this process, in four years you could be making $1 million in revenue.

3. The outcome. Using this process will assure that your company’s revenue will go up every year. The closure rates will increase and you will be able to sell higher-end equipment and IAQ accessories.

Mike Moore offers HVAC advice for managers, technicians, and sales teams daily on Facebook, Twitter, and my blog. Follow me and stay in the know.

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