The single most common problem in selling commercial service agreements is low-balling competition. I recently worked with a contractor client who is faced with this dilemma (as we all are) and is totally perplexed. His service sale people are instructed to sell quality preventive maintenance (PM) agreements, including all of the necessary tasks to do the following:
1. Extend the life of the system
2. Reduce energy
3. Reduce breakdowns
4. Increase comfort
5. Provide tenant/employee satisfaction.
Since all quality contractors pay their technicians approximately the same, it should be an even playing field, right? Maybe not. In every market, competitors will sell a stripped-down program at a very low price. Of course, without the proper tasks being performed, those contractors will get three to four times the PM price in emergency calls, premature replacement, and repairs. The unfortunate fact is, all too many building owners/managers dive for the low price.
While my philosophy has always been to sell up to the quality program, sometimes we have to make a decision to go low or walk. I have created numerous selling aids to open prospective customers’ eyes to the difference in the programs and what happens when they don’t spend enough on the front end. The most recent selling aid is the simplest one I have ever developed, but also one of the most effective.
Have you ever noticed that the more a customer invests in planned maintenance, the less they spend on repairs and replacement? Another somewhat subliminal message is sent from the size of the two pie charts pictured above. Note that the chart with the larger amount invested in preventive maintenance is significantly smaller than the chart with minimal PM. This is to say that overall costs are driven down when planned maintenance is adequate.
As always, it’s foundationally important to have a back- up plan using more than one visual aid. I use a time study analysis that displays the recommended time for each task. By showing the prospect the list of recommended tasks and the associated time to perform each task, you can build a strong case for task based pricing.
If all of this effort gets you to the roof or equipment room, the pictures of the prospects’ own equipment is the final blow. It’s hard to argue that the tasks are presently being done by the incumbent when the coils are dirty, panels are left off, belts are misaligned, etc.
Once again, it comes down to a strong selling effort. When all of these selling techniques are executed properly and with enthusiasm, and the prospect is still wanting the lowest price, it’s time to make that decision: low ball or walk.
Earl King is the founder of King Productions International, a commercial HVAC contracting sales consulting firm based in Texas. He speaks to associations and HVAC trade groups, and consults with commercial contractors across the country. E-mail Earl at: [email protected] or call him at 515/321-2426.
