• The Value of HVAC Service Agreements

    Aug. 3, 2011
    Life in a safer, more comfortable home

    Many years ago, as a new homeowner, I established my requirements for an HVAC technician after I had bought a small, 11-year-old house near a lake. One week later, a huge noise announced we were the proud owners of a broken down furnace. It was January, below freezing, and I couldn’t get the furnace restarted.

    I bundled up my two daughters and put them in my bed and proceeded to wrap water pipes, and try to keep the house warmer until morning. The next day I started making calls, looking for someone who could come out that day. After 90 calls, I got a callback. He said he would be out before end of day. I didn’t know his day was ending at 10:00 PM, which is when he arrived. He charged me more than I could afford. I would have paid anything, and I think he knew that. I paid it, but the cost, and the day of waiting in a cold home, set me off.

    Five years later, I built a larger 3,200 sq.ft. home for my family eight miles from that little lakeside house. After three years, the new AC in that home needed fixing. Nothing in the Yellow Pages looked like the company name I couldn’t remember from five year ago. I found a new contractor – Mike —who sold me on a maintenance and service agreement after fixing the air conditioning system. Mike has been my heating and air guy for 25 years. And he put me on a service agreement plan from the very start.

    Over the years, I’ve bought:

    • A new high efficiency system 9.5 SEER when I built the house
    • A system add-on when I built an in-law’s suite.
    • A 13 SEER high efficiency system
    • A zoning system that allowed my mother-in-law a chance to heat and cool her three rooms separately, the other side of the downstairs separately, and our upstairs separately.
    • A standard round thermostat for my mother-in-law — she wouldn’t have one she couldn’t control herself
    • Two set back programmable thermostats for my other two zones. Another zoning system when the old one failed
    • New motors, changes to the ducting, new thermostats, and other parts that had broken or become worn.
    • Mike’s guys have been out on average four times a year after my mother-in law moved in, and lived with us for 12 years.

    I don’t know what I would have done without Mike and his wife, Cindy. They retired, and sold their company to another owner, also named Mike. I worked with him and his crew for a few years. He dropped the service agreements because he said they were too hard to manage. Unfortunately the current economic upheaval has lost him the company.

    The same business, in the same market, run by a credible HVAC professional, didn’t succeed after he eliminated the service and maintenance agreement part of the business.

    Mike and Cindy moved to another city and I’ve now moved to the mountains. Mike had always been there for my family and me. And while he may not have believed it at times I was always there for his business too. I used to check prices when I had something large to buy, like the new system, or the new zoning. After I had Mike’s guys put it in, I would call him and tell him the premium I paid to have his company sell and install the items. Mike had always been higher than the lowest bid, but he and his people were worth it. I just wanted to know how much more I would have to pay for someone I could trust.

    I’ve not only lived in a safe house because of Mike’s consultancy, I’ve lived in a comfortable one. Today, only one in five homeowners have the confidence of a consultancy (maintenance service agreement) like I’ve had. Mike’s company made it through hard times when his competition failed because he had built his agreement business and counted on all of us who counted on him. He flourished in good times, charged us a rate that would enable him to provide us with quality technicians. We appreciated it.

    Later, the same business, in the same market, run by a credible HVAC professional, didn’t succeed after he eliminated the service and maintenance agreement part of the business.

    I don’t know why so many great contractors continue to go out of business every year. Why do many still retire with no value in the company, and why do so many take the abuse from homeowners like me so many years ago, when I was a new customer, and didn’t know what that contractor went through to provide me with heat that cold winter day?

    This has been a true story, I know because it is my story, and my life. It was also Mike and Cindy’s, story, and the Mike who bought the company several years ago. Think about your business, your employees, your goals, and your potential customers. How many of your customers will look back and tell you how important your business was to their lives? The contractor side of the business is becoming much more marketing savvy and more professional in the way they communicate and work with homeowner clients.

    Take the time after the season to test your company. Run a SWOT — strengths, weaknesses, opportunities and threats review. Then take the necessary action. It could be to close up shop and join a company that will last. It could be to add the services and communications protocols needed for you to grow. Or, it could be you’re already there, and you just need to find new ways to grow. Keep looking for them!

    Garry Upton, of Decision Analyst, Inc., Arlington, TX, shares his interpretations of Decision Analyst’s American Home Comfort Study of homeowners, and explores what customers look for in HVAC contractors. To learn more about this study, or to purchase it, contact Garry, at [email protected].