Make Maintenance Agreements a Year-round Profit Center

May 1, 2006
f youve employed some of the most fundamental elements of customer retention including maintaining regular contact through customer newsletters and other

f you’ve employed some of the most fundamental elements of customer retention — including maintaining regular contact through customer newsletters and other regular mailings — you’ve made a significant investment in your relationship with customers.

But have you ever wondered how to get your customers to pay you for that relationship?

That’s the basis of a successful loyalty program — a mutual investment between the consumer and the service provider. Loyalty programs for contractors center around regular maintenance that includes a heightened level of service, discounts, and special treatment or guarantees, or what’s usually known as a maintenance agreement.

By offering maintenance agreements to your customers, you'll position your business above your competitors by:

  • Establishing a more predictable profit center.
  • Increasing your ability to attract and keep good employees profitably active in the “off-season.”
  • Building and maintaining a retention rate other contractors only dream about.
  • Providing yourself a “built in” mechanism for contacting and visiting your customers multiple times a year, thus keeping your name foremost in their minds for future sales and referrals.
  • Developing an ever-expanding customer base that funds itself and pays huge profits — which is much better than paying for “acquisition” customers who are less loyal and price-shop more often.

Maintenance agreements take your technicians into customers' homes twice a year for a full system evaluation, for which you’ll be paid. As an additional benefit, you’re reminding them of your professionalism and value while increasing loyalty.

Because they provide year-round work and cash flow, they’re very important for a company’s financial health. Imagine being able to start the year knowing you’ve got appreciative, high-value customers with a pre-paid service that only needs scheduling!

But be aware: they’re not for everybody. They’re for your customers. Therefore, when marketing maintenance agreements, it's costly and counter-productive to offer them by broad media to non-customers. Why? They don’t even know you; why should they enter a commitment with you?

The better approach is to broadly offer tune-ups. Tune-ups, after all, are for customers and non-customers alike. Then, at the moment of presenting the invoice to your customer, your tech utters these words, “This is the list of what all I did, and here’s the invoice for $89. But, if you’re interested, I can save you $10 in 10 seconds. Would you like me to explain how?” Now you have the customer’s attention.

The tech then says, "For $79 per visit, you can get this service, PLUS a discount, PLUS a 1-year warranty, PLUS priority scheduling, PLUS free scheduling reminders for both services. You won’t have to think about it again, and you can cancel anytime.” Sold.

Your acceptance rate with this method is far higher than through one-step mailing for maintenance agreement response. This exact same approach works with a repair call, where the tech merely changes the dollar amount. Yet ultimately, the message you’re conveying is that you’re not trying to sell your customers anything; you’re trying to give them a discount. That’s something you can believe in, and soon your customers will too.

A maintenance agreement form that also reads like a sales script helps techs explain the benefits while the customer clearly sees the difference. The conversion rate to maintenance agreements is staggering, and your ability to build a recurring off-season income is, too.

So your “to do” list is: 1) Get a Customer Retention newsletter program for all customers. 2) Convert all customers to a maintenance agreement program. Customer retention through this two-step strategy is a very wide path to prosperity.

Adams Hudson is president of Hudson, Ink, a creative marketing firm for contractors. Call 1-800-489-9099 to ask for a free 12-page report on converting every service call to a Maintenance Agreement. For a free marketing newsletter, contractors can fax their letterhead with the request to 334-262-1115 or check out for other free marketing articles and reports.