Neighborhood.jpg Andrei Stanescu/iStock/GettyImagesPlus

Stop Selling Service Agreements!

Instead, offer a menu of service offerings that will create more opportunities to connect with residential customers. It's about different plans for different people.

The most successful, profitable, longest-standing, customer-oriented, best-reviewed, and highest-rated residential HVAC companies have a bunch of service agreement customers. This committed captive audience yields guaranteed maintenance (and repair) visits along with the potential of ancillary product and service purchases and future replacement equipment sales.  

The key performance indicator (KPI) for a healthy company is 1000 agreements per million dollars of residential revenue. A vibrant and thriving company has 1500 agreements per million dollars of revenue. Another KPI is for the company to have 50% or more of their customers secured on service agreements. These KPIs are great, but also limiting in their scope and potential opportunity.

One Choice = No Choice
The problem I see with most companies is that their service agreement program offers a singular agreement. A choice of one is a choice of none. We need to offer customers options, not ultimatums (by definition a final proposition, especially one whose rejection will end negotiations and cause a resort to force or other direct action, often in the opposite desired direction).  

Think about this way: If you were a car dealer and you ask people who are in the market for a car, “Would you like to buy car from us?,” many people would say no. But what if you ask, “Of the various cars we offer, which model is most appealing to you: the sports coupe, the sedan or the hatchback?” Now, the customer has choices or options and a couple things to say no to. Some customers will still say no to buying a car at all from me now (they may come back later), but many more will select one of the choices offered. In the second scenario, the customer must state they don’t want anything that was offered (a 75% chance of earning the customer’s business — 3 choices vs. no), whereas in the first scenario the customer can say ‘yes’ or ‘no’ — a 50% chance based on math, but less than a 25% chance based on buyer psychology and statistics when the only choices offered are yes and no, and in order to have options the customer has to consider other dealers.

We all know the more active customers (someone who has paid for a product or service in the last 36 months) you have, the greater the revenue and profit generation potential. Service agreement customers meet this criteria since they pay for their agreement each year. However, if you only offer one level of agreement to lock in customers, the odds of you locking in the maximum amount of people are less than if you were to offer people a series of choices to become an agreement customer.

Offering multiple levels of service allows customers to choose the level of access, service and engagement that makes sense to them, and some things to which they can say no. 

This is why we recommend that our clients offer multiple options when it comes to service agreements. Offering multiple levels of service allows customers to choose the level of access, service and engagement that makes sense to them, and some things to which they can say no.  

People pay for access, service, and value-added benefits on a spectrum of DIY to “done cheap” to “best value” to “done for me,” “done right” and “one less thing I have to worry about.”  People will pay a premium for pain- and problems-avoided or solved, life impacts, and extraordinary and exclusive experiences.

Vary the level of access, service, and benefits from “service at our leisure, not at your convenience” to “service at your convenience, not our leisure.” All customers get a world-class service and customer care experience, company newsletter, money and energy saving tips, exclusive offers, and access to special events.

EXAMPLES OF MULTI-TIERED SERVICE 

Here, Drew Cameron provides an example of a tiered benefit and access agreement program. NOTE: dollar amounts and percentages are for demonstration purposes only. You can also come up with your own branding for the various programs.

‘Pals’— FREE to join for people providing contact information (and who ‘like’ the company on Facebook)

• Dedicated live-person 24/7 customer care line

• Standard trip and diagnostic fee

• 5% off twice annual precision tune-ups (optional)

• 5% off repairs

• 3% off equipment

• Standard repair warranty

• Priority 2 service access

• No accumulative spend accrual account with point banking from year to year

• 1 point per $2 spent Accumulative spend accrual account with point banking from year to year

‘Peeps’ — $5/month

• Inspect all home mechanicals

• Dedicated elite live person 24/7 customer care line 

• $20 discount off trip and diagnostic fee

• 10% off twice annual precision tune-ups

• 10% off repairs

• 5% off equipment

• Tier 2 Extended repair warranty 

• Priority 1 service access

• 1 point per $1 spent Accumulative spend accrual account with point banking from year to year

‘Patrons’ —$16.50/mo.

• Inspect all home mechanicals

• HVAC tune-ups with NCI protocols and iManifold testing

• Dedicated elite live person 24/7 customer care line

• Chat with an eExpert for FREE on minor concerns or D.I.Y.

• $40 discount off trip and diagnostic fee

• 15% off twice annual precision tune-ups 

• 15% off repairs 

• No-breakdown guarantee

• Tier 1 Extended repair warranty 

• 7% off equipment

• Priority 1 service access

• 2 points per $1 spent Accumulative spend accrual account with point banking from year to year

Partners — $24.50/mo.

• Inspect all home mechanicals

• HVAC tune-ups with NCI protocols and iManifold testing

• Water heater tune-up

• Smart home - remote thermostat, access and control

• Dedicated elite live person 24/7 customer care line

• Chat with an expert for FREE on minor concerns or D.I.Y.

• $0 trip and diagnostic fee

• 15% off twice annual precision tune-ups

• 15% off repairs 

• No-breakdown guarantee

• Tier 1 Extended repair warranty 

• 10% off equipment

• Priority 1 service access

• 2 points per $1 spent Accumulative spend accrual account with point banking from year to year

Power Players: $36.50/mo.

• Inspect all home mechanicals

• HVAC tune-ups with NCI protocols and iManifold system performance testing

• Water heater tune-up

• Smart home technology - remote thermostat, keyless door lock, doorbell camera, access and control

• Dedicated elite live person 24/7 customer care line

• Chat with an expert for FREE on minor concern or D.I.Y.

• $0 trip and diagnostic fee

• 20% off twice annual precision tune-ups 

• 20% off repairs 

• No-breakdown guarantee

• Tier 1 Extended repair warranty 

• 10% off equipment

• Priority 1 service access

• 3 points per $1 spent Accumulative spend accrual account with point banking from year to year

Creating more opportunities for connection to your company is more sustainable with less of a marketing expense to create future marketing and purchase opportunities for other services. This model will make you more sticky to more customers and help your build your ecosystem.

To download your free service agreements resource and training package complete with powerful tools, templates, industry research and educational videos, CLICK HERE.

Drew Cameron is  billed as “America’s Most Sought-After Sales and Marketing Strategy and Success Advisor to Home Services Contractors,” and president of both HVAC Sellutions and Energy Design Systems, LLC, a leading alliance providing industry-leading marketing and sales consultative support as well as sales recruiting, training, coaching, software tools and performance enhancement for Home Services Contactors. Drew is also a Board member, Foundation Board Trustee, and a Contractor University Founder and Faculty member for Electric and Gas industries Association (EGIA); and president of the Cameron Family Foundation. Contact Drew at 610-745-7020; [email protected]

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish