What Will Maintenance Agreements Do for My Company?

Posted on:

May 23, 2018

First of all, a well-run Maintenance Agreement Program can become your most reliable income stream. Once implemented, a good Maintenance Agreement Program can help grow the value of the company by 500% to 800%! That’s because it’s “money in the bank” instead of, “if the weather holds out and nobody quits, hopefully we’ll do ‘$X’ volume next season.”

However, the company that manages a Maintenance Agreement Program can quantifiably say, “We’ve got 2200 Maintenance Agreements at $159 each for $350,000 in service, which at two services a year means $175,000 next ‘slow’ season. Plus, with a schedule to sell another 1000 tune-ups, we can easily add another 300 Maintenance Agreements for an additional $48,000 reliably scheduled in. All of these will add to our replacement and referral sales.”

This predictability is just one benefit. The Maintenance Agreement Program will even out your cash flow, which is naturally one of the biggest concerns you face. Selling Maintenance Agreements year-round means that renewals come in year-round, allowing cash to come in year-round.

Maintenance Agreements help you fill in the slow periods. What do you do now with your service techs when your business slows down? If you lay them off, they find jobs elsewhere, right? You can’t afford to lose them, but you also can’t afford to pay them for doing nothing. Maintenance Agreements help you keep your quality team intact by providing profitable work throughout the year.

Maintenance Agreements enable you to plan your work. You’ll schedule equipment checks for your current customers during the slow seasons and reserve the busy seasons for bringing in new customers. (In order for your business to grow profitably, you must devote your busy seasons to bringing in new customers – but only as long as you have a system in place to service your current customers in the slow periods.)

The biggest benefit of a well-run Maintenance Agreement Program is the guaranteed stream of replacement sales. As we all know, most replacement sales come from repeat customers or referrals. Since your customers have a Maintenance Agreement with you, and your techs see them at least twice a year… it is near certain that you will get the replacement call.

From there, you’re clearly the front-runner on getting the sale. Don’t tell me, “Oh, I’m already getting all those from my customer base.” Without any version of a retention program, that’s more doubtful than you may be ready to believe. Over 55% of your un-retained customer base leaves you for the competition because they weren’t contacted! The “cause” and the “effect” were self-perpetuating.

Your Customer Wins (And Becomes a Client!)

The people your company serves fall into different category levels. Someone who should use your company is merely a “suspect.” If they call for an appointment, they’re a “prospect.” When they choose you to do the work, they’re a “customer.” And if they get a Maintenance Agreement, they’re a “client.”

Now, you may be wondering if there’s any real difference between a customer and a client. They both spend money with you, don’t they? Well, yes, they do.

But think of it this way: you don’t always know a customer. That could be just any person whose identity is hidden behind an invoice or a name on a check – and who may or may not use your services next time around. But you do know your clients. A client is someone you serve regularly and with whom you have a continuing relationship.

Through the service you provide, your goal is to advance each level to the next level, eventually attaining the highest level of service. “Client” relationships are established in your Maintenance Agreement Program.

The client, as you would imagine, reaps the greatest rewards.

You can be successful in selling Maintenance Agreements without trying to sell something that people won’t actually benefit by owning. So it’s important for you to recognize that, for the homeowner, a Maintenance Agreement comes with real benefits. These include:

Fewer breakdowns. Contractors have found that on 90% of their repair calls, the equipment has broken down due to a lack of routine maintenance. So it’s safe to say that regular maintenance on equipment leads to fewer breakdowns.
Priority service. The definition of priority service should be that, aside from warranty calls and other Maintenance Agreement clients who’ve already called ahead of them, your Maintenance Agreement clients are instantly moved to the head of the line when they call for repair service. There are times of the year when that alone becomes the most important benefit!
Discounts on repairs. You decide what your discount includes, but this simply reinforces the value of a Maintenance Agreement to your customers.
Less stress and inconvenience. Fewer breakdowns also means less stress, less inconvenience and lower overall repair costs.
Equipment longevity. Maintained equipment lasts longer than non-maintained equipment. Same with any mechanical device. It is maintained to avoid the cost of replacing equipment prematurely.
Maintenance discount. A Maintenance Agreement gives customers a discount on the maintenance itself. A customer who gets regular tune-ups should get a discount for being a good customer.
Lower operating costs. Maintained equipment runs at a lower operating cost, which means lower electric and gas or oil bills. That’s money right back in the homeowner’s pocket.
Equipment efficiency. Maintained equipment cools more quickly and dehumidifies better. In fact, in the case of heat pumps, maintenance is absolutely essential to obtain maximum heat output.
Better indoor air quality. A clean evaporator and blower will mean cleaner, healthier air. These days a lot of attention is given to dirty indoor air and the dangers lurking therein.
Peace of mind. When something is maintained well, it’s less of a worry in customers’ lives. For the same reason you’d service your car before a long trip, comfort equipment should be serviced before a demanding season of use.
Provides warranty protection. As with automobile manufacturers, proper maintenance is required to keep a warranty intact. Fortunately, some equipment manufacturers help us out by stating right in their warranty that repairs which become necessary due to a lack of maintenance are not In fact, a lot of contractors now state that their warranties are good only as long as a Maintenance Agreement with their company remains in effect.
Provides documentation. The customer won’t be “guessing” if it’s been maintained or how long ago such-and-such broke because the maintenance will be performed like clockwork.

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Adams Hudson

President at Hudson, Ink.

Adams Hudson is president of Hudson, Ink, a contractor marketing firm serving the contractor trades, and ACCA’s national marketing partner. Readers can receive a free subscription to Adams’ Sales&Marketing Insider eNewsletter by emailing a polite request to freeACCAstuff@hudsonink.com.