Strategies for Increasing Service Agreement Sales
The HVAC industry has primarily been a seasonal industry. During the slower months, service agreements can be the key foundation to combat the downtime your company may face and can bring a steady income into your business and increase revenue. To do so, there are certain methods to a successful service agreement sale. Provided below is information you need to ensure success, along with some tips from a few contractors located all over the country that we have interviewed:
BE EXCITED ABOUT IT
In general, a technician’s attitude is one of the most important aspects when it comes to selling service agreements. Customers usually have no knowledge regarding the ins and outs of HVAC and look at technicians as experts at what they do. If a technician were to act unsure about an issue, the customer will feel doubt. When a customer sees a technician radiate with excitement and truly believe in the value of a service agreement, the customer will believe it too. In order for technicians to fully understand and feel confident when talking about service agreements, host a training session and provide all the information that they need. During this training session, it is important to provide technicians the opportunity to ask all the questions they have.
CAREFULLY LAYOUT THE BENEFITS
To successfully sell more HVAC service agreements, Joy Franck, office manager of Frontier Heat & AC Service located in Albion, NY, asserts that customers must first be aware of the benefits when under a service agreement contract. When customers are under a service agreement with Frontier Heat & AC Service, the customers are given benefits such as:
- Annual tune ups included
- Member exclusive discounts
- Repair labor warranties
- Free warranty registration processing
- Automated scheduling and reminders
- No overtime or after hour fees
- Priority Response
When customers are aware of their options and fully understand the benefits that you are laying out for them, they will be inclined to purchase a service agreement. Saving money in the long run, feeling prioritized and important, and having peace of mind are three important aspects that customers value to a great extent.
PROVIDE DIFFERENT OPTIONS
According to Louis Hobaica, president of Hobaica Services Inc. in Phoenix, AZ, another successful way of selling service agreements is providing the customer different category memberships to choose from depending on the services that they need. Every customer and their homes are different, some require a higher maintenance while some only need a few. By offering different tiers, it provides a few options for each of their unique lifestyles and needs.
In this case, Hobaica Services have three different memberships: a Gold, Silver, and Bronze package. Depending on the customer and their needs, a Gold membership will provide 13 benefits such as:
- Priority service
- Discount on service call fee
- Discount on emergency repairs
- Discount on plan with HVAC equipment over 10 years old
- Two cooling /heating precision tune-ups
- Full plumbing inspections
- Full electrical inspections
- HVAC system replacement credit per year
As you can see, a Gold package offers countless benefits and is the perfect package for those who need it. If a customer does not need all 13 benefits, there are two other options such as the Silver package that only provide the first 10 benefits and the bronze package that only offers the first 6 benefits. When customers are given options, they do not think whether or not to purchase a service agreement, but what kind of service agreement to purchase.
DETERMINE THE RIGHT CUSTOMERS AT THE RIGHT TIME
In order to successfully approach customers, knowing the right time is another important step when it comes to selling service agreements. According to Hobaica, the best time to approach current customers about renewing their service agreement is when their call is scheduled or when they are about to pay for their services.
“This is when you are supposed to present the options available.” said Hobaica.
Although, it’s important to take note that service agreements are not for everyone and approaching the right customers is just as important. Increasing service agreements should not be just about increasing revenue, but to also improve your customer base in the long run. If you wish that your customer stays for the long run, make sure that they know you are not selling a service agreement that they do not particularly need. When customers are loyal, they are 54% more inclined to purchase than non-loyal customers. In fact, they cost a lot less to reach and sell, costing an average of $40 versus a non-customer that can cost up to $350 per visit. According to the Harvard Business Review, a 5% increase in customer loyalty can lead to an 85% increase in profits.
“We wouldn’t want to sell a service agreement to everyone, we need to make sure it’s within the best interest of the customer,” said Franck. “A customer that has a 30-year-old boiler that a technician has been putting parts in for the last few years is not the best equipment to put a service agreement on. It’s best that technicians inspect the equipment first before a service agreement is determined to be needed.”
Through customer loyalty, another great way to boost service agreement sales is to create a referral program. When customers are happy with their service, they will be inclined to sell your service agreements for you, and people are most likely to trust their friends and family more than the marketing material from your technicians. To encourage your customers to do so, create a referral program where they are able to receive some kind of benefit each time, they refer a customer.
“It is all about the conversation,” said Franck. “Knowing who and when to plant the seed is important to be successful.”
There are certain strategies that contractors have used in order to successfully sell service agreements with new and existing customers. According to Franck, a strategy that Frontier Heat & AC Service that proved to be effective is providing a visual handout to their customers. When explaining the benefits to their customers, Franck noticed that providing something visual is a more effective option rather than attempting to sell an agreement over the phone because the customer is able to understand the benefits easier, and they have something to reference even when at home. When creating a visual, Franck recommends that it must be informative but visually appealing and technicians must always carry these visuals inside their vans.
Another successful strategy is the use of automatic renewals. In Hobaica Services, administering monthly auto charge memberships or credit cards and checking EFT is one of their main strategies to ensure service agreement renewals. This strategy proved to be effective because Hobaica Services have also lost many customers under an annual plan because of its manual renewal nature.
These are one of the many tips that you can do in order to increase the sales of your service agreements. Try it out and see the growth for yourself.
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