What is a service agreement?
A service agreement (or contract) is a legal agreement between your company and a customer that states that your company will handle preventive maintenance on whatever equipment is being installed, repaired or replaced. For example, an HVAC service contract would guarantee the company’s ongoing services for the customer’s HVAC system for an agreed price during a fixed period. Additionally, service agreements will define the type or types of services that would be performed for the price. Of course, the more services the contract includes, the higher the cost the customer would have to pay.
Why should my home services company offer service agreements?
Offering service contracts is a win-win for your home service business and your customers.
Benefits for the Homeowner:
A service contract, maintenance agreement, or service plan — whatever you want to call it — can help homeowners save money on expensive repairs and/or replacements on major home systems and appliances.
For example: If a homeowner needs repairs done on their heating and air conditioning equipment, they can enter a service agreement with an HVAC company to cover maintenance for that equipment over a set duration of time for a set price, rather than paying for individual maintenance visits and repair jobs.
Plus, most services agreements also include discounts for repairs and services beyond just the equipment covered under the agreement.
For example: you could note on the service agreement that if the homeowner enters into the service agreement, they’ll get a 15% discount on any future repairs or emergency services.
So, for the homeowner, the cost savings are not limited to fixes of the newly installed unit.
Benefits for your Home Services Company:
For your HVAC, plumbing, or electrical business, a service contract can provide you with more consistent revenue year-round. Contractors often speak highly of service agreements because they allow the contractor to get into the home and provide safety checks/tune ups, during which they can identify revenue generating opportunities through repairs and upsells. Service agreements are especially helpful for HVAC companies, as this industry typically sees less business during the Fall and Spring. And since business expenses still need to be paid during these months, it’s vital you still have a stable cash flow.
Service Agreements also afford your technicians and employees more hours to work during the offseason. Plus, the labor related to service agreements is typically just maintenance, which means less complex and lower stress work for your technicians.
How do I present service agreements?
Since customers often have difficulty understanding the value of service, you may be interested in the following tips on how your tech’s can professionally and successfully present Service Agreements to your customers:
While we encourage digital invoicing, web-based payments, and just about anything that will cut down on paper and improve your efficiency, your service agreement collateral should be printed out, packed into a folder and handed to the customer. Why? Because when it comes to service agreements, customers WANT something tangible. Yes, it’s just a folder with a signed piece of paper and a pricing flyer inside, but it represents protection and security for a customer's home—something that goes a long way for the homeowner.
To maximize your chance of success selling a service agreement, we recommend that your technicians discuss the service agreement three (3) times with the homeowner during a service call: before the diagnostic, during the diagnostic, and after the diagnostic. Here are some examples of what your techs could say at these points:
Before the diagnostic: “Before I get started on diagnosing your issue, I want to make sure you’re aware of our Home Protection Plan. It is a great way to protect your home, not to mention great savings along with it. Here’s a folder with some more information about it.”
During the diagnostic: “Mrs. Jones, I think I’ve found what’s wrong with your system. I want to run a few more tests just to make sure everything else checks out. It should be about another 10 minutes. Also, did you have a chance to look over the info I gave you and did you have any questions?”
After the diagnostic: “Mrs. Jones, I’ve diagnosed that you have a damaged capacitor. We can repair it now for this cost, but by entering into our service agreement you can get 2 years of regular tune-ups for free, extending the life of your new equipment and ensuring peak efficiency. Additionally, this service agreement will grant you a 10% discount on any other future HVAC services or repairs.”
And if the homeowner doesn’t buy the service agreement at the time, they still have the folder with collateral you left them to think about it!
While not every single customer will need a service agreement, offering them one will ultimately give homeowner more options, drive more revenue to your home services business, and give you a leg up on the competition.
To learn more about how you can use service agreements with Profit Rhino, please reach out to our support team at support@profitrhino.com.