7 Reasons Service Agreements Work

Read why maintenance agreements should be a critical part of your operation and business strategy.

HVAC, electrical, plumbing, and other service providers who prioritize maintenance agreements tend to have successful long-term business plans and a track record of customer acquisition and retention. Along with the right contractor management software, these agreements are the lifeblood of residential service providers, ensuring a steady income regardless of seasonal and cyclical buying cycles.

And the experts agree. In a recent article in HVACR magazine, the benefits of selling maintenance agreements were clearly outlined.

If you haven’t used maintenance agreements as part of your business strategy, keep reading to better understand why other service providers make them a critical part of their operations.

Guarantee predictable revenue

The first reason that most businesses begin using service agreements is to create and maintain a steady cash flow during the off-season. Planning for future heating and cooling equipment maintenance or replacements can stabilize cash flow and improve relationships.

Attract and retain better service techs

An underestimated benefit is the ability to recruit service technicians and keep them busy with steady work. If you keep your technicians working consistently while gaining experience, they earn more. And by developing deeper customer relationships, they will become masters at their technical skills and customer service, driving job satisfaction and loyalty.

Maximize the life of customer investments

According to manufacturer recommendations, equipment requires maintenance to ensure longevity and reliability. A regularly maintained system will outlast one that is neglected. Help your customers understand the value of preventative maintenance to avoid costly replacements.

Build your business by tracking service-level metrics

Once you commit to a service-level agreement program, the next step is implementing metrics to track your progress. As you become methodical in tracking metrics, including weekly sales per technician and gross profit dollars per day by each crew, you can focus on making minor, incremental improvements that will grow your business and make it resistant to competitors.

Organize and digitize paperwork

Using contractor management software enables you to reconcile and correlate data between all business systems. This system creates built-in accountability. When you enter data, it flows through the system into the right departments within your company. This creates accuracy, optimized workflow, and increased productivity. Increased visibility allows stakeholders to maintain transactions and audit trails, analyze progress in the contract lifecycle, and refine spending and cost allocations.

Speed work approvals

Eliminate extra phone calls or texts back to the office for approvals. With a service agreement, everyone is on the same page. Techs can take maintenance jobs to the next level by adding notes, tracking products on their truck, noting issues, ordering parts, and getting on-location, electronic approvals.

Build trust to attract and retain customers

Signing new customers can cost seven times more than retaining a current customer.  In terms of customer retention, lowering your churn rate by a mere 5% can boost your profitability anywhere from 25% to 125%! Implementing maintenance or service level agreements is something most organizations can do within a few months for immediate impact on their bottom line and overall efficiency.

Read more about service maintenance agreements here.