Service agreements (or memberships) have become an invaluable part of business for home services companies. These agreements carry tangible benefits for companies and customers alike. But without a management system in place for service agreements, they can become quite cumbersome to manage. So how do you ensure that both the business and the customer benefit from such an arrangement?
The role of service agreements for home services companies For a home services company, service agreements are a staple business element. “There is no doubt that residential service agreements play a key role in the growth of many HVACR contractors,” said Hilary Atkins, general counsel for the Air Conditioning Contractors of America (ACCA), in 2009 when ACCA last published a benchmarking guide on service agreements. An update could be coming later this year.
Indeed, service agreements provide a source of recurring revenue for home services companies that may otherwise be difficult to replace. The HVAC world, for example, is typically seasonal, so memberships have become an effective way to generate revenue during slow months. Service agreements also provide upsell opportunities when technicians are conducting site visits and maintenance inspections.
But the benefits go beyond the bottom line — these contracts are also key to customer relationship building and management. Service agreements establish a company as a customer’s go-to service provider for maintenance work, replacements, and similar tasks. That allows one or more technicians to conduct repeated visits to a customer and establish the type of rapport that builds comfort and trust. These visits also place the service technician in a better position to present additional services from a company, which is key since apparently only 13% of customers believe a salesperson can understand their needs.
The role of service agreements for customers “With service agreements, you’re trying to get customers to build a relationship with their home,” said Aaron Gaynor, owner of Eco Plumbers, an Ohio-based plumbing company. Like long-term relationships between two people, the stability and big-picture rewards may be worth more over time than the immediate benefits. “It’s about peace of mind, which is why you buy a warranty, for example. Service agreements have to be presented as peace of mind first, benefits second,” Gaynor said.
Quantifying the benefits of a service agreement from a customer’s perspective can be a challenge because the focus is on costs being avoided. But service agreements are a great way to standardize preventive maintenance, i.e., to keep equipment running smoothly and proactively manage any issues that arise. One tangible benefit for customers? Discounts. When those pesky maintenance issues do pop up, most service agreements allow for customers to receive a discount on equipment. And getting back to the relationship that companies want customers to build with their homes, consider the home’s value and how preventive maintenance can help.
“When you sell your home, you want it to be the #1 draft pick,” Gaynor continued. “You don’t want it to be #4.” In other words, proper maintenance has the added benefit of increasing — or at least not detracting from — a home’s value.
Managing service agreements with software As new technological tools are added to the home services landscape, software has become a popular solution to manage service agreements for businesses. But some software tools don’t manage memberships well, or at all, which is why a lot of companies continue to manage their agreements manually even when software helps to manage other parts of their businesses. However, there are some powerful platforms that store, manage, and automate the service agreement process. This approach carries a variety of benefits.
One clear advantage — for both the company and the customer — is that tracking service agreements through software enables the company to integrate these contracts with customer histories. This means that a company can track and manage maintenance inspections for customers with ease. Knowing the service history and specific pain points of a particular customer helps build rapport and personalize the service.
A second advantage is that best-in-class software platforms in this space can manage the massive undertaking of setting up service agreements. ServiceTitan’s platform, for example, has a setup wizard that can walk users through the step-by-step process of establishing memberships. This process includes creating membership types as well as establishing recurring services, discounts, task codes, billing procedures, and more.
Another consideration is the automation and coordination that software tools provide. Looked at another way, this is peace of mind for the company. Customers can be billed automatically and on a recurring basis, erasing the difficulty of remembering who to bill and when. These platforms can also:
- send reminders for follow-up appointments or expiring memberships
- recognize deferred revenue that these service agreements generate
- automatically attribute bonuses to technicians that have sold these agreements
Memberships can also be sorted by type, so if a company serves several different verticals — plumbing and HVAC, for example — it can specify how or to which group(s) of products a discount may apply, thereby eliminating another source of manual error.
Using technology to manage service agreements can be a winning strategy, as long as the tool is robust enough handle each part of the process. The win for customers is not only the peace of mind, but also the level of personal service that a company can provide. The win for the business — just in case satisfied customers aren’t enough — is an automated process that allows team members to focus on other customer-facing and revenue-generating activities.