How to Profit From Maintenance Contracts | The Ultimate Guide

Brittany ParisAugust 12th, 2020
Listen to this article

Home maintenance contracts, often sold as service agreements or club memberships, generate guaranteed, recurring revenue for home service businesses. Maintenance agreements also provide homeowners with the peace of mind your company will show up if something breaks and maintain their equipment to prevent major problems. 

For HVAC, electrical, plumbing, and other types of contractors who perform repairs and routine home maintenance, an annual or monthly maintenance contract guarantees future billable work in a market that's hard to predict and very competitive. It’s also a way to book more time in a customer’s home, build brand loyalty, and give homeowners discounted or exclusive access to your services. 

Is your home service business properly utilizing service agreements? Could your field technicians sell more of them? Does your team know how to successfully pitch memberships and contracts to customers?

In this guide to home maintenance contracts, we give tips on how to sell service agreements and examine the ways modern service agreement software can help your business revamp its approach.               

Reasons for pursuing home service contracts

  • Maintenance agreements generate predictable, recurring revenue during slower seasons.

  • Monthly maintenance contracts allow techs to regularly check a customer’s equipment or systems and address minor issues before they become expensive problems.

  • Equipment-based contracts sold with new equipment ensures scheduled maintenance service to protect the investment and your company’s reputation. 

  • Home maintenance contracts give more opportunities to engage loyal customers, build the brand, and identify potential sales opportunities.

  • Use field-management software so your techs know the right time and ways to pitch a service club membership, and give them mobile technology to make signing up and setting recurring payments quick and easy.

Why selling service maintenance agreement is important

Service maintenance agreements provide:

Increased predictable revenue. As a business owner, you already know there are busy times when the phone rings off the hook and other slower periods when jobs become scarce. In some service industries, like HVAC and plumbing, these peaks and lulls change with the season, but every business must weather slow periods when revenue can rapidly dwindle.

Maintenance contracts help stabilize revenue during these slow times and grow your customer base. By scheduling routine maintenance and checking in on existing customers, you can maintain a stream of billable, preventive services even when homeowners aren’t calling you with an urgent issue. 

Train your technicians to catch potential problems homeowners should take care of immediately—before they become a larger, more expensive issue in the future—and discover opportunities to upsell accessories or additional services.

Improved customer satisfaction. Maintenance service agreements mean your company must stay vigilant to your customers' needs, and that kind of attentive customer service gives you more opportunities to impress, service, and satisfy homeowners.

Train your technician team to engage with customers and listen to their questions and concerns during scheduled check-ups and maintenance. Time spent talking face-to-face with customers provides extremely valuable feedback and reassures customers your company cares. A monthly maintenance contract generates more of these opportunities to build good rapport with homeowners and inspire loyalty to your brand.

Creating your home maintenance agreements

Whether you want to revamp your current service agreements or introduce home maintenance contracts to your customer base for the first time, keep in mind these specific principles to ensure these offerings mutually benefit both you and your customers:

  • Charge the right price. This varies, based on your market, competitors, and the specifics of your own business. Bottomline: You want to crunch enough of your own numbers to make sure service agreements prove profitable for your business and don't end up being costly or wasteful.

  • Set the right contract terms. Many home service agreements last for 12 months—others work on a month-by-month basis as a monthly maintenance contract (read more about renewal policies below). You want to find a policy term that appeals to homeowners who are willing to try out a contract agreement but don't want a major commitment.

  • Determine a renewal policy. If you opt for an automatic renewal policy for your home service agreements, you’ll want to make that clear to homeowners as they sign up. Establish an automated notification system that sends homeowners a reminder in the weeks prior to the auto-renewal. Transparency builds trust with customers—and modern consumers expect a digital reminder from companies.

  • Do your due diligence. Maintenance agreements shouldn't be extended to homeowners until your team obtains detailed information about their equipment and property. If your company installs new equipment, make sure to attach an equipment-based contract to that specific unit and log the serial number in your digital records. 

Generally speaking, it’s best to fully examine the working condition of a homeowner's HVAC technology, plumbing, electrical system, etc. before extending a service agreement to the customer. Too many service visits to remedy repeat repair issues makes the home maintenance contract too costly for your company. Consider setting a limit of appointments per contract period and specify what services the maintenance membership covers.

Helping your field techs succeed at selling service memberships

Your field technicians bear most of the burden of pitching and selling a home maintenance contract to your customers. Many techs entered the skilled trades because they enjoy working with their hands and helping people—not because they wanted to be salespeople. 

However, you can give your on-site team the mobile technology and sales tools to approach this process with confidence. Build in a discount so techs can easily show the customer a digital estimate that calculates how much money the membership potentially saves them on service calls and equipment deals. 

“I’d hate to be offering a membership program and not have my company on ServiceTitan,” says Joshua Campbell, co-founder of Rescue Air Heating & Cooling in Texas. “You hit a button and put it on recurring payments...it’s about getting those visits. Those customers build trust in you.” 

Keep your pitch simple and short. Neither your customers or your techs want to be burdened with an awkward, prolonged sales situation, so make sure your techs know how to speak about your maintenance agreements with a succinct sales presentation that highlights homeowner benefits.

You also want your team to identify the ideal opportunities to pitch your company’s club membership or  maintenance contract. Not every house call presents an opportunity to sell a service agreement, but techs should be aware of situations where they do appeal to homeowners and make financial sense for the business. 

For instance, if your company offers free inspections on initial visits, use these thorough inspections to help uncover current or potential issues the homeowner may not know about. Advise solutions to help them remedy over time or stay on top of the problem with a monthly maintenance contract.

With an intuitive, cloud-based mobile app in the field like ServiceTitan Mobile 2.0, you can utilize a customizable service agreement template with just a few quick taps on a tablet and make the membership forms a mandatory part of certain service calls—ensuring your techs always know the right time and situation to pitch a home maintenance contract to a customer.

“I really love the fact of how easy it made our service agreement program,” Chris Hunter reported to the EGIA about his ServiceTitan 2.0 experience as president of Hunter Heat & Air. 

Hunter, who co-owns Go Time Success Group, recently joined ServiceTitan as Director of Customer Relations to lend his “voice of the contractor” and experience running an HVAC business for nearly 15 years. 

The ServiceTitan software suite automates maintenance appointment scheduling, develops targeted marketing email campaigns geared toward renewal and new customers, and delivers reporting on home maintenance contracts and memberships to ensure companies can see the profit and customer-base growth driven by service agreements.

“Service agreements used to be a nightmare to manage, and now it is so easy that we have more than doubled our agreements!” Hunter says.

ServiceTitan is a comprehensive software solution built specifically to help service companies streamline their operations, boost revenue, and substantially elevate the trajectory of their business. Our comprehensive, cloud-based platform is used by thousands of electrical, HVAC, plumbing, garage door, and chimney sweep shops across the country—and has increased their revenue by an average of 25% in just their first year with us.

Learn More

Related post