The Future of Memberships: Smart Strategies to Boost Loyalty with SmartAC

For decades, contractors have been selling HVAC memberships or annual service agreements the same old way. Sell the customer a new system, and then ask them to sign up for a maintenance plan that includes two service visits per year to keep it running optimally.

The ultimate goal? Build customer loyalty, gain additional face time with the customer, and be the company they call the next time something goes wrong.

While tried and true, this process of selling HVAC memberships (or service agreements for any trade) could use a little modernization, says Josh Teekell, Founder and CEO of SmartAC.com. Using his company’s sensor technology and software integrations, contractors can change the traditional HVAC membership business model, gain more customers, and grow profitability.

“The goal is just to make sure that you get that next demand call,” Teekell says. “Everything we do at SmartAC is to try to accomplish that same objective, just by doing it in a different way than it’s been done for the past 50 years.”

In the next episode of the Mastering ServiceTitan podcast, Teekell explains how reducing physical visits from twice to once a year, leveraging real-time monitoring, and offering tiered membership plans can boost signup rates, increase retention, and significantly reduce costs.

Let’s get into it.

Why memberships are critical for customer retention

Contractors began selling service memberships to homeowners back in the 1970s as a way to acquire and retain an ongoing relationship with customers. But the membership business model failed to evolve, few companies offered it, and only a small percentage of homeowners found value in it.

“We knew there had to be a better way to be able to increase the customer lifetime value by making sure you [the contractor] own that home moving forward,” Teekell says.

Today, more contractors sell memberships, but they often engage in pricing wars with competitors to see who can offer the lowest-cost membership plan. 

“They're selling them at a price point that doesn't even cover the labor of going to the house a few times a year,” Teekell explains. “And, in general, attrition can be very high and so people just get run down doing it… they don’t see the benefit.”

Another challenge involves businesses offering homeowners a 10% discount on their new HVAC installation if they sign up for your membership plan. Initially, you might gain a large number of new customer memberships but many will cancel within the first year because they’ve already received their perceived value from the discount offered on day one.

“What would be the reason for why they stay with this plan six, 12, 18, or 24 months from now? Putting them on a membership just to have them turn it off accomplishes nothing,” Teekell says.

SmartAC data collection boosts membership value 

Homeowners often sign up for HVAC membership service plans for peace of mind, knowing their systems will be less likely to break down with regularly scheduled maintenance. But sending technicians to the customer’s home twice a year for tune-ups may not be the smartest way to deliver the best membership service.

“Many times, those trips to the house become redundant because these systems don't really need to be tuned up every six months,” Teekell says. “But when it was the only way of getting face time with a customer, it made sense to be pushing that.”

By leveraging real-time monitoring technology through SmartAC, contractors can track their customers’ systems directly and know exactly when service is needed—much like driving a vehicle with dashboard indicators that alert you when something goes wrong.

“Offering them that peace of mind, some transparency into the process, knowing when the right time is to service the system, knowing that it's been done correctly afterwards, all of those things are like a dashboard for your HVAC system.”

With SmartAC, you can reduce those physical visits from twice to once a year and offer tiered membership plans for different buying personas. With traditional membership offerings, Teekell says only about 20% of customers are willing to pre-pay you to visit their homes a couple of times a year. With this new technology, however, SmartAC can help boost those numbers to 30% to 35%. And for customers who don’t want to pay $25 to $30 per month for your membership service, you can use the smart technology to offer lower-priced options like $10 per month.

“What we're focused on now is, how do we go down market even more from there?” Teekell says. “To be able to give every homeowner some option to engage with that contractor at whatever level they’re willing to, all the way down to free, so we can help contractors accomplish the main goal, which is getting that next demand call at the house.”

What is SmartAC technology?

SmartAC technology starts with placing simple sensors in the HVAC customer’s supply vents, return vents, and evaporator drain pans, Teekell says. With a model created for every single house, SmartAC uses old-school HVAC technology plus machine-learning AI to monitor system operations and diagnose any issues.

“When they both say something's wrong, that's when we serve up a monetizable opportunity to the contractor, and we send it to the contractor first,” Teekell says. “Everything we're trying to do is to empower the contractor to be that hero to the homeowner, by giving them the experience they promised when they signed up for the membership.”

The SmartAC sensors monitor the customer’s system all year long and if the customer’s dashboard says it’s operating at 95% efficiency, the two physical visits can be dropped to one to achieve the same maintenance results. One visit means you’re saving half the labor costs of providing that membership service.

“By reducing the amount of times you're guaranteed to be there annually, you're able to double the amount of homes that you can manage with your team,” Teekell says, and your job assignments can be more efficient by using the data collected to target where your services are needed.

While SmartAC’s “Detect” is powered by the sensors, the new “Connect” offering is powered by a software app. Teekell says you can start with one, then onboard the second. By adding the app, homeowners can video chat directly with their contractor and show them exactly what’s going on with their HVAC system.

“It's a great dropdown offering to be able to capture more homes,” Teekell says. “They can start day one with having their own white labeled branded app for the homeowner engagement piece so they can try to win that next demand call and give the homeowner as good of an experience as they can have.”

With Detect, you’ll need to train your technicians to do the 10-minute sensor installation and reconstruct your membership plan around it. The Connect software-only offering can go live in a few days.

To summarize, SmartAC offerings include:

• $10 per month plan with sensors only

• $20 or $30 per month plan with sensors plus software app

• Software app only (a subsidized model where the contractor receives no monthly membership income but retains the customer for future work)

“The goal is to sell every homeowner a $20 or $30 a month membership. But a lot of people won't sign up for that. And we just need to have something else to offer the people who won't,” Teekell says.

ServiceTitan’s Integration with SmartAC and Important KPIs

The goal behind the SmartAC and ServiceTitan integration is to monitor customers’ HVAC systems in real-time and allow that data to flow directly into the contractor’s ServiceTitan account. The CSRs can see the high-level detail provided by SmartAC, notify the homeowner about the issue, then schedule service—all within the ServiceTitan platform.

“The bookings through the [Connect] app flow directly to ServiceTitan as well, and the real-time availability API that ServiceTitan has now makes that really beautiful, where the homeowner doesn't even have to verify anything. There's no verification. It's purely software and no human touch, which can really help with CSR bandwidth as well.”

It all boils down to revitalizing a contractor’s entire strategy around customer loyalty, Teekell says. By reducing the number of physical visits, leveraging real-time monitoring, and offering tiered membership plans with SmartAC, you can boost membership signup rates, increase customer retention, and significantly reduce costs.

Key KPIs with SmartAC include boosting membership sign-up rates to 40%+ and customer retention rates to 90%+.

“With retention, our average customer is 96.5% across hundreds of customers. It's unbelievable,” Teekell says. “And that's just the function of giving the homeowner value they can see all year long instead of twice a year.

“It's all a numbers game and we try to let the numbers do the talking,” he adds. “We're trying to slowly reframe the industry.”

You can find this interview and many more by subscribing to Mastering ServiceTitan on Apple Podcasts, on Spotify, or here. 

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