Why I Hate Service Agreements

Perhaps my favorite (and most productive) consulting activity is to go on a Ride Along with a Service Tech.  I hop in the truck…open my ears and eyes, shut my mouth, and always learn something.  Afterwards, we debrief and examine what went right and what could be improved.

My deep appreciation of trades people comes from watching, first hand, what it takes to do PHCE work on-site.  Wow.  We require so much from a Service Tech, operationally, technically.  And he/she is required to meet Sales goals, too.  I believe that a nice, solidly skilled Tech with a simple, friendly sales process is a gold mine of relationship building, problem solving and profits.

EXCEPT when that Service Tech is talking about your Service Agreements.

Recently, I went on a Ride Along.  The Service Tech was terrific.  From the minute we arrived, “Timmy” charmed the customer with his Southern manners and calm, technical confidence.  Timmy did a home survey and listened well as Mrs. Homeowner explained the challenges of their HVAC system.  He did a fast and thorough diagnosis on the troublesome equipment.  He made a successful presentation of suggested solutions and Mrs. Homeowner said, “Yes!” to everything.  She offered to make Timmy lunch, too.

Then, all the love and “warm fuzzies” went high-tailing it out of the room the moment Timmy started in on the Service Agreement.

“Oh, Mrs. Homeowner, I notice that your Service Agreement has expired.  Would you like to renew it?”

“Um, sure.  I guess.  What is the Service Agreement for again?”

“Well, we do a 39 point check on your HVAC system two times a year and make sure it’s running properly.”

“OK.  Wait.  Didn’t you just do that?”

“No, ma’am, I was troubleshooting the systems and found those problems.”

“If you fix them, why would I need a 39 point check?”

“Well, the Service Agreement also includes filter changes.”

“Oh, yes, well, are you going to change the filters today?”

“I could!  They are free with a Service Agreement.”

 

“How much is that?”

Now, at this point, Timmy fumbles for, then finds and presents, a 10,000 word, 4 page agreement that lists – in 8 point font – 39 technical activities…all for the super confusing price of somewhere between $189 and $529 depending on what is referred to in an asterisk somewhere.  I am not exaggerating.

 

Well, it went from bad to worse at this point.  Timmy never got lunch.  He did do the originally agreed upon work.  Mrs. Homeowner did not buy a service agreement.  Timmy changed the filters, but I am not sure that Mrs. H. knows this as she and Timmy didn’t exchange more than a dozen words before we left.  Ugh.

Here’s what I hate about Service Agreements…

  • Doesn’t cover anything. As a homeowner, I am painfully aware of what a Service Agreement doesn’t cover.  To make matters worse, your Service Techs often give away a lot of service that the customer is not appreciating or paying for.  It’s a lose-lose situation.  Most owners create service agreements from this belief, “If we get in the door, we can upgrade the sale with additional sales.”  Duly noted.  But so often the risk of confusion outweighs the opportunity when you are face to face with the customer.  And, the Tech fails to capitalize on the opportunity.  Don’t believe me?  Ride Along with one of your Techs and experience their presentation of the Service Agreement itself…and the Scheduled Maintenance Call that is offered as a “benefit.”
  • Asterisks. I hate small print, *s, and anything else that looks like we are trying to pull a fast one.
  • Need to renew. Why?  Why does one have to re-up every year?  It puts the Tech in a weird spot over and over.
  • Bad brochures.  The biggest issue with the Ride Along described above was a burdensome brochure.  Too many features and not enough benefit, squeezed into an “amateurish” print job.
  • Nightmare experiences with other Warrantees and Guarantees. This one isn’t your fault.  This is a problem created by “Big Box” companies that offer empty promises.  If you have been burned by one of these – who hasn’t? – it leaves a lingering bad taste.  And your Tech is going to come up against it.
  • Painful presentation. Most importantly, Service Techs are not properly trained to present the benefits in such a way that they don’t trip over themselves in the attempt. Maybe because the benefits aren’t that impressive.

Bottom line:  As a business owner, I understand why you offer Service Agreements.  But why would your customer want one?  And are your Techs really turning them into any significant additional Sales?

 

If you are going to offer them…

 

  • Skip Plumbing Service Agreements. Is the juice really worth the squeeze to drain and purge a water heater?  How often does the drain cock leak after you put it back together again?
  • Keep it simple! Come up with a one page, 12-point font, bulleted list of what’s in it for them.  Be clear about what is and isn’t covered.
  • Role Play, Ride Along and perfect the Pitch! From the offer of the Agreement to the offer of additional work needed, examine how your team is communicating.  And, measure the add-on Sales.  If you are convinced your Service Agreements are a win-win…carry on!

Note: It’s really Residential Service Agreements that I hate.  When it comes to Commercial Service Agreements, we can have a different conversation.  How about creating a customized Maintenance Plan?  Based on the facility, could you create a monthly, quarterly list of “To Do’s” that would support the efforts of the maintenance crew?  Sure you could…and it could be tremendously valuable to your commercial customers.

Pull the Plug?

What if you just stopped selling Residential Service Agreements?  GASP!  What if you offered a V.I.P. Club membership instead?  Perhaps it could be something like this…

  • V.I.P. Club Benefits…
    • 10% off everything you offer. This would include a 10% discount on their twice yearly maintenance on their HVAC and/or Hydronics system.  However, it would be presented and sold just like everything else your Service Tech offers.  And, you will be in charge of reminding your customers of when their service is due.
    • First in line. On the one or two days a year when weather or disaster strikes, you promise that you get to them.
    • Special offers! Make special opportunities available to your Club members.
  • And, all they have to do is become your Facebook friend!
    • Become our Facebook friend and we’ll keep you in the loop about special offers, new products, energy saving tips, etc.  Commit to becoming a fun and relevant Facebook friend.

Disagree?  Agree?  Think you have a ROCKIN’ approach to the Service Agreement/Club concept?  Let me know!  I’m on the lookout for inspiring, creative approaches.  Post your thoughts on my FB page! https://www.facebook.com/ellenrohr. I just may show up at your shop to Ride Along with one of the Service Techs at your company.

 

2 Comments

Add a Comment

Your email address will not be published. Required fields are marked *