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Maintenance Agreements in 2024

Maintenance Agreements in 2024

June 7, 2024
Maintenance Agreements

WHAT IS A MAINTENANCE AGREEMENT?

A maintenance agreement is a contract between you and your customer. It includes regular appointments to check in on the health of the customer’s home systems. This agreement ensures the regular upkeep of their systems and provides them with a sense of security and peace of mind.

  • OTHER NAMES FOR MAs
  • Service Partner Plan
  • Service Plan
  • Maintenance Plan
  • Preventative maintenance agreements

 

Tradesman Experience headshotPRO ADVICE FROM THE TRADESMAN EXPERIENCE: Do not use the word “preventative” in the name of your agreement. When customers see the word “preventative,” they think you are solving problems before they occur. To avoid upsetting a customer, keep preventative out of the name. 

 

THE POSITIVE IMPACT OF MAINTENANCE AGREEMENTS FOR BUSINESS

  1. Customer Loyalty/Stickiness—While business is about solving customers’ problems, it is also about building relationships. In the home service industry, customers want to trust the people entering their homes to fix their issues. 
  2. Guaranteed Business/Income — Most trade business owners know that managing annual slow periods will make or break a business. A maintenance agreement can help you stay busy during slow times and ensure a steady income stream. They can also make forecasting easier and help you better plan your resources for the year. 
  3. Want to reduce the number of late-night emergency calls from panicked customers? By implementing Maintenance Agreements, your business can reduce after-hours calls by signing on more customers.
  4. Extended lifespan of equipment – Buying an entirely new system is expensive. No wonder customers often want to get a second opinion before agreeing to a complete replacement. Maintenance agreements can guarantee that a customer will get maximum use of their system.

 

WHAT ARE THE KEY ELEMENTS OF A MAINTENANCE AGREEMENT? 

Flat Rate Price

The flat rate is the price you will charge the customer for each appointment in the maintenance agreement. Your flat rate price is the most essential part of the agreement because it will determine your profit from the work that this entails. 

METRICS: FieldPulse Partner The Tradesman Experience, says TIME is all need to consider when deciding your flat rate price.

Consider how much you would charge for a 90-minute service call to make sure your Maintenance Agreements drive profit for your business. Within the agreement, you should charge around 60-80% of that rate per visit. The visits will inevitably increase profitability once you are in the door because of the needed repairs. 

Get creative with how you structure the price of your service agreement. Here is how Josh Huite sets up his Maintenance Plans to keep consistent cash flow:

  1. Initial Buy-in: Charge the customer $40 as a buy-in when they signed the agreement. Since the agreement included four visits, this netted out to an up front cost of $10 per visit.
  2. At each visit, the customer pays $70. Combined with the upfront cost of $10, you will make a minimum of $80 at each of the four visits. The remaining profit comes from repair costs.

 

Appointments & Term of Agreement

Customers may hesitate to sign an agreement because of the length of the service terms. You can set up your service agreement based on how often the unit or system needs servicing to extend its lifespan. Typically, the appointment schedule is X number of appointments every x months for x years. For example, a new HVAC system service agreement would be one service appointment every six months for two years. 

Your team should call the customers to schedule each appointment to get the most out of these agreements. Customers will be thrilled not to have to keep track of the schedule.

Discount on Services

A proven way to encourage customers to sign on is to provide a discount on parts and services. This discount adds another layer of loyalty because it motivates customers to call your business for additional jobs. 

Pro Tip: A 15-20% discount on parts and services within your agreement is standard. 

Priority Scheduling—

When entering into an extended agreement with you, customers want to know you will prioritize them. Include a defined time window within which your customers can expect to have their problems addressed (e.g., within two days). Remember to evaluate whether your business can honor a time window commitment before including it in your contract. Failing to meet the promised window can hurt customer satisfaction.

Additional Benefits: 

Depending on how you run your business, consider adding additional benefits to these agreements to boost customers’ perceived value. Consider the examples below:

Referral Compensation—Find potential customers and gain leads by adding a referral incentive into your agreements. For example, maybe they get $50 off for each new customer they refer that you complete a job for.  

Consistent Technician: Building relationships with customers is the key to success in the trades industry. 

100% Satisfaction Guarantee— A guarantee demonstrates your confidence in your team’s ability to solve the problem. Your customer’s confidence will improve too.

Transferrable – to your customer’s new home or the new owners of a customer’s former home. 

 

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BUSINESS OPERATIONS FOR MAINTENANCE AGREEMENTS

Business owners have said they don’t offer maintenance agreements because they don’t have the operations to manage it. If your business management software limits your business’s expansion, it might be time to check out your options. FieldPulse is a field service management software that supports business growth on many fronts, including maintenance agreements. Here’s how:

  1. Organize Maintenance Agreements Centrally – In FieldPulse, maintenance agreements are directly accessible from your main navigation. The Maintenance Agreements tab will show you all the maintenance appointments this month and next month. Additionally, the master location that gives you access to all Maintenance Agreements you have with your customers. 
  2. Tailor Your Plans— Build as many different plans as you need. FieldPulse has a wide range of customization options so you can find what works to help grow your business. Take control of your field service operations. You can create different agreements based on how you run your business and how best to serve your existing customers. 
  3. Contract Management—Send maintenance agreements directly to customers via text or email. Customers can easily e-sign and accept the contract, automatically populating their profile within FieldPulse. 
  4. Recurring Jobs with Recurring Billing: With the FieldPulse, save time – don’t waste time creating multiple jobs. The recurring job feature lets you repeat jobs on a cadence set at your chosen interval. Then, you can also set up your agreements to bill on recurring intervals. Price out each visit, so your customer can pay per visit and not all up front.
  5. Automatic Service Reminders to Customers: Impress customers with automatic reminders of Service Agreement scheduling. First, customers are less likely to no-show after receiving reminders. Secondly, you build trust in your trades business by staying on top of the schedule. 
  6. Associate Assets with Maintenance Agreements: Easily track the type of asset associated with the Maintenance Agreement directly in FieldPulse. Give your team real time access to see the asset they are servicing and give customers the best service.

Maintenance Agreements can have long term benefits for your business. Test and learn what your target audience needs and provide great customer service with a win win solution. Of all your products and service, Maintenance Agreements will quickly become the best of your lead generation strategies.

You’ll keep your team busy with recurring work and watch your business continue to grow.

Eager to learn more about how you can improve your bottom line? Sign up for a free demo with FieldPulse today.

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