8 Ways to Sell Commercial HVAC Service Contracts in 2024
Service contracts and maintenance agreements are a core focus for commercial HVAC businesses. They reduce your need to drum up constant business by allowing you to rely on steady income from existing, long-term clients.
The benefits are therefore pretty clear, but the means are a little more opaque—namely, how can you convince people to sign a contract with you?
The good news is, there are a few different ways to package such agreements to make them attractive to clients; you just have to do it in a way that clearly demonstrates value to the client. If you’re wondering how to sell HVAC service contracts in 2024 and beyond, look no further.
Elements of Commercial HVAC Service Contracts
Before we discuss ways to sell mechanical and commercial HVAC service contracts, it’s beneficial to understandwhat commercial HVAC contracts include.
Service agreements come in many forms, with many variable terms, depending on your business and customers. The main variables are similar across the board, though, and should include:
How often the service will occur
Whether the service will happen on a regular basis, or a set number of times as needed
Which services are covered under the contract
How often full preventative maintenance on HVAC equipment will occur (versus, say, quick routine inspections)
The Value of Commercial HVAC Maintenance Agreements
HVAC service contracts are hugely beneficial, and not just for the service provider in terms of monthly revenues.
In fact, they give the customer peace of mind, demonstrating to them that they don’t need to be on alert for problems or breakdowns in the system. Instead, they can rely on you to ensure that doesn’t happen – and to take care of things pronto if it does. Plus, as the economy slows, many facility owners and managers will move toward maintaining their current equipment (rather than replacing it).
What does that mean for you? Well, if you’re a business that relies largely on installs and/or construction projects, you may find leaning into service a good strategy for the year and beyond. If you’re a company who already focuses primarily on selling service contracts, then this is a good time to sell bigger contracts to better customers.
8 Ways to Increase Service Agreement Sales for Your Commercial HVAC Business
There are numerous ways that commercial HVAC companies can increase sales of service agreements, and we’ve covered 8 here. Note that you don’t need to try and implement each of these ways of selling HVAC service contracts all at once. That will quickly lead to overwhelm and a disorganized business strategy – and no one wants that.
Instead, read through this list and choose two or three you think could mesh pretty well with your current business development strategy. Start with tips 1-4 to ensure a solid foundation of service contract value and sales strategy. As you successfully weave those into your routine, add a few more.
With patience, you will transform your commercial HVAC business into one that is not only lucrative but resilient against economic changes.
1. Get Your Team On Board
It may seem unnecessary to say, but sometimes you need to start with the basics and make sure everyone on your team understands the value of selling maintenance contracts to commercial HVAC clients. If the people who work for you don’t see why a maintenance contract is of value, then you can’t expect them to jump on board readily.
More than knowing what’s in it for them, though, your staff need to comprehend what’s in it for prospective customers. Only then can they effectively sell it while they’re on the phone or in the field. And since your staff are often the face of your company – you can only be in so many places at once, after all – you need to trust them to get the job done.
If you haven’t already, make sure you sit down with your team and talk through service contracts: why they matter, how to tell customers about them, and how to follow through.
2. Sell What Your Prospect Needs
Don’t oversell your prospect on a ton of services that you know they don’t need yet — that’s no way to instill confidence and keep your customer long-term. On the same token, you shouldn’t undersell them in order to get them to a lower monthly rate, either. They need the services they need in order to keep equipment running and by providing fewer services than necessary, you may end up neglecting some equipment, leading to breakdowns and decreased customer trust.
The best way to respect your customer base is by providing detailed proposals that explain exactly what, when, how, and why each service is recommended. If you are proposing a package or contract, you’ll need to give a good reason why they should pay you more money upfront, or over a period of time, rather than as needed for maintenance visits. In fact, that’s one reason selling service agreements can be difficult.
However, if they see a lot of value in your explanation, they will perceive it not as a money grab but as a good-faith effort on your part to help them. Getting granular in your agreement reasoning and performance details can help not only get their business, but ramp up your referral traffic as well.
3. Reach the Decision Makers
The building engineer might seem like the smart person to reach out to, and in some cases, maybe they are – if only to get in the door. But you’ll learn real quick who the actual decision maker is in the situation, because you simply cannot sell a long-term agreement to gatekeepers or maintenance personnel.
When you call or contact the company to discuss your contracts and services, ask clearly for the person who can give the go-ahead. Don’t be afraid to say “Are you the one who makes these decisions? Are you able to greenlight a deal if you’re happy with what I can offer you? Great! When should we meet?”
4. Sell the Program
It’s not enough to sell the idea of maintenance. Your customers understand why a company wants to get them on a contract. Instead, make them understand what’s in it for them.
Don’t sell promises. Instead, sell examples that show them exactly what you provide and where you’ve provided it in the past. Explain how service lowers costs, reduces risk, and increases protection. Additionally, show them the program you use to track their visits and check in on their system. Make yourself out to be a benevolent Big Brother who knows what’s best so they don’t have to think about it.
If you don’t know how to do this, read up on some companies that are doing it well and thetakeaways from their success.
5. Offer Flexible Maintenance Plans
Business owners know they need regular maintenance, but they’re wary of signing up for something they might not need as often as they pay for. This is especially true if the only maintenance plan you offer includes a ton of the bells and whistles that your customer knows they won’t need.
Combat this with a range of tiered, flexible maintenance plan options. Perhaps one plan provides the absolute bare minimum, while the next offers a few nice-to-have services, and the top-tier plan pulls out all the stops. Or, think about creating an a-la-carte maintenance plan option to provide the ultimate in flexibility. Whichever structure you go for, make customers understand that your plans keep warranties in effect and ensure every HVAC unit receives the timely maintenance it needs, all without having to spend unnecessary funds.
6. Make Your Business Visible and Reputable Online
A leading study by Podium says that 93% of consumers pull up online reviews and rely on them when making purchase decisions. So, if you’re not already putting a sizable effort into maintaining your online presence, you’re a bit behind the game.
That said, you can catch up. You’ll need a website with a local SEO presence, and good reviews for prospects to find. Create a Google My Business account if you haven’t already, and encourage each and every customer to leave positive reviews about their experience with you.
7. Improve Retention by Providing Exceptional Customer Experience
Customer experience is just as important as your online presence. It’s important that you know what customers go through at every phase so that you can adjust your process to hit the highest possible satisfaction marks. Request feedback, take surveys, and maintain open lines of communication at all times, even after they sign on the dotted line. Especially after they sign on the dotted line.
Maintaining a great customer experience and securing those online reviews will bring customers to you organically, majorly reducing the amount of work you have to put in.
8. Use a Sales Software Built for Service Contractors
NorthBoundary, the latest addition to ServiceTrade’s suite of products, is a robust software solution that enables your team to create accurate proposals and manage your sales funnel to win and retain customers.
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Want to learn more? We encourage you tosign up for a free demo and see the full ServiceTrade platform in action. It’s never been easier to use HVAC service agreements to build your business in 2023 and beyond!
Lessons from Moneyball: The Data You Need To Sell More Services
Look at these two career software salesmen.
Along with silly and fun, we’d describe Billy and Tim as:
Charismatic
Engaging
Great at building relationships
This can be extremely helpful when you’re in sales. Why? Because storytelling is a huge part of successful sales. We regularly train our sales teams on storytelling. Everyone shares interesting stories they hear from customers and prospects because stories are so important in relating to prospective customers.
If your sales team is engaging and they can tell a good story, they can be successful. But there’s another story they might be telling, and that’s what we want to warn you about.
Watch this scene from the 2011 movie Moneyball where the Oakland A’s are trying to replace three star players lost to free agency.
Did you notice the helpless look from General Manager Billy Beane as his experienced scouts start evaluating opportunities to replace players in their pipeline? You hear: He has the looks. He’s ready to play the part. He just needs the playing time.
Do you know what that sounds like in a commercial service business? I’m behind but I have a lot of good opportunities about to drop. We have a great relationship. We went out for drinks last night and it’s a done deal. They’re just busy, but they said they’ll commit by the end of the quarter.
For a sales manager or business owner, this subjectivity is easy comfort but dangerous to believe. So our warning is this: Don’t. Be. Sold.
Now, look at what Billy Beane did instead of being sold.
The Oakland A’s began thinking about getting on base, a statistic that was ignored by the league, and it helped get them to the playoffs with about a quarter of the budget other teams had. They expanded their view to see the whole story.
Believe it or not, most business owners and sales leaders are watching the game instead of coaching. What else can they do but believe the people who are going to bring them the wins? Well, they could begin tracking and analyzing the data.
Once you begin using a data-driven approach, you’ll know what’s happening, not happening, and what needs to happen to get those wins. Once you’ve figured out the formula and what benchmarks you need to keep everyone accountable, your success becomes repeatable. It becomes predictable rather than a surprise at the end of the month, quarter, or year.
3 KPIs to Track
So what stats should you be looking at? That depends on what you’re selling and how your team is structured. Actually, it depends on a lot of factors. But here are a few general stats everyone should be looking at.
At-Bats (Initial Activities)
The great thing about sales is that a salesperson can have as many at-bats as they’re willing to go out and get. At-bats at are initial activities that are measured by thenumber of calls recorded in your CRM and made in your phone system.
On Base Percentage (Opportunities Created)
This one is easy, it’s the number of opportunities being generated and is pulled directly from your CRM.
RBIs (Sales)
The number of opportunities won.
There’s no one formula that works for everyone, but once you have an understanding of the whole story and what your stats sheet should be saying, you can coach the game rather than sit in the dugout hoping for a walk-off home run.
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Want to learn about the sales software and CRM made specifically for commercial service contractors? Check out SalesManager.
This blog post is adapted from the Digital Wrap Conference presentation “Moneyball” by ServiceTrade VP of Sales Anna McMahon.
5 Ways to Sell More (& Better) Mechanical Service Agreements with SalesManager
Selling more maintenance agreements is one of the best ways to scale your mechanical service business, particularly in a labor shortage. But improving your sales engine can be a daunting task, especially when you’re focused on operations and keeping up with your current workload. That’s where SalesManager, sales software built for mechanical contractors, can help.
What is SalesManager?
SalesManager is the only cloud-based sales management software specifically designed for mechanical contractors. It provides industry-specific expertise, built-in pricing models, and templates to help you create comprehensive proposals that meet profit margin goals, automate and manage sales, and deliver a professional, winning pitch.
5 Ways to Sell More with SalesManager
Here are five ways you sell more (and better) service agreements with SalesManager
1. Stay profitable by pricing proposals to meet your specific margin goals.
Once SalesManager knows your margin goals it can calculate the right pricing for the services on any estimate. Margin calculations consider tech labor rates, agreement coverage level, equipment-specific seasonal tasking, belts, filters, and any other material costs, and travel time requirements. By tailoring proposals to your specific margin goals for different types of work, you can ensure that you create profitable proposals that meet your business objectives.
2. Estimate costs & pricing more accurately with an equipment-specific process.
One of the most significant advantages of using SalesManager is the powerful built-in pricing models for project and maintenance contracts of mechanical hvac equipment. These pricing models are based on each customer’s equipment inventory. Using the SalesManager mobile app, any seller, tech, or apprentice can collect equipment model information that the software uses to generate a proposal. SalesManager adds the right list of services and materials needed to maintain that list of equipment to the proposal.
3. Keep the conversations going with sales follow-ups and reminders.
Following up with potential customers is key to closing more service agreements. With SalesManager, you can keep up with proposal status and prospecting activity to stay on top of follow-ups and ensure that you are staying top-of-mind with your prospects. This can help to keep the conversation going and increase the likelihood of converting the prospect into a customer.
4. Show customers how much they’ll save with equipment operating cost analyses.
SalesManager has the ability to provide customers with detailed equipment operating cost analyses with no extra work on your part. By showing customers how much they can save with a service agreement, you can help them understand the value of your offering. And proposing good-better-best options allows the prospective customer to weigh costs, risks, and value to make an informed decision.
5. Showcase your brand with professional proposal templates.
Here’s another marketing impression for you. Proposal templates in SalesManager can be easily customized with your branding and messaging. Using these templates, you can create a professional, branded proposal that clearly communicates who you are and the value of your service agreement. This level of polish will help differentiate you from competitors and increase the likelihood of closing the sale.
At ServiceTrade’s 2022 Digital Wrap Conference, CEO Billy Marshall presented an innovative solution to a core challenge that’s top of mind for everyone these days—the ongoing labor shortage.
The statistics are concerning. For every two techs that retire each year, only one enters the field. But demand for your services continues to grow. So what’s the play? Billy offered this 3-step strategy:
Minimize demand work
Sell to better customers
Organize around the goal of keeping your techs on track
We’ll get to those in just a minute. First, an illustration…
The F1 Analogy
Watch this:
In case the analogy isn’t clear, your technicians are your race cars on the track. The growth and limitations of your business rely largely on the quality and efficiency of their work. But in a labor shortage, skilled technicians are a constrained resource. You can’t just go out and hire more techs. You can’t tag in another race car.
But you can innovate and build up your supporting team, your pit crew, your technology-empowered office staff and sales team. Employ as much administrative staff as you need to achieve one mission – keep the technician solely focused on doing the high-value, hands-on work that only they can do.
3 Steps to Growing Revenue Without Hiring More Techs
Minimize Demand Work
You can’t plan for demand work. It causes chaos and throws off schedules. Prioritize maintaining and repairing equipment with routine service. If you have customers who refuse to properly maintain or repair equipment, consider cutting ties with them, raising their prices, or deprioritizing their service.
Sell Better Customers
If demand for your services is high, make room for only the best customers. Good customers would much rather sign up for your premium packages than risk their equipment failing. Good customers want predictable operating expenses, not the unexpected and unpredictable cost of demand work.
Organize Around the Goal of Keeping Your Techs On Track
Take administrative burdens off of your technicians. Invest in your office staff. Make sure that everyone in the company understands the goal and is working toward optimizing technician efficiency. Software helps you do just that.
You can learn more about growing your business despite the skilled labor shortage by watching the full presentation.
Highly Recommended Holiday Reading
This might not be for you, but most of us in sales need help knowing what to say and when. Take a look at this two-minute clip of Phil M. Jones from the 2019 Digital Wrap Conference.
This exercise demonstrates how the right words can change how we think. At DWC19, Phil revealed some of the magic words that motivate people – the people you want to buy your products and services – to take action.
I purchased the audiobook shortly after DWC19. I listened to the 1 hour 15 minute recording once, then immediately replayed it because I wanted to absorb every idea. Anna McMahon, who leads ServiceTrade’s inside sales, is running contests in her team for the best use of Phil’s magic phrases. They’re tools that work and Phil shares them in ways that make sense.
If you heard Phil’s DWC19 presentation, let us know in the comments which magic phrases have stayed with you and which ones you’ve started using.
How to Grow Your Service Contracting Revenue 23.4% Year Over Year
On average, commercial service contractors who use ServiceTrade grow their invoice revenue by 23.4% year over year. All you have to do is buy ServiceTrade and you’ll grow! Our work here is done. The end.
If only it were that simple. There is a big difference between the best and worst performers. For example, contractors that engage their customers online, quote more repair work, and drive more revenue per customer and per job grow much faster than those that don’t.
These conclusions came from an analysis of millions of data points. Over the last year, ServiceTrade customers invoiced over $1 billion through 1.5 million invoices on 1.9 million jobs. On top of that, their customers approved 140,000 quotes to the tune of $450 million. That’s a shedload of service work! We measured YoY revenue growth for companies generating invoices in ServiceTrade since 2017Q2 and here’s what we found:
Drive more revenue per customer and per job to yield faster growth
We wanted to know where the fastest growing contractors earn their new revenue. As it turns out, the old business adage that it’s easier to drive more revenue from your existing customer base than from acquiring new customers is true even for service contractors.
We found that a company’s growth rate is proportional to how quickly they grow the average revenue per customer (chart) and revenue per job (chart). Surprisingly, a company’s ability to attain net new customers does not impact revenue growth. In fact, some of the fastest growing companies have a shrinking customer count because they fire lots of their worst customers and win a smaller group of new customers that represent more revenue.
So, how are you going to drive more revenue from the work you already have? Read on!
Engage customers online to create revenue growth
We divided ServiceTrade customers in half based on how often their customers engage with Service Links*. The top half, whose customers viewed Service Links more often, grew their service revenue an average of 29.1% YoY. The bottom half only grew 9.2% YoY. Your customers want to trust that they are getting the value they are paying for. If you provide more transparency with a convenient, online experience, you build that trust and differentiate yourself from your competition. Being different and better makes it easier to command a premium price and earn more revenue from each customer.
*With ServiceTrade, you send online summaries of the services you are performing with a feature called Service Link. Here’s an example. Much like the notifications you receive for every Amazon order about shipping, delivery, and feedback, Service Link keeps your customers informed about the value you deliver on each service. We call these Marketing Impressions Per Service (MIPS) and they reinforce your value while keeping your customers informed about the service process.
Sell more repair work
Then we divided our customers based on a ratio of the number of approved repair quotes to overall job count — how often are they earning new repair revenue for each completed job? The top half grew their revenue at an average rate of 27.7% YoY. The bottom half only grew 10.8%.
Sending online quotes to your customers that are easy to approve and include details, pictures, and videos reported from the field is quick and easy with ServiceTrade. And, as I showed in my last data-driven blog post, quotes that are sent quickly, that include rich media, and are convenient for the customer have much higher approval rates.
At the beginning of this post I joked that all you have to do is buy ServiceTrade to grow. The fact is, when used effectively, ServiceTrade is a powerful tool to help you drive more revenue from the customers you already have. ServiceTrade will help you grow by engaging your customers online and executing more effectively on repair sales.
The data analysis and graphs for this blog post were all generated with Amazon QuickSight that is available to ServiceTrade customers to analyze their own service data. Call us at 919-246-9900 if you’d like to learn more.
254,484 Quotes: Fast, Rich, and Easy
Commercial service contractors, do delays in sending repair quotes to your customers impact your approval rate? How much? Are quotes more likely to be approved if they are paper or digital? Do pictures and videos help? These are easy questions to answer! Simply connect a business intelligence (BI) tool, like Amazon QuickSight, to the application you use to build and send quotes, like ServiceTrade, and analyze the data. It’s easy as pie.
OK, maybe it’s not that easy if you don’t have access to all these applications. On top of that, you also need loads of data that spans enough time to find statistically significant results. Don’t have access to all of those resources? That’s OK. We do. We analyzed 254,484 quotes created in ServiceTrade between January 1st, 2017 and July 31st, 2018 that were submitted to facility customers. From that data, we found that if you want to get quotes approved, they should be fast, rich, and easy.
1. Fast
We analyzed the time between when quotes were first created to the time they were first submitted to the customer to determine how much delays can impact the approval rate. This analysis does not take into account the time between the initial discovery of quoted opportunities to the time the quotes were created, but still offers a glimpse into the impact of delays on a customer’s probability of saying “yes.”
There’s no real surprise here. The longer it takes to get quotes into your customers’ hands, the less likely they are to approve them. The approval rate drops less quickly than I would have expected, but drops nonetheless. Turn quotes around as quickly as possible for the best outcomes.
2. Rich
Here’s your get rich quick tip of the day: Take more pictures and videos, but not too many. Analysis of quote attachments, like pictures and videos, suggests there’s an optimal quantity that can maximize your quote approval rate; it’s 5. Fewer than that and you probably aren’t showing customers the full story and why they should approve your quote. More than that and you are likely overwhelming your customers with too much information.
3. Easy
Companies like Amazon and Uber set a high bar for customer experience and convenience. Data shows that commercial facility customers expect the same from you. You’re not going to spend billions of dollars on infrastructure to revolutionize commercial service contracting. However, simple conveniences go a long way. For example, sending quotes to customers online in a format that includes rich media and easy, one-click approval makes a big difference. Our data shows that ServiceTrade quotes that are viewed online are approved at a significantly higher rate than those that are not. For those that were not viewed online, this data does not distinguish between those that were delivered in a more traditional manner (email, snail mail, etc) or were just ignored by the customer. Either way, more views online mean more approvals.
You’re competing for a share of your customer’s attention and wallet. Their flooded inbox and growing to-do list make it easy for them to lose track of priorities like your quotes for equipment repairs. Data suggests that email reminders give your customers the extra nudge they need to remember and prioritize your quotes. Reminders have diminishing returns but are effective at boosting overall quote approval rates.
Tellin’ ain’t Sellin’ – Every Customer is From Missouri, So Show Them Something!
When your salespeople call on customers, what are they pitching? What do they present when they get that rare opportunity to show a high-profile prospect the benefit of working with your company? While I have not been in the room often when a commercial service contractor is pitching a customer, I have seen hundreds of websites for these companies, and I have been to lots of trade shows where they are exhibiting. Generally, I am not impressed by what I have reviewed. Mostly I see some version of one or more of the following themes:
We Work Harder! It sucks to work harder than the other guy.
We Care More! Not certain what sucks more – working harder or caring more.
Better Technicians Means Better Service! This is the Papa John’s pizza pitch. You’ve seen examples here, here, and here of how that’s not working.
We’re a Family Business! The mafia is a family business too.
We’ve Been in Business a Long Time! Really? Why are you still such a small company?
Sadly, the website content for most commercial service contractors is typically a long and rambling word salad that doesn’t add up to much value for the customer. Generally, Google is not impressed either as most rank pretty low for relevance in organic search results. I imagine the salespeople are equally unimpressed with the company strategy, so their pitch quickly devolves to price:
How much are you paying now? We’ll get the work done, and it will be cheaper! Let’s negotiate labor rates and a markup on parts! We will be there 24/7 when things go wrong! Call us anytime and we will fix your broken equipment by working around the clock until everything is good again!
Competing on price and some vague promises to work harder and care more and fix broken equipment 24/7 and be more family-oriented sucks. Why should the customer believe anything the sales rep is saying? How can your sales representative make an impression that moves the conversation to valuable outcomes instead of a mark-up on the cost of the labor and parts?
Of course the most important thing the salesperson can do is ask questions and understand the goals of the buyer through some discovery conversation. The other thing that should be offered is a premium program, but do not expect the customer to buy on the promises and platitudes of a sales rep. Tellin’ ain’t sellin! Your sales people should be able to show the customer the value of your brand by demonstrating how the program works. I am fond of declaring that all customers come from Missouri, which is known as the “show me” state. If you can’t show them the value, you will not sell them the program.
So what does a premium program look like? And how can you demonstrate it to the customer in a way that is meaningful to them? Let’s have a look at some examples from other industries to gain insights into components you should consider.
Amazon Prime – Amazon offers a subscription program called Prime, and nearly 70% of US households are Prime members. Prime members pay $119 per year in exchange for free two-day shipping, access to a library of movies, television shows, and music, and a free Kindle book every month, among other things. The most important thing Prime does, however, is put Amazon at the top of the heap when a subscriber considers how to buy the next bag of dog food, or supplies for their kitchen pantry, or Christmas gifts for their friends:
I’ve already paid for Prime, I might as well benefit from the free, expedited shipping!
The program helps keep the Amazon brand top of mind for future purchases, and customers pay for this marketing trick through their subscription fees! It’s brilliant marketing by Amazon. Amazon allows prospective customers to try Prime free for a month to experience its value because Amazon knows that all customers are from Missouri. The free trial “shows” the customer why Prime is valuable instead of just “telling” the customer that it will be great if they buy.
BMW Ultimate Care – BMW is a premium automotive brand that delivers what they claim is the “Ultimate Driving Machine,” and Ultimate Care is their premium maintenance program. You pay in advance, typically at time of purchase when financing is also a part of the conversation. Ultimate Care provides unlimited service consistent with the manufacturer’s recommended service plan. All parts and service required for recommended maintenance are included at a thirty-percent discount. The program is only available at BMW dealership locations, so you will be bringing the car to the dealership and wandering about reviewing all of the latest offerings of BMW as your maintenance plan is delivered.
Once again, brilliant marketing. You payin advance so that you will certainly use the service that requires you to come to the dealership on a regular basis. No doubt you will get a loaner for the latest model at the upper end of your price range for any extended service requirements. The dealership is having the customer pay fees in advance of service to help them deliver a hassle-free experience and market their latest offerings to the customer on a regular basis.
Brandt STORM – Brandt Engineering is one of the largest mechanical contractors in Texas, and STORM is their premium program. STORM stands for Service, Technology, Optimization, Retro-commissioning, and Monitoring. When the customer buys into the STORM program, Brandt does a top-to-bottom review of the equipment while installing monitoring technology to track key performance data on the critical elements where failure results in expensive disruptions. Once they and the customer agree the equipment condition is worthy of a performance promise, STORM is initiated. The customer receives regular communication and attention from Brandt engineers and technicians while simultaneously benefiting from lower rates on service requirements and ideally lower utility costs.
The customer is paying Brandt the money they are saving on utility bills and breakdowns as subscription fees in order for Brandt to continuously remind them of the value of the Brandt brand! That trade-off is certainly worth the risk to Brandt of a failure where Brandt must pay the premium (expedited parts, overtime labor, etc.) for recovery instead of the customer paying it. These risks are minimized through information, and the customer is conditioned that any retro-commissioning recommendations (quotes for new equipment) based upon the data are in their best interest to avoid performance disruptions that fall outside the STORM promise. It is brilliant.
So what are the lessons you should take from these examples?
1 – Brand the Program. What is your version of Amazon Prime? Ideally the name helps the sales rep to tell the story, to get the conversation going with the customer, and then the customer remembers your brand. A good name demonstrates your company’s thoughtfulness in how you communicate your value.
2 – Show, Don’t Tell. Your sales people need to be prepared to give a demonstration of the program. Amazon gives prospective Prime members a month of free Prime membership to try out all of the benefits. Do your sales people have a way to easily give the customer your branded program experience?
3 – Promote the Features. Can you enumerate the features of the program? In a list? Spend some time thinking about the names of the features.
4 – Get Paid for Nothing. If the only time you send a customer an invoice is when you have a labor or parts line item to bill, guess what? They are going to assume your value is in the labor and parts instead of the program. The fewer invoices you send to the customer, the better. Ideally, have them pay annually in advance. It’s better for you and cheaper for them.
5 – Offer a Good Contract. Put in place a master service agreement, a rate schedule, and a service level agreement. Good fences make good neighbors and good contracts make good customers.
None of these elements of a premium program are rocket science, but it is surprising to me how rarely they are implemented by service contractors. Do not let shoddy practices in your industry nor weak competitors that always sell on price dictate your business model. The executive management of your company should spend at least fifty percent of their time working on program and marketing innovations that set the brand apart from competitors. Innovation rarely happens by accident, and it is the key to having a differentiated value proposition.
That Awkward Moment
I love asking business owners and managers “Who do you think you are?” I’m not trying to pick a fight. What I’m really asking is “What makes you different and better than your competition?” But that’s a pretty boring question. Generally, those who give me a concise, thoughtful answer run growing and profitable companies. Those who can’t, don’t.
We’ve written a lot about figuring out what makes you different and better than your competition, but sometimes being committed to your unique value proposition leads to difficult conversations with customers and prospects. Being different will certainly help your company stand out relative to the competition, but it can also feel pretty uncomfortable at times. I will never forget a customer visit with Billy that illustrates just how difficult being committed to being different can be. We were visiting with Randy and Rebekah Akins, the owners of Aztec Fire and Safety in San Diego California. Randy was on the phone because he could not get to the office that day, and Billy, Rebekah, and I were sitting in Rebekah’s office. Randy led off the conversation with an observation on why he had abandoned his last customer service platform and selected ServiceTrade.
“The last application we used really screwed up our QuickBooks, and the most important thing ServiceTrade can get right is an elegant integration with our accounting application,” Randy declared through the phone speaker.
Uh oh, I thought to myself. This is about to get really interesting. Billy didn’t let it go as I hoped he might. Randy had just signed up with ServiceTrade the week before, and I guess Billy was pretty confident that Randy had already written and mailed the check because his first response was a verbal punch in the mouth for Randy.
“Well then, you are likely to be disappointed with ServiceTrade if an elegant QuickBooks integration is what is most important to you. We focus most of our research and development spending on innovations that help you make more money from your customers through great customer service. We believe making more money and great customer service is far more important than how you send the information to your accounting application.” Billy wasted no time getting to the heart of the conflict, and Rebekah and I stared awkwardly at each other wondering what was going to happen next. I personally was happy that Randy was not in the room because he seemed to be spoiling for a fight after wasting a year or more on an application and then switching to ServiceTrade to solve what he felt was his most important problem – QuickBooks integration.
My response to the situation.
“That’s a pretty arrogant thing to declare in the first meeting with a new customer. Basically, you are telling me that what I want is not important and that you guys know better than the customer. We are going to be very disappointed if you can’t help us with this QuickBooks problem.” Randy wasn’t backing down either. I felt I should do something, but this experience was like watching a train wreck, and I felt paralyzed. I literally couldn’t speak or move. Billy continued with “We certainly don’t mean to be arrogant, and you guys are important to us. I hope the QuickBooks thing works, but it might not. If you stick with us, however, I can promise you in six months you will be thrilled with how much easier it is to take care of your customers, deliver more services, raise your prices, and attract new customers.”
“We have already written the check, and we plan to make every attempt to be a good customer. I hope you are right because our last experience with technology was a huge disappointment,” Randy closed the door on the fight, and we moved onto more comfortable ground with a conversation regarding the training and data migration plan for Aztec.
Fast forward eight months and Billy and Randy are best buds. Randy and Rebekah’s business is growing like crazy, and they feel like ServiceTrade has made them stand out in their market. They are selling more services, earning a premium, and attracting new and better customers to their brand. Billy took a calculated risk in that first conversation because he knew that the best ServiceTrade could do regarding a QuickBooks integration was not going to impress anyone. QuickBooks is low cost, basic accounting application that is easy to use, but it has severe limitations regarding how third-party applications interface with it. There are no APIs for the desktop version. Besides, having a QuickBooks integration is not what sets ServiceTrade apart in the market. We know who we are as a company, and our mission is to help commercial service contractors use technology to deliver amazing customer service and become more valuable to their customers. QuickBooks has no bearing on that mission.
Do you know who you are as a business? Do you know what makes you different and special in your market? Can you confidently tell your prospects that you don’t care about being the low price leader and explain what unique value you can offer them instead? Can you explain why your program will reduce inconvenient and expensive breakdowns in the future? Do your customers know who you are? Commit to being different, even if it means being uncomfortable, in your early engagements with customers and prospects to overcome the bad habits they’ve learned from your low-end competition.
Money for Nothing
When you deliver great service, equipment and systems don’t fail, nothing happens, and your customer is left wondering if you’re worth the money. When you deliver poor service, systems fail and the customer gets frustrated. You’re damned if you do and damned if you don’t. Billy Marshall’s keynote presentation at the 2017 Digital Wrap Conference, Money for Nothing: How Exceptional Service Brands Earn More Pay for Less Work, explains how to keep customers happy and earn a premium when nothing goes wrong. As Billy explained in an earlier blog post, this strategy requires you to show customers all the “snakes” you find in their systems:
You can give the customer what they want, which is nothing, as long as you are regularly finding snakes on the roof, snakes in the riser room, snakes in the ductwork, snakes in every nook and cranny of their critical equipment. Of course, these are figurative snakes, not literal snakes. The snakes are the equipment deficiencies that your technicians are recording with photos, audio, and video for the customer to review online via your Service Link. The deficiency snakes are clickbait that constantly reminds the customer how your diligence keeps them from getting bitten by disruptions and breakdowns which inevitably lead to hassles and aggravation.
Billy didn’t stop talking about snakes for months. He managed to take this snake analogy all the way to his keynote presentation:
The analogies and stories don’t stop at snakes. Check out Billy’s entire presentation to learn how to make “Money for Nothing” and create a customer program that will let you charge a premium because you provide more value.
