On the fence about selling Service Agreements?

Are you having reservations about selling Service Agreements as part of your company’s products and services? If you are, the good news is that you are not alone. There are a lot of companies out there that are not selling Service Agreements today. Some may have thought about it, but decided that it would be too much work or that it was too complicated to get started. If you are one of those companies that are on the fence as to whether or not to sell Service Agreements, let me help by providing some guidance.

Types Of Agreements

First, let’s start with the different types of Service Agreements that are being offered today. One of the most common is the Preventative Maintenance (PM) agreement. This type of agreement provides your customers with pre-scheduled times when your technician will come out and make sure that everything is working and will stay working for a specified period of time. The PM Agreement is typically used within companies that are servicing items that are seasonal such as Air Conditioning and Heating.

Another type of agreement is the simple Maintenance Agreement. This agreement provides your customer with parts and repair services for an item or items when they breakdown. A Maintenance Agreement can apply to anything from appliances, computer equipment, medical equipment, or anything and everything that has the potential for needing service.

The next type of agreement is sometimes called a Replacement Agreement. It provides your customers with replacement coverage should an item become impossible or highly unlikely to repair. In some cases, the Replacement Agreement is offered in combination with the above mentioned Maintenance Agreement. This provides the customer with a possible "Full Coverage" solution.

Finally, there is the Services Only Agreement. This type of agreement provides your customer with a set list of services that are made available during a specified period of time. The Services Only Agreement is typically used within the Veterinary or pet industry as well as other industries that provide services other than repair type services.

Why Service Agreements Are Good

So why offer Service Agreements to your customers? One reason is to develop customer loyalty. Customer loyalty allows your business to build a set number of customers that you know will call you when they need service regardless of whether or not the service is covered under their agreement. A loyal customer is also more inclined to listen to you when you have a new product or service that may help them to save money over time. Ultimately, having customer loyalty provides your company with better up selling/cross selling opportunities while your technician is in front of the customer and when you may be helping them over the phone.

Another reason to sell Service Agreements is to entice potential customers with discounted service rates and product offerings. If you are offering a set list of services for a flat fee, customers see value in that and usually don’t think twice about jumping in. The same rule applies when selling/including consumable items within the total cost of the contract. The more money you can save the customer over the long run, the easier it will be to get them on board with your Service Agreement offerings.

The biggest reason for selling Service Agreements is to create an incoming stream of reoccurring revenue into your business on an annual basis. As long as you provide your customers with great service all of the time and provide them with plenty of notice of expiration, they should have no problem renewing their agreement with you every year. The better news about generating a reoccurring revenue steam is that all of that renewal revenue typically goes straight to your bottom line and what company doesn’t like that?

Some Things To Do Before You Get Started

So, what are some of the check list items you should know before you start putting together your Service Agreement offerings? Well one of the most important items is making sure that you have the workforce to support the extra service call volume that your agreements will generate. Remember you want the customer to renew each year, so don’t let your service calls go out more than a day or so before you can provide service.

The next checklist item is to create a pricing structure for each of your agreements that is simple and straight forward. Include your costs that will be associated with supporting the agreement, but don’t make the pricing so much that your customers won’t be interested. It is also a good idea to provide different levels of agreements. For example, maybe a gold, silver, and platinum plan or something similar that will give your customers a set number of choices to choose from. Note that too many choices have a tendency to overwhelm people, where as a good, better, and best approach provides your customer with choices that will make it easy for them to choose the agreement that is just right for them based upon their needs.

Another checklist item is providing some flexibility with your agreements. As I noted above, you don’t want too many choices in the way of a base Service Agreement. However, your customer may need coverage on an item or items that may not be covered in one or any of your base service agreements. In this case, give your customers the ability to select add-on items to augment one or all of your agreements. That way your customer gets a Service Agreement that fits their needs perfectly. Just like your Service Agreements, you also want to make your add-on items are attractively priced for your customers, but be sure not to cut your business short when it comes to your costs.

The last checklist item that I am going to cover is one that, in my eyes, is the most important and that is creating your Terms and Conditions. Each of your Service Agreements should come with a professionally created (by a lawyer) set of Terms and Conditions. The inclusion of this legal document helps to protect you and your customers in the event of a misunderstanding and leaves no confusion as to what is covered under your agreements and what is not. It also sets limits as to what the damage will be in the event of arbitration (your preferred path) or litigation in a court room. Note that it is important to keep this document up to date as your business changes. Shop around for some legal advice on how and who can help you create this. The money you spend will be worth every penny.

So, there you have it. Service Agreements are a great way to create new business and revenue. But, there are some things that you need to do before selling Service Agreements to your customers. I have listed a few of the most important items to help you get started. If you would like an excellent resource for getting your company in to the Service Agreement business, check out this excellent video called Service Agreement Success from Gary Elekes on Contracting Business. It is a little long but chalk full of great information on getting your business started selling Service Agreements. If you get to the point that you would like to sell your Service Agreements online, check out our Service Plan Builder tool. It makes it easy for your company to sell and process your Service Agreements online.

Are you currently selling Service Agreements for your products and/or services? Do you have some advice for those just getting started? Let us know below…

     

Technician vs. Customer – The winner is not always obvious

Imagine, if you will, that after placing a service call you are at home or work and a technician has arrived to fix a specific problem. Now imagine that when the technician has completed the repair he/she begins explaining what the problem was and how they resolved it. Thinking about the explanation, you realize that what they have just explained makes no sense. You politely ask the technician, how could the problem be resolved when your solution defies all rules of gravity? Even though you have brought science in to the equation, the technician still insists that what you are saying is wrong and that the way he/she fixed the problem is the right way. You explain to him/her again how what they have just said could scientifically not be possible. At this point, the technician has become defensive and your questioning has instigated an argument. You realize that the discussion is going nowhere but downhill and you concede or agree to disagree with the technician and they get in their vehicle and leave.

Forgetting for a moment what the actual problem was and/or how it was resolved, I want to bring your attention to the bigger issue in this scenario, that being that the technician chose to argue with the customer. In the service industry or any other industry for that matter, arguing with the customer is or should be construed as a cardinal sin. One simple rule takes precedent in these types of situations, and that one rule is followed by large companies such as Home Depot, Lowes, and many many others. The one simple rule that should have governed the above scenario is that THE CUSTOMER IS ALWAYS RIGHT. If your technicians don't understand this simple phrase it could be devastating to your business and here is why...

Something that is not always seen through the eyes of a technician is that companies, service or otherwise, work very hard and spend a lot of money to obtain just one customer. When the customer finally spends money with your company, it is important that they stay happy with your services and your employees. When a customer experiences a pleasant person, even when ironing out a problem, they are more likely to do two important things to help make your company more successful. First, if they purchased a service agreement from you, they are more likely to renew that agreement. When a customer renews a service agreement, that revenue goes straight to the bottom line and all your company had to do was to keep them happy. Second, a customer that is happy with ALL of their experiences with your company is more likely to tell other people about who you are and what you do, but most importantly how well your people handle tough situations. This is FREE advertisement and, in addition to the increased revenue from their renewal, a happy customer has now also brought your company more customers and a larger bottom line.

So how do you handle training your technicians to be better prepared in situations such as these? For starters, make sure they know and follow rule number one above – The Customer is Always Right. The next step is to teach your technician how to diffuse a potentially bad situation with a customer. One way to do this is to have the technician go over what they did to fix the problem step by step with the customer. It may sound elementary, but another way would be to draw the customer a picture as to what caused the problem and then showing how the problem was resolved. As a last resort, your technician may want to tell the customer that if the problem comes back, call them and they will return to take another approach.

The truth is there are many different tactics a technician can use to help the customer understand the solution. In some cases, none of those tactics may work to console the customer if you are dealing with someone who just wants to be difficult. If the customer just won’t understand the solution, don’t argue with them. If all else fails ask them to talk to a manager and provide them a name and a phone number. Sometimes, the customer just wants to make sure that the work that was done was done in the best way possible. A manager can validate this for them without causing an argument and while backing up the work done by the technician.

In the case of technicians vs. customers, the “winner” should always be your customer. After all, they are the ones paying your bills and keeping your company in the black. Teach them strategies for avoiding bad situations and tactics for dealing with those situations should they arise. There are many resources out on the web to aid in educating your techs. Check out this excellent paper written by William K. Pollock from Strategies for Growth titled Empowering Field Technicians through Technical and Customer Service Training. Search around and pick some tools that apply to your business. If nothing else, just keep reminding your technicians that The Customer Is Always Right no matter what.
Do your technicians know how to handle difficult customers? If so, how do you educate them to make certain that they leave the customer happy? Let us know below.

       

To Sell Or Not To Sell - That is For Your Techs To Decide

Anyone doing business today knows that you must tap every resource you have at your disposal to increase revenue. One possible resource within the service industry is the service technician. That said, it is not uncommon to see technicians expected to act like sales people, pushed to sell more products and services for the company while also augmenting their salaries.

I have found that there are usually two camps of thought as to whether or not technicians should also be salesmen. The first camp believes that if the tech is on premise with a customer then they should take advantage of that opportunity to try and up sell a product or service. The other camp believes that the tech is there to do one job and one job only, to resolve the problem at hand and move to his/her next service call. From a business standpoint, I can see the argument for both camps of thought.

On the one hand, you have the tech in a position to take advantage of a captured audience. Once they have completed the service call, they can hand out flyers or begin a sales pitch making the customer aware of a sale going on for today only or on other products or services that they may benefit from. It only takes a few extra minutes and besides, what do they have to lose right?

On the other hand, the technician stands to create more revenue for the company by doing as many calls as possible throughout the course of the day. If the calls they are doing are COD related, the number of calls can make a huge difference in monthly revenue for the company. The technician has no time to stop and have a sales chat with the customer and must keep moving.

In either case, there is usually resistance from the technician as to whether they should or should not be selling to as well as servicing the customer’s needs. There are some people who believe that they are not cut out to be sales people (like me). And then there are other people who could sell the Brooklyn Bridge if they were given the chance. The problem in either case is finding a happy medium and doing so without jeopardizing new and old ways of generating revenue for the company.

My opinion on this subject is simple and straight forward, let the tech decide. Don't force them into an uncomfortable situation. Most customers can see when a tech is being forced to do something that they are not good at, like sales. My philosophy throughout my management career has always been to take advantage of the strengths of an individual and let them do what they are best at. In this case, your tech will be much happier if they are fixing a problem and not having to act like a sales person when they have no desire to be a sales person. On the other hand, there are techs out there that are very good at selling. Again I say, take advantage of your techs strengths. If the tech is good at repairing things and at selling additional products and services, then by all means let them do both. In most cases, the tech that knows how to sell and is good at it is going to sell more than the tech that does not want to sell at all. They will also do it in a way that will not upset or push away your customers. In essence, the tech that knows how to sell and is comfortable doing so will make up for the tech that is more content while servicing the customer’s repair issues. Using this strategy, your company can both service its customers and increment sales at the same time while keeping both the customer and your technicians happy.

Do you think that your service techs should try and up sell to your customers? Do you find that some of your techs are willing to be sales people and others are not? Let us know by responding below.