HVAC Residential Market / Business Services

Extended Warranties Can Help Contractors Expand Their Sales

May 16, 2011
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The JBA team includes (from left to right) Evan Myers, Steve Cue, Jeff Bohannan, Becky Bohannan, Brandon Bohannan, Sasi Madduri, and Taylor Bohannan.

Extended warranties have long been considered another potential source of revenue for contractors, but many companies that offered these programs in the past have not succeeded in the market. Nowadays there’s a new player seeking to change the extended warranty market. JB & Associates (JBA), based in Dallas, has set out to create an easy, streamlined, and reliable approach to warranties for licensed and accredited contractors.

Jeff Bohannan, president and CEO of JBA, explained that there is a market need for extended warranties. “The demand for extended warranties continues to grow,” he said. “There is definitely a need in the market for a simple, user-friendly program to allow our contractors to capture and grow their service base.”

JBA started in 1996 as a representative for a leading extended warranty provider, and began its own fully-insured, nationwide extended warranty service agreement program in 2008.

STRUCTURAL SAFEGUARDS

According to Bohannan, he has carefully structured JBA for success. “The way our program works is that we offer agreements that cover mechanical repairs, and each agreement is fully insured,” he said.

“We’ve set up a structure so we act as the marketing arm of the program,” he explained. “In the past, a couple of companies have been the marketing arm as well as the third-party administrator.” In contrast, JBA has put in place an independent third-party administrator, Cornerstone CPS, which ensures the program is run per the terms and conditions agreed upon by JBA and the insurance company. JBA’s company literature includes the following statement: “Cornerstone CPS, a division of Tier One CPS independently monitors the JB&A program to make sure that everyone’s interests are secure and remain so. This is an extra precautionary measure put into place to make sure that all JB&A customers can be confident in the stability of the program and their agreements.”

In addition, JBA has also focused on insurance. “We’ve gone back and dissected the failures [of past companies], and in most cases there was inadequate insurance backing the agreements, combined with poor management and cumbersome systems.” As a result, Bohannan said, each agreement JBA offers is underwritten and backed by the insurance company Life of the South, a subsidiary of Fortegra Financial.

Another advantage Bohannan has found is that his company is able to incorporate current technology. “In the past, companies did not have this advantage. It used to all be done by snail mail. Ours is electronic, state-of-the-art, and real-time, so it’s very accurate and user friendly.”

JB & Associates offers a fully-insured extended warranty agreement program to contractors nationwide. President Jeff Bohannan (center) and national accounts manager Evan Myers (right) discuss the benefits of these warranties with a contractor.

CONTRACTOR BENEFITS

For contractors, the main benefit of providing extended warranties to customers is the additional profit stream. “It also allows the contractor a competitive advantage when offering their products against factory programs or competitors not offering extended warranty programs,” Bohannan said.

“Our program allows contractors to regain lost profitability in warranty calls. We reimburse them for their time but also allow them to make profit/markup on parts.”

He continued, “When units used to come with one-year parts [warranties], contractors could go out and expect to get paid for parts and labor. As manufacturers extended those warranties to 10 years, all they [the contractors] can bill for is generally labor. So our program allows them the opportunity to make a profit on that part.”

Richard Fortin, general manager of Del-Air (Sanford, Fla.), explained that his company looked to JBA for more options after manufacturers recently changed their extended warranties. Since signing up in mid-February with JBA, Del-Air has sold 85 warranties, and Fortin said, “We feel very comfortable with JB and Associates and see this as just the beginning.” He added that his experience with JBA has proven that the company “is open to suggestions and is competitive.” Plus, he added, JBA offers “an online system that is easy to use and track, and the ability to sell an extended warranty of any line of equipment.”

Another benefit is that offering extended warranties enables a contractor to maintain a service relationship with that customer. Dave Pelton, owner of Air Specialist Heating and Air Conditioning Inc. (Pearland, Texas), offers JBA’s extended warranties to his customers and has found it to be a good selling and retaining feature. “We sell this warranty to all of our new customers - we just include it in the price,” he said. “We want to differentiate ourselves from our competition, so any new system we sell has a 10-year parts and labor warranty on it.” He added that this provides peace of mind to his customers because they don’t have any out-of-pocket expenses after purchasing the equipment.

“It’s just a way to grow business and tie customers into you for a long time,” he said. Working with JBA has been a good fit for Air Specialist. “The way Jeff runs his company and the way I run mine is synonymous. They’re an aggressive company. They want to grow and we want to grow,” Pelton said.

COVERAGES

JBA offers extended warranties for HVAC, plumbing, and electrical. The extended service agreements utilize the OEM’s limited parts warranty and extend that to 10 to 12 years. The agreements may also cover labor expenses that occur as a result of a mechanical failure for up to 12 years from equipment startup.

“We offer a much wider range of coverages than just what the manufacturers offer or other independent third-party programs [offer],” Bohannan said, adding that JBA offers coverage for new and existing systems.

“With other programs, once the equipment has been installed and running, there is a deadline by which an extended warranty has to be sold. With that deadline missed, the homeowner has very few opportunities to cover their HVAC system.” In contrast, Bohannan said, “We have coverages that will go ahead and cover that system for a long period of time - like an additional five years.”

Additionally, JBA covers all brands for both residential and commercial applications. “Our coverages apply to Brand A or Brand B with no change in price,” he said.

CUSTOMER SERVICES

“There are several features to our program that have great appeal,” Bohannan said. “One of the things is that we have incorporated all current technology to make our program totally web-based and online for our contractors.” He added, “We go with the model of keeping it as simple and easy to use as possible.”

Additionally, JBA is also focused on quick turnaround. “We pride ourselves on having the fastest claims turnaround response in the industry,” Bohannan said. “All complete valid claims are reimbursed in 45 days.” In the past, he added, the lack of timeliness for claims reimbursement has frequently “been a thorn in the side” of contractors.

The key to the quick turnaround, Bohannan explained, is simply good business management. According to him, JBA has the organizational model and structure to quickly and efficiently process claims online. “The big thing is contractors can count on good cash flow from our program because of the quick turnaround on the claims reimbursement,” he said.

To contact JB & Associates, call 877-675-7774 or visit www.jbandassociates.biz.

Publication date: 05/16/2011

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