Hop On The Service Agreement Bandwagon

April 18, 2003
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PALM SPRINGS, Calif. — Ray Isaac speaks from experience when it comes to the topic of extended service agreements. The general manager of Isaac Heating and Air Conditioning Inc., Rochester, N.Y., told attendees of his seminar at the recent convention of the Air Conditioning Contractors of America (ACCA) that his company has 17,000 service agreements, which represent 60 percent of the company’s service sales volume. He told fellow contractors that it is time for them to get on the service agreement bandwagon.

“Six out of 10 consumers will purchase extended service agreements on automobiles and appliances if they are offered,” Isaac said.

Isaac said a service agreement program is a sure-fire way to “lock in a customer for life” — and a way to protect the future interests of the customer from other outside influences. “Make sure you protect yourself. Don’t allow manufacturers to sell agreements to your customers, especially after you have dropped the manufacturer’s product line,” he suggested.

Isaac also said that contractors need to emphasize the importance of an annual agreement, not a seasonal one. “Get rid of the spring and fall checkups. A service agreement program is an annual maintenance program. Don’t pigeonhole your scheduled maintenance.”

Marketing Opportunities

Jeff Liter, national sales manager for Equiguard Inc., Willowbrook, Ill., joined Isaac to explain the marketing opportunities that can go hand in hand with service agreements.

“Include the cost of the agreement in the selling price,” he said. “A clean and check is a good time to market and sell an extended service agreement. It is also an opportunity to sell agreements on existing equipment.”

Liter had a tip about working with local real estate agents. “Get a list of what homes are coming out of the original buyer’s home protection program,” he advised.

“Being in the customer’s home every year gives you the opportunity to sell add-on equipment,” Isaac noted. “That comes from building in a maintenance program on every warranty agreement. Build in complete coverage with your warranties and remove all of the barriers. And make yourself accessible to your customers.”

Isaac said it is important for service technicians to understand service agreements and how to sell them. “Your technician is not going to sell something he or she doesn’t believe in,” he said. “Take away all of their objections.”

Isaac also recommended that contractors pick one or two standard extended service agreement or warranty programs, and to try not to offer too many options. He said several items should not be covered in the agreement, including normal maintenance, nuisance calls (such as a tripped breaker), and damage from abuse or a natural disaster.

He suggested offering customers a discount on longer agreements because they normally pay up front and the money can earn interest for the contractor, as well as improve cash flow.

Publication date: 04/21/2003

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