Tech Basics: Service Agreements

September 24, 2004
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Textbooks and HVAC lab equipment are now behind you; the academic world of vocational technology has but whetted your appetite. It's time to bring on the beastly mechanical contraptions that you have dreamed of fixing.

Two weeks on the job, however, and you are hearing the words service agreements more often than broken condensers. Before you schedule psychological help for your tools and meters, let's take a close look at the service agreement: what it is, how it relates to your customer and company, and how, when viewed positively, it will accelerate your learning curve as a technician.

The Contract

A service agreement is a contract between your customer and your company. It states that your company will render specific services in turn for prepayment. We will examine some of these services and how they translate to benefits for all involved, but for now, think of a service agreement as an opportunity to strengthen a relationship between your customer and company.

The HVACR business is a business of relationships. The ongoing relationship between company and customer is the foundation from which we earn a living. If we wish to increase our earning potential, it only makes sense to strengthen this relationship.

Your company will be in contact with customers many times throughout the year. Whether the company telephones to schedule a call or mails a newsletter and marketing piece, each contact brings the customer in closer. But the real rubber hits the road when you, the service technician, are at your customer's home to perform service agreement maintenance.

Your actions directly affect the course of this business relationship.

Types Of Service Agreements

Inspection - In this type of service agreement, the equipment and entire system are inspected once per year. All system components, safeties, and controls are checked and cleaned where applicable. Moving parts are lubricated as necessary. Airflow is checked. Temperature differential is checked.

Inspection and labor - In addition to the inspection items listed above, labor for repairs is covered.

Inspection, parts, and labor - Inspection items are covered. Parts and labor for repairs are covered.

Good For The Customer

Customers who take advantage of your company's service agreements experience these benefits:

Priority service - Customers under service agreements typically receive service before those who do not have an agreement.

Lower utility bills - Equipment and systems that are maintained and cleaned regularly cost less to operate.

Fewer equipment breakdowns - The majority of equipment breakdowns can be traced back to a lack of maintenance.

Repair discounts - Most companies offer a discount on repairs that are not covered under the agreement.

Trusting relationship - Of course companies must earn this, but customers appreciate knowing what to expect. There is a confidence gained when customers know breakdown, comfort, and safety issues are being handled by a company they are familiar with.

Good For The Company

The contracting company you work for also benefits from service agreements:

Aids scheduling - Service agreements can be scheduled around the busy seasons.

Improves cash flow - The cash flow is generated by payment in advance for service contracts.

Increases system sales - Service agreement customers are more likely to purchase a system replacement from your company.

Raises company value - The more customers who have service agreements, the higher the company's value.

Strengthens customer relationships - Service agreements provide ongoing opportunities to cement relationships, especially when the technician in the customer's home is addressing their particular needs.

What's In It For You

More technical training - Service agreement maintenance visits provide an invaluable opportunity to learn the equipment's sequence of operation and the operating dynamics of the entire system. In order to troubleshoot a problem, you must first know the order in which a system operates.

Unless you prefer the pressure of Mr. Jones breathing down your back when it's 5 degrees F outside and you're there to rewire an entire control circuit that has melted down, learning how systems operate during maintenance visits is a good choice. In a low-pressure environment, you can become familiar with and learn the importance of the following whole-system dynamics:

  • Combustion air and combustion analysis.

  • Carbon monoxide measurements.

  • Flue venting.

  • Proper supply and return outlets.

  • Static pressure measurements.

  • Proper airflow.

  • Ductwork.

  • Hydronic and steam piping.

  • Circulating pumps, expansion tanks, and air eliminators.

  • Radiators, traps and air vents.

    More customer relations training - Service agreement maintenance visits also provide a chance to begin learning how to deal with customers. Overall, this group should be familiar with your company. Frequent interaction with service agreement customers will help to build your confidence so that when Mr. Five-Degree Jones becomes a reality, you'll have him eating out of your hands.

    Incentives - Most professional companies offer incentives to their technicians for selling service agreements. Once you have obtained a thorough understanding of how the customer, your company, and you benefit from service agreements, it will not seem like selling at all. It will be a demonstration of care for your customer, recognition of the economic importance to your company, and recognition of a unique learning adventure for yourself.

    David E. Rothacker is a member of the National Comfort Institute's advisory board and a National Comfort Team founding member. For questions or comments on Tech Basics, contact Rothacker at dave.rothacker@serviceroundtable.com.

    Publication date: 09/27/2004

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