Opinions


Are Maintenance Agreements an Antiquated Program?

December 2, 2013

Sometimes the phrase “thinking outside the box” can get thrown around faster than a crack pipe at the mayor of Toronto’s home. But, as an HVAC contractor, you need to make sure you are doing things for a reason and not just because that is the way you have always done them.

Take Rob Minnick of Minnick’s in Laurel, Md., as an example. He has totally eliminated maintenance agreements from his business. When Rob shared this with me I was surprised, since at just about every contractor meeting I go to many people preach the importance of maintenance agreements.

99 Problems

Minnick had a few problems with maintenance agreements. At the beginning of every heating and cooling season his staff was running around like chickens with their heads cut off trying to schedule all these appointments.

“We don’t do the 10-15 minute inspection. We are thorough. Our techs can’t run six to 14 calls per day. We were not making much money on the agreements,” Minnick said.

The bigger problem was, after going through the inspection and presenting some concerns to the homeowners, the customer would often think that the subsequent work should be covered under the maintenance agreement.

“At that point, we were starting off on the wrong foot. We were going down the wrong path. It was a big challenge to get over that hurdle. We ran into it all the time,” Minnick said.

He worked with his consultant to develop a VIP program to replace maintenance agreements. In fact, he said it took him half a second to get on board when the consultant brought it to his attention.

The program was launched in July of 2012. There is no cost to join the program and all members get 10 percent off their bills. Members also get VIP points for an assortment of items including referrals, social media engagement (liking the company on Facebook and following it on Twitter), and customer testimonials. One VIP point equals $1 and can be used on any service Minnick’s provides.

The program has been a big success. It is only 1½-year-old, but Minnick already has twice as many VIP members as he did maintenance agreements.

“The race is always how many maintenance agreements do you have and how that translates to how much the company is worth. I understand all of that,” he said. “The other side of that is what part of that is really true and how are you serving the customers well.”

The program has a bunch of other cool aspects like each product having a QR code sticker on it so a tech can scan it to provide the points. Obviously, Rob is an HVAC contractor and not a programmer, so he worked with a company called CaptureCode to put the technological system in place.

This type of program has been used frequently in retail — think about your local grocery store’s loyalty program — but Minnick has made it work in the HVAC world.

Lessons

I am sure this program would not work for all HVAC businesses. One size rarely fits all. Perhaps your maintenance agreements work just fine and your customers are not engaged enough to do a VIP program. However, the real moral of this story is not to continue the status quo just because that is the way you have always done things.

If a smart contractor like Minnick can go in the opposite direction of conventional wisdom and drop a maintenance agreement program, what can your business do? Not all of your changes and ideas will be as successful as the Minnick VIP program; I promise you that. But, on the flip side, I am positive you will never have the success Minnick is having if you just do things as they have always been done.

Publication date: 12/2/2013

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