This is the fourth and final article of a four-part series on selling commercial service agreements. This series is designed as a complete A-Z on how to sell and organize for commercial service agreements. This article discusses proposal writing strategies.

Wendell Bedell

The Two Functions Of The Service Agreement Proposal

The service agreement proposal has two separate functions; it's a sales presentation and a legal business contract. It must answer "why do business with me" to all of the decision-makers. Since a proposal is a presentation and a business contract, it should be presented and discussed in order for the customer to have clear understanding of your offering and the business transaction.

You should never ever just send it in the mail. When you mail a proposal/contract, you miss the opportunity to sell and you open the opportunity to have misunderstandings of the business transaction. Misunderstandings occur much too often when the customer fails to read or fully understand the scope of your offering or your terms and conditions, which establish limitations, obligations, and liabilities of both parties.

The Service Agreement Proposal As A Presentation

As with any customer presentation, the proposal is a marketing promotion piece and therefore must address the customer's many unanswered questions.

The proposal provides proof:

1. That there is a need for your services that justifies the customer to spend money to fill it.

2. That what you are offering will fill that need better and more cost-effectively than any other alternative, internal or external through your competitors.

3. That you and your organization:

a) Perform your work and obligations reliably.

b) Consistently deliver on your written and verbal word.

c) Demonstrate professionalism in your employees and work methods.

d) Have expertise and experience in the proposed scope of work.

e) Are competent and have the skill levels to get the job done.

f) Can demonstrate that your firm is viable enough to fulfill your obligations.

The proposal is usually delivered only after you have demonstrated to the prospect that there is a need and how your company best satisfies that need. Once you have delivered and presented the proposal, all the customer has to do now is to try to decide whose maintenance program to buy. It is for this reason that long after you have gone, the proposal must continue to sell on your behalf as outlined above.

The Service Agreement Proposal As A Business Contract

It is important for the sales rep to understand why the proposal is a business contract. The proposal must clearly describe the business and technical transaction and include the following:

1. The scope of work of your offering(s) to include:

a) The equipment maintenance tasking procedures.

b) The frequency of maintenance tasking for each piece of equipment.

c) The equipment component repair liability coverage (included/excluded).

d) The overtime emergency response coverage (included/excluded).

e) The special service(s) tasking procedures for specific equipment (included/excluded) such as:

(1) Filter changes, quality of filtration, and frequency.

(2) Water treatment.

(3) Testing and diagnostics.

(4) Startup and shut down procedures.

(5) Summer/winter changeover.

2. The price or prices if a multi-year offering:

a) Payment distribution annually.

b) Early pay discounts.

c) How adds/deducts will be handled.

3. Terms and conditions of the offering:

a) Term of agreement.

b) Causes of termination.

c) How disputes will be handled.

d) Liability inclusions/exclusions.

4. Offer and acceptance:

a) Signature of sales rep.

b) Authorization signatures of both parties.

c) Date of binding agreement.

Reasons Why A Proposal Is Required

Usually, the customer asks you to submit a proposal for the following reasons:

  • To clarify the scope of your services.

  • To allow for detailed program comparisons with your offered options or to the competition.

  • To aid the customer in gaining internal approval.

  • To be used to back up purchase requisitions.

    The last two bullets indicate that the proposal can be distributed to several other internal decision-makers. Therefore the proposal should attempt to clearly address the needs of these other decision-makers.

    Service Agreement Proposal Content And Format

    Studies have shown that customers do not like legal-looking documents or contracts. They prefer documents that are in reader-friendly letter-style format. You may have noticed that the trend today in business-to-business communication style is more consultative or customized to meet unique customer requirements.

    BSI's studies find that best-in-class proposals should contain the following elements:

    Cover Letter or Title Page

  • Title of proposal "Programmed Maintenance Agreement."

  • Date.

  • Your company name and address and logo.

  • Try to include the prospect's logo. You can download it from the customer's Web site or scan it from marketing communication documents.

    Executive Summary

  • Thank the prospect for the opportunity to propose.

  • Thank prospect and his/her staff for their assistance in helping you develop this offering.

  • Provide overview of present situation.

  • Provide overview of your proposed solution(s).

  • Provide relevant references of similar customers/facilities for which you have provided this same solution.

    Benefits of Programmed Maintenance

  • Here summarize the objective in a benefits/features format and include any special benefits that the prospect may gain by your offering:

    - Energy dollar savings

    - Operating cost savings

    - Extending equipment life

    - Improving indoor air quality

    - Increasing comfort levels

    - Implementation schedule to fit prospect's operation requirements

    - Engineering support

    - Guaranteed priority service response

    - Other (e.g., increased production, reduced loss time, reduced complaints from headquarters, first line of defense for OSHA complaints, enhanced specific category of service delivery)

    Program Implementation Team

  • List all of the people assigned to handle the prospect's business transactions and how the customer can contact them:

    - Account executive

    - Primary and secondary service technician

    - Service coordinator

    - Service manager

    - Invoicing coordinator

    Program Features

  • Here include the scope of tasking procedures for each piece of equipment.

  • Frequency of tasking.

  • Filter service (included/excluded).

  • Component repair coverage (included/excluded).

  • Emergency coverage (included/excluded).

  • Refrigerant containment services.

  • What service documentation will be provided to meet communication requirements.

  • Scheduled meetings with prospect to review performance and make corrective or service scope of work modifications.

  • Any special services.

    Pricing and Payment Terms

  • Annual price.

  • Multi-year prices.

  • Invoicing options.

  • How equipment adds/deletes will effect price.

  • Payment terms, usually net 30 days upon invoice.

    Offer and Acceptance Signature

  • Your signature line.

  • Customer signature line, title, date, P.O. number if required.

  • Your designated authorized signature line, title, date.

    Terms and Conditions

  • Establishes each party's obligations.

  • Establishes equipment liability exclusions.

  • Establishes the limits of performance and financial obligations.

  • Establishes liability limits on regulatory mandates.

    List of Covered Equipment – Appendix

  • Here you list the equipment covered by the agreement.

  • Identify the address where the equipment is located.

  • For each piece of equipment identify the make, model, size, and physical location within the facility.

    Equipment Tasking Procedures – Appendix

  • Itemize typical tasking procedures you will perform for each piece of equipment (annual, operational, startup/shutdown).

  • Enhancements:

    - Equipment or system pictures with text describing a situation that you will correct (e.g., picture of dirty coils – cleaning will reduce energy consumption and improve indoor air quality).

    - Additional technical details or supporting data.

    Five Strategies To Differentiate Your Offerings

    BSI recommends five key areas to differentiate your offering from the competition:

    1. Provide a free photo record of the client's equipment. This is a lead generation strategy that separates you from the pack. Most contractors realize that use of digital cameras to capture signs of poor maintenance better assists the sales rep to show quality differences to the customer. They then illustrate them in the proposal. So why not offer clients a photo record of their equipment to get you in more doors.

    2. Conduct a physical survey of the inside of the HVAC equipment to identify how their existing program is working. Most of your competitors will simply get the equipment list, identify the filter type by asking the customer, and propose based on price. BSI studies show that owners who actually occupy the building are concerned about energy, indoor air quality, and tenant productivity. Opening up equipment and finding eight out of 10 times dirty heat transfer surfaces, debris inside and around the unit, inappropriate filtration type or frequencies, and/or compressor replaced well before the end of the equipment's useful life are all obvious signs that their current program is not working and in need of your services.

    3. Clearly communicate your company's field management and quality control process. The only way for the customer to obtain equipment maintained to the equipment manufacturer's original installed specification is for the service technician to use equipment tasking sheets. Most manufacturers require more than 55 specific maintenance, cleaning, calibration, and tuning tasks on unitary equipment alone. There is no way even the best technicians can remember to systematically and consistently do each task. This is why we find that 80 percent of all buildings are being poorly maintained.

    Another best practice is to have a field supervisor or service manager randomly inspect all work done in the field to verify appropriate work methods and safety training. Let your customer know why this is important during your presentations and in your proposal.

    4. Brand your services. Customers want to do business with contractors that understand their unique needs. Use a brand name for your maintenance agreements like "Protect for Property Management" or "Health-Guard Program" for healthcare facilities. BSI studies of its commercial members found that this single strategy alone increased sales close rates 17 percent.

    5. Use service delivery technologies. Using delivery technologies like computer dispatch, GPS in your service vehicles, and computer reports allow you to demonstrate that your company has fast and accurate response capabilities more akin to being the UPS of the HVAC industry. Use field diagnostic tools like AirAdvice, Aircuity Optima System, and Honeywell's Enalysis System to provide unbiased proof that you deliver all requirements. These field technologies help you position your company as a performance-based contractor versus 99 percent of the competition's error-prone manual processes.

    Wendell Bedell is president of Building Services Institute Inc. For information about Building Services Institute's residential and commercial business development education series, marketing methods, pricing software, Residential Thrust or Commercial Thrust membership program, and PowerMax coaching/mentoring support services, visit or call 800-240-2823. Bedell can be reached directly at 866-557-1611.

    Publication date: 06/27/2005