The Winning Answer

First, it is necessary to define extended warranty, standard warranty, extended service agreement, and the many names given to planned service.

When someone says they like the “extended warranty,” are we sure we know what it is they mean? To one contractor, that may mean an optional 10-year parts and labor coverage offered as an option, and to another it may mean five-year parts and a lifetime heat exchanger warranty as a standard offering by the manufacturer.

Others may define extended service agreements as planned service paid for in advance. It can be confusing to us, and we deal with it daily.

The winner is the contractor who explains the differences to the customers so they can make an informed decision. The time it takes to explain the manufacturer’s warranty, the extended service agreement options, and the planned service can determine how satisfied the customer will be when future problems arise.

Most contractors can relate to the problems of trying to collect labor from a customer with a five-year manufacturer’s warranty. Yes, the warranty spells out parts, but was it explained that the labor for the compressor repair is $700 out of the customer’s pocket? More importantly, even if the homeowner pays the labor, the contractor loses.

The profit on a repair is the markup of the manufacturer’s part. In this case, zero. The contractor further incurs the cost of handling the return of the failed part.

The winning answer lies in selling extended service agreements that extend the parts coverage, which includes the labor and the markup of the part. The repair to the customer is billed as “no charge” and the contractor is reimbursed at his retail (or flat) rate for the entire repair cost.

Now we have a win-win situation. There are both manufacturers and independent programs that are available. Yes, they reimburse at the contractor’s retail (or flat) rate.

The real benefits come to the contractor who includes his main-tenance agreement with the extended warranty. Most warranty agreements I have seen require yearly planned maintenance. What a great way to build a service department and stay in contact with the customer.

The biggest benefit is customer retention. With competition from utilities, mass merchandisers, and fellow contractors all looking for ways to target your installations, locking in your customers with 10-year parts and labor coverage is the way to go. Retain customers and build value in your company at the same time.

A financially secure, comprehensive extended service agreement program that offers coverage for all brands of equipment, new and existing, can be a cornerstone to a contractor’s business plan for success.

Be the winner of the extended warranty sweepstakes and call it anything you’d like.

Jeff Liter, National Sales Manager, Equiguard, Inc., Willowbrook, IL

Atomizers and Mold

Injecting safe sanitizers that are commercially available is a very easy answer when an atomizing rh system is available as the vehicle to carry these additives.

Michael V. Elkas, President, Atomizing Systems Inc., Hohokus, NJ

Publication date: 05/06/2002