Keep Customers With Service Agreements

I think, however, there is another answer to eliminating the collection problem. Let someone else be responsible for the payment. That someone else is a properly managed and secured Extended Service Agreement provider. Referencing the story on the compressor replacement: If a contractor sells an Extended Service Agreement for parts and labor on every new install, or simply includes it in the price of the equipment, his customer will never have to face the cost of an unexpected repair bill, and the contractor will never have to “collect” from the customer, or refuse service work because of a bad credit experience with the customer.

The compressor story is all too familiar in our industry. Typically the customer hears that the “compressor is warranted from the factory for five years.” What they do not hear is that warranty covers only the part, not the labor. If the contractor would have offered and sold an Extended Service Agreement, the labor would have been paid, the customer would be happy, and the contractor would avoid all sorts of headaches, in addition to keeping a “paying” customer.

Under a properly secured Extended Service Agreement, the contractor is paid within 30 days for all covered repairs. He has no collection costs nor writes off bad debts. He does not have to refuse service work due to credit problems and he keeps his customer for years to come. There are numerous other benefits, like the profits earned in selling the agreement, the add-on and replacement business from satisfied customers, and the peace of mind knowing he will not lose money on repair work.

John F. Castronovo
President
Equiguard Inc.
Willowbrook, Ill.

A Manageable Workload

Well done! I can’t agree more.

I was previously the service manager for a couple of HVAC equipment manufacturers. As such, I had from three to 10 service technicians working region-wide.

I made it a point to make sure that my technicians did not work more than 10 hours per day. After 10 hours, I feel that they become tired and start to miss key points of what they are doing. It can also lead to on-the-job accidents, that being my biggest fear. The 10-hour rule didn’t mean 10 hours every day, every week.

There are times when overtime cannot be avoided, process cooling being a prime example. If this is unavoidable, the service manager should review the workload of the other technicians and try to move the affected technician’s scheduled work around.

Hey, if the technician has to do some overtime in the middle of the night, maybe the service manager/scheduler should come in early to jockey around the schedule.

As brought out in the editorial, good, qualified, experienced service technicians are hard to come by. There is a life after five o’clock. Let them enjoy the fruits of their labors.

Douglas R. Ewen
Application Engineer
Hartford Compressors Inc.
West Hartford, Conn.

Reward Those With Maintenance Contracts

I think it’s time to make some changes in our industry, starting with 24-hour service. The fact is that most after-hours emergency service can be avoided by just taking care of equipment and replacing it when it’s time. Most after-hours calls are not for equipment that is taken care of with a service agreement and proper maintenance. The majority of after-hours service requests are from people who don’t have service agreements, and a lot of them probably didn’t even buy the equipment from you. Why do we reward people for not taking care of their equipment by giving them the convenience of 24-hour emergency service?

And that brings me to another question: What defines an emergency? I suppose that everyone would say that having no heat when it’s 0 degrees outside is an emergency, but what about when it’s 35 degrees? Is not having cooling an emergency? Maybe it is in some places, but not everywhere. How about the person with the condensate leak or the fan that runs all the time?

Here is my solution: Don’t advertise 24-hour service — just give it to those who care enough about their equipment to take care of it with a service agreement. Define what constitutes an emergency and stick to it. And never let a tech go on an after-hours call without making sure that the customer knows that they have to pay the technician right then with either cash or a credit card. Do not accept checks. What about the people who say they don’t have a credit card? Well, if some bank won’t take them as a credit risk, why would you? You are a contractor, not a lending institution. All after-hours residential calls absolutely must be COD. Those same people can’t go to Wal-Mart and get anything without paying, and they shouldn’t expect you to come to their home without getting paid right then.

You can do just fine without offering 24-hour service to the masses. If you use “after-hours emergency service” (that’s the proper term) as a benefit of buying a service agreement, you will have successfully reduced your exposure to bad accounts and sold a lot of service agreements. The customer’s expectation is that to receive after-hours emergency service, they must have a service agreement. Now you have defined the conditions that warrant giving after-hours service, and you have also given your customers a really good reason to buy a service agreement.

James D. Maidlow
Vice President
Lehman’s Mechanical
Anderson, Ind.

Publication date: 08/25/2003