Drew Cameron

Time to elevate your game. There has been plenty written by many people in our industry about selling service agreements. Their articles appear in the trade publications and online. Many HVAC Industry trainers teach about how to sell service agreements. You can even watch videos and listen to podcasts on the subject.

My tips don’t refute anything they teach or write about. I am simply going to share some insights based on my study, lessons learned in my company and client companies, lessons learned outside the industry, and most importantly – lessons learned from customers.

To put it another way, in a service-based business model, for me to get the results I want for my business, I must deliver the outcome my customers want for their lives. The better the
delivered outcome, the more people will pay. However, not all customers are willing to pay for the highest level of access or experience.

It’s About Choices

Throughout my career, I run into contractors who offer their customers a choice between two types of service agreements – maintenance and/or repair agreements. Some even offer a combo agreement. Unfortunately, I find that most companies have defaulted to just offering maintenance agreement programs.

This is a problem. So, what should you do? Following are three tips to help set your service agreement program on the path to success and growth.

TIP #1

Realize that customer satisfaction is worthless, and that customer loyalty is priceless.

– If you want your service agreement program to take flight and soar to new heights, stop thinking of it as something that locks your customers to your company for tune-ups in the shoulder seasons.

A good service agreement program is the single most important part of your overall marketing platform to create customer loyalty and referrals. In other words, the service agreement is a relationship marketing model.

Typically, the most successful and profitable companies with the greatest number of service agreements and highest customer happiness scores, reviews, and referrals get 50% of their leads from technicians who generate opportunities from existing customers. Twenty-five percent of these leads are from referrals by existing customers or by proximity to existing customers. The remaining 25% comes from advertising and
marketing efforts.

Countless studies reveal that loyal customers and their referrals yield a greater impact on a business’ top line revenue and net profit than new customers.

Think about this: Your existing customer base will buy 67% more than a new customer lead from your marketing. Estimates show that landing a new customer actually costs five to 20 times more than selling into an existing relationship

Loyal Customers Are Golden!

Loyal customers buy 54% more quickly than non-loyal customers. A customer who buys twice is twice as likely to buy than one who buys once. They cost much less to reach and sell – It costs approximately $40 to reach, visit, and close a customer versus $325 and up for non-customers.

Loyal customers yield higher closing ratios – 80% plus for loyal customers versus 35% or less for non-customers. The lifetime value of a loyal customer is 20 times their annual volume.

A 5% increase in customer loyalty can mean up to an 85% increase in profits, according to the Harvard Business Review.

Referrals are the best form of advertising and one of the greatest sources of high margin business. Loyal customers are the best way to generate referrals. They refer 107% more than non-loyal ones. Word-of-mouth advertising is 50 times more effective than any other form of advertising. Consumers are six times more likely to rely on a recommendation than on advertising and yield closing ratios of 78% versus 32% for cold acquisition.

Plus, referrals are 1/8th the cost of broad market advertising acquisition. Some more facts:

  • Customer referrals spend 200% more than the average customer.
  • Referred customers bring you a 25% higher profit margin.
  • A referred customer is 18% more loyal than a customer acquired by other means.
  • Referred customers are four times more likely to refer more customers to you or your company since they like to pay their being referred forward and share a great idea.
  • Customers referred by other customers have a 37% higher customer retention rate.

Loyalty and referrals don’t come from simply satisfying customers and offering what someone can get through another outlet for less. You must offer something people cannot get anywhere else. Make customers so happy that they feel compelled to tell others so that the relationships you develop are PRICELESS.

Create Something Unlike Anything Else Out There

TIP #2

Be different, better, and more.

– Let’s consider a differentiated approach to yield better results and get more people buying our agreements for more money.

First, don’t measure yourself against others in the industry or competitors. Aspire to a greater calling – the calling of truly serving others beyond what most companies think is practical.

In other words, go beyond the things you offer and become the “boutique for the discerning homeowner.” Solve real problems. Become a Whole House, System Performance, Access, and Control Customer Care Service Provider.

HVAC Branding Builds Loyalty

Building loyalty is more important than providing satisfaction alone.

Brand yourself as being focused on the “distinguishing customer with distinctive tastes” who wants to be catered to with unique custom solutions, pampered with extraordinary service, and impressed with a caring and impactful experience.

Delivering such an experience starts with your marketing, which promotes a brand promise and expectation of what is to come if they contact you.

Next, your Customer Experience Coordinators need to honor the promise when contacted. They need to set the next stage of expectation, which focuses on making the booking and confirmation all about information, convenience, and communication of differentiated expectations.

There are some great technology platforms that can enhance these steps and put your company in a class of service all by itself.

Communication and Customer Experience

Once the technician is dispatched, it is all about communication and the customer experience. The customer should feel good about the process and the information shared.

They should understand the things they have to do, what they should consider doing, and what things they don’t have to do but would enhance the system performance and improve the living experience. They should be able to make smart decisions to be better caretakers of their home and what to spend.

Getting your team to deliver such an experience comes from creating a culture where your people feel good about the brand and relationship they have with the company so that customers will feel good about the brand and relationship. Passion and purpose breed passion and connection.

Engage and Connect

TIP #3

Create a community with levels of engagement and connect with a cause.

– Simon Sinek in his book, “Start with Why,” states that people want to associate with people and do business with companies that believe what they believe. Today, more than ever before, people want to feel fulfilled. The way to accomplish this is to be part of something bigger than the transaction. People want a sense of community and purpose.

If a company sells products and services, the business is transactional. If a company chases a purpose bigger than money and is about impacting not only the lives of those they serve but also the community, customers feel great about spending what they spend.

To accomplish this, create a multi-level High-Performance Service Agreement platform to appeal to as many people as possible. This can funnel them to various levels of engagement over time versus offering a one-size-fits-all approach. Offer an agreement with the highest level of access and benefits.

Connect the customer to your company-created community. Get involved in charitable causes they feel are important. Then step down the level of access, benefits, and investment to where you can offer a free
service agreement to everyone!

Next time, I’ll share the specifics of a multi-tiered High-Performance Service Agreement platform designed to offer customers choices, so you are offering options, not ultimatums.

Escalate the Relationship

Once the prospect becomes your loyal customer, you can escalate the relationship where they choose to raise their level of loyalty and/or can buy other products and services you offer in other channels (e.g. plumbing, electrical, smart home). Loyalty yields repeat business and referrals.

BOTTOM LINE: Deliver a differentiated customer experience that makes a life impact, is memorable, ensures loyalty, generates repeat business, and is worth telling others about. Don’t fit in. Stand out.
Be REMARKABLE!

Drew Cameron is an advisor to Home Services Contractors and is president of both HVAC Sellutions and Energy Design Systems, Inc. Drew is an industry-
recognized author, speaker, educator, coach, consultant, software developer, philanthropist, and an International Consultant Award Winner. He is also a president of the Ron Cameron Foundation; Board member, Foundation Board Trustee, and a Contractor University Founder & Faculty member for Electric & Gas Industries Association (EGIA). He is also an Air Conditioning Contractors of America member. Contact him at 610-745-7020 or drew@hvacsellutions.com.