Service and Maintenance Agreements and the Homeowner

A recent survey conducted for The ACHR NEWS by myCLEARopinion found that homeowners are split on the importance of service or maintenance agreements. The data showed that 15% of homeowners find them “extremely” important, 24% find them “very” important, and 35% find them just “important.” The data from 2024 remained relatively the same compared to data from 2023.

Though homeowners might not find service or maintenance agreements “extremely” or even “very” important, if they were to get one, data showed 57% of homeowners would be looking to spend about $100 a year, and also receive a discount on parts and labor (76% and 80%), as well as priority service (77%), in addition to twice a year equipment inspections.

Most contractors already offer some sort of service or maintenance agreement, regardless of how important they are to homeowners. So, let’s take a look at how some HVACR contractors have set up their service or maintenance agreements, considerations when deciding on one, marketing these agreements, and maintaining quality of service.

 

Deciding on a Service/Maintenance Agreement

When deciding what type of service or maintenance agreement to offer, the first step is deciding what it will cover, and making sure the customer understands what it is and what it is not.

Rogers Heating, Cooling, Electrical, & Plumbing offers service agreements for HVAC and electrical. On the HVAC side, they provide two visits per year where they check the system to ensure it’s working properly. And there are perks that come with that. They currently offer a one-, two-, or three-year membership option to customers. This year, they’re adding plumbing to the offering.

Very early on when Rogers created this membership program, they enlisted the help of different individuals in the trades. They discussed what they wanted to offer at Rogers, and those trade professionals helped them come up with marketing strategies.

“We are also huge, huge followers, and may he rest in peace, of Ron Smith,” said Alyssa Rogers, vice president of Rogers Heating. “And from the beginning of our journey — we read ‘HVAC Spells Wealth’ — and that’s been like our Bible over the years. We’ve tried to learn from what he was doing when he was running an HVAC company, so we got a lot of ideas from him.”

High 5 Plumbing, Heating, Cooling & Electric in Denver, Colorado, offers service agreements that include annual services for their plumbing, electrical, heating, and cooling systems. They come with a waived service call fee (which is normally $49), priority service and scheduling, an annual plumbing inspection, an annual furnace inspection and cleaning, an annual whole-home electrical inspection, a discount of 10%, an annual water heater flush, an annual plumbing camera inspection, and an annual a/c inspection and rinse.

“All in, these services would cost well over $2,000 but are offered at just $299/year (about $25/month),” said Levi Torres, co-owner of High 5 Plumbing.

This service agreement came about with the intention of providing High 5 customers with immense value and peace of mind in knowing the systems in their homes are well-cared-for, safe, and running smoothly.

“We determined the pricing by calculating the total value and determining what would be an excellent deal/savings for our clients who join our membership, while also being advantageous to our company,” said Torres.

Butch Welsch, president of Welsch Heating & Cooling in St. Louis, Missouri, makes sure his customers know what they’re paying for by drawing a clear distinction between service contracts and maintenance contracts.

“Typically, a service contract will provide complete parts and labor for the equipment for a given period of time,” he said “It is basically an insurance policy.”

Service contracts can be extremely difficult to price because of the nature of the mechanical equipment involved, he said.

“With today’s equipment, some parts can run into the thousands of dollars, and it is very hard to charge enough to cover those types of expenses,” Welsch said. “We do not offer service contracts and have found that most of the companies that do have to charge exorbitant prices or put exclusions in the fine print to cover themselves in case of any extremely costly repairs.”

Instead, Welsch offers a maintenance agreement in which they provide two service calls a year: one to maintain the a/c in the spring, and one to maintain the furnace in the fall. They also give the homeowners a long list of the services the technicians provide. Customers with a maintenance agreement get a 10% discount on any parts required during that visit or throughout the year, along with priority service.

“Because we can determine our costs for the maintenance calls on the equipment, we can provide honest and fair pricing without having to hide surprises to our customers,” Welsch said. “We generally price our maintenance agreements to cover all of our direct costs with a slight amount above that.”

 

Contractor Considerations

Service/maintenance agreements need to be simple and straightforward.

“Make sure it’s easy to understand for customers and for anyone that you have working on your team, so that they can provide support to the customers that are on your membership plan, and make sure this easy for them to sell,” Rogers said. “We train our team on the membership program to the point where they just believe in it so much that it’s so easy for them to talk to customers about — and that’s all the way from our customer service representatives (CSRs) to dispatchers to service technicians to managers — we want everyone in our company to believe in it, so we can get customers to believe in it and join the program.”

Additionally, contractors should avoid over-promising, and only tack on to the service agreement what they can handle.

“They should also ensure that the agreement is within their ability/capacity to uphold,” said Torres. “The service agreement should involve only the trades and services that the contractor is able to execute efficiently and the offerings should enable the contractor to identify any potential issues beyond the service agreement offerings. For example, by offering an annual a/c inspection, the contractor is able to evaluate the system and identify potential issues that, with the right strategy, can be turned into sales right then and there.”

 

Making the Sale

Once a contractor has their maintenance or service agreement ready to go, it’s time to market it.

Welsch has found that the best way to market one of these is to provide incentives to service technicians when they sell one.

“When they are on the job, providing a clean and check or actually making a repair is definitely the best time to offer (and sell) a maintenance agreement,” Welsch said. “Customers tend to trust service technicians more than sales engineers. We also offer an incentive to our CSRs if they can sell the maintenance agreement on the customer’s first call to the company.”

Torres shares a similar mindset. He said, “Contractors should offer service agreements at every call and incentivize customers to join. For example, if a contractor is completing a high-ticket job, contractors should offer the service agreement as a way to bring the cost of that job down.”

Contractors should also be marketing their service and maintenance agreements on their social media channels.

In addition to social media, Rogers Heating also markets their service agreements via direct mailing, newspapers, billboards, radio shows — basically, whatever outlet they can.

“Everyone doesn’t need our services every single day, so it’s not at the top of minds … You want people to take care of their home so they can prolong the lifespan of their system, and so when you’re promoting a membership program, it’s important to not come off as ‘salesy’ and like you’re just trying to sell them something that costs thousands of dollars,” Rogers said. “You are going into their home to help keep them comfortable throughout the year and prolong the lifespan of their system so they don’t have to spend that much money.”

When technicians approach the sale with that mindset, he said, it can actually be a lot easier to promote rather than just selling a product or service.

 

Ensuring Quality

Juggling all of these service or maintenance agreements for each customer can be challenging, which is why it is so important for contractors to set them up in a way that does not exceed their capacity. By setting and communicating expectations (that they can meet) early on, contractors can ensure quality on every single call.

“Because service agreement calls might not always lead to additional work being sold, it’s important to spread them out throughout the year,” Torres said. “That way, contractors are able to monitor and control their capacity, balancing between new customer work and service agreement work. … Ideally, service agreements should be leveraged during slower times in the year so that a contractor’s capacity is not stretched thin during busy seasons by being overbooked with service agreement services.”

Rogers said in the beginning, his company had their technicians add service agreement tasks within their schedules, but the quality of service suffered.

“We were at a spot where … we promised all of these things to our customers, and we have so many now, so it’s like oh my gosh, how are we going to do this?” he said.

So, six years ago, with enough members to justify the expense, Rogers hired maintenance techs whose sole job was taking care of members.

“They’re doing the visits … and they’re highly trained in how to go step-by-step in what it takes to provide that service when they get to the home, and what to look for, and what to check, and what to clean,” Rogers said.