In the United States today, there are over 118,000 HVAC companies competing for a share of the $81.1 billion HVAC market. And, with over 72 million homes in the United States equipped with a central HVAC system, how can your HVAC company stand out in such a crowded industry?
HVAC contractors in the United States will grow by 0.5 percent in 2022. Statistics show that your business needs a new strategy to grow. Something that can really create new revenue opportunities. HVAC service contracts are one such strategy to increase your productivity, grow revenue, and manage the technicians better.
What is an HVAC service contract?
An HVAC service contract is a contract between a property owner and an HVAC contractor whereby the contractor is tasked with providing routine maintenance services to the property’s HVAC system. These services may include inspection, testing, repair, and/or replacement of components in the HVAC system.
An HVAC maintenance agreement is important for your customers because it ensures that the system is working at peak performance, which can save you money on energy costs. Furthermore, it can also help prevent expensive repairs that could otherwise be avoided.
In this blog, we shall discuss the benefits that you will get after signing HVAC service contracts with customers as well as how your customers will take advantage of your service.
Advantages of a Commercial HVAC Service Contract
1. Customer lifetime value
Customer lifetime value is the total amount of revenue a company can expect to receive from its customers over the entire relationship with the company.
It’s calculated by dividing the total value of all a customer’s purchases by their average lifetime.This is important because it helps businesses understand how much they should be investing in each customer, and makes it possible to identify customers who are worth more than others. As it explains, you should focus your efforts on retaining existing customers rather than spending money on attracting new ones.
In recent years, CLV has become a popular metric for businesses to use when making decisions about their marketing strategies. For example, if a company has 1 million customers but each customer spends $5/year on average, that adds up to $5 million in revenue over 10 year, but it gets better! If the company is able to retain all those customers for 15 years or more, then they’ll bring in an additional $8 million! That’s why it’s so important for companies like yours to make sure that we’re focused on retaining our clients as long as possible, because it makes us more successful overall than just focusing on acquiring new ones.
If you are an HVAC company, you probably have a lot of customers who have been with you for a long time. These long-term clients are often more lucrative than new ones because they have integrated your services into their lives and are less likely to leave you. The longer a customer stays with you, the more they’ll spend over the course of their relationship with your company.
2. Off-season employment and financial opportunities
It can be tough to keep your revenue coming during the slow season. But, if you schedule your annual HVAC maintenance contract visits in advance, you can generate revenue and keep your techs busy year-round.Here’s how:
During the traditionally slow seasons for heating and A/C (usually the off-seasons), schedule your HVAC maintenance contract visits. This will keep your techs busy when service calls are few and far between.
Not only will this keep your techs employed, but it will also help to keep them busy during the high season. By scheduling your HVAC maintenance contract visits in advance, you can ensure that your techs are always prepared and busy, no matter what time of year it is.
3. Convert one-time service calls into a recurring and predictable revenue stream
HVAC maintenance agreements ensure a steady stream of repair and tune-up work, resulting in a more stable source of income. You can sign monthly, yearly or quarterly service contracts, which ensures future income. Hence you are converting a service call into a long term, fixed revenue generation contract.
Moreover, your customers also need regular equipment maintenance. The longer your furnace and air conditioner operate without being serviced, component wear and other technical issues can cause greater harm. As a result, proactive maintenance and repairs are favored over reactive maintenance and repairs. Early detection of a problem is the best approach to avoid future costly repairs.
4. Increase customer engagement.
An HVAC service contract offers your technicians more touchpoints with customers and facilitates regular face-to-face interactions with an established customer base. This is a win-win for both you and your customers.
For example, if you have set up a maintenance agreement with a customer, they can call or email you when they have problems, and they will know that you will be there to help them out at no extra cost.
This increased face-time will likely lead to more sales opportunities. That intimate knowledge and time spent relationship-building with customers will make them more likely to buy from you in the future.
For example, one of your customers, say Paul, likes your regular services. Assume he moves into a new house next year and decides it’s time to install a new system on his new property. With the established trust and knowledge that you have built using HVAC service contracts, he will contact you for installation.
In the world of HVAC maintenance agreements, trust is key. A trusting relationship between a technician and a client allows for complete transparency and accountability. This leads to an easy work environment for the technician. Additionally, this trust allows the client to feel comfortable whenever they have a problem or an issue that needs to be addressed.
5.The Work is Straightforward.
HVAC maintenance agreements are a great way of getting your team members more predictable work and less troubleshooting.
It’s easy to get lost in the weeds while you are working on HVAC maintenance. It’s hard to keep track of all the moving pieces, and it can be a struggle to make sure everything is running smoothly. But with an HVAC maintenance agreement, your technicians will have an easier time getting the job done.
The work involved is straightforward, and it’s easy to see how it works for both parties.
Your technician will be able to see exactly what they need to do, and you’ll be able to focus on other aspects of your business.
If you are already offering an HVAC service contract, you’ve got a prime opportunity to cross-sell your customers on energy assessment services and more efficient air filters. After building trust by providing consistent quality workmanship, you can suggest upgrades such as indoor air quality solutions or more efficient air filters to improve the home’s comfort, health, or safety.
With an HVAC service contract, you can keep your technicians in front of your customers with the opportunity to suggest additional services like indoor air quality solutions and home efficiency upgrades.
This may be one of your best opportunities to cross-sell additional products. After you have built a relationship with the customer, you can then make a deal for different equipment and can even incentivize technicians for selling a HVAC service agreement.nn
7.Dispatch Fee Waived for Higher Tier Plans
You can create a tier plan for your commercial HVAC service contract. There are basic, standard, and advanced plans, for example. This opens the possibility for higher revenue generation per job.
You can pitch upgraded premium plans with higher costs and can offer some value, like more security or repair warranties.
What do you offer your customers with HVAC service contracts ?
In this section, we have discussed how your customers can benefit after signing an HVAC service contract with you. You can also use this pointer to pitch a service contract to customer
- Early Problem Detection
An HVAC service contract will help your customers spot problems before they get worse and can potentially save you money down the line. If the HVAC system has not been working properly for a long time, it can cause damage to the home and can be expensive to repair.
2. Improved Energy Efficiency
In order for a heating and air conditioning system to run efficiently, it must be maintained properly. A service contract ensures that your customer’s heating and air conditioner will run as efficiently as possible so that you can cut back on costs over time.
3. Discounts on services and long-term cost savings on
When you sign up for an HVAC service contract, you can offer your customer some discounts on regular maintenance services. Moreover, repairs are planned and performed by licensed professionals to ensure they are done correctly and efficiently so that they last longer than ever before without breaking down again later down the road, which means more savings in the long run!
4. Staying up to date with your warranty
An HVAC service contract gives homeowners peace of mind knowing their warranty is covered under normal wear and tear conditions such as labor costs for repairs or replacements due to faulty parts inside the units themselves (not caused externally by weather damage or vandalism). This way, if anything happens down the road during that term period, then it won’t cost much money.
Do you want to sell HVAC service contracts?
You have seen the immense advantages of signing service contracts with customers. If you wish to get started, you must read our blog on how to manage HVAC maintenance contracts.
HVAC service contracts may look a little complicated if you are starting out, but how about using software that will generate a great return on your investment? Learn more about HVAC maintenance agreement software