Emily B,Jan 11, 2019 @ 8:00AM
What’s the best way to guarantee you’ll have more revenue down the road? Get your current customers to agree to future work today.
Finding new customers is one of the hardest things about running a home service business. Not to mention the cost of marketing and bringing in new leads. In fact, it’s anywhere between 5 to 25% cheaper to retain an existing customer than to land a brand new one.
The key to a sustainable HVAC business is recurring revenue, both from customers you already have and new ones who hire you in the future.
So, how can you ensure your current customers keep coming back to you consistently – while also providing great value as thanks for their loyalty? With HVAC maintenance agreements.
What is an HVAC Maintenance Contract?
An HVAC maintenance contract is an agreement between your business and a customer who agrees to pay a set monthly fee for ongoing maintenance and preventative care.
Your typical HVAC maintenance contract includes bi-annual checkups at the start of winter and summer. Some contracts also provide discounted rates for other services, free parts for anything that needs to be replaced, and priority treatment that allows the customer to get faster service in the case of an emergency.
When Should You Use One?
The most obvious time to suggest a maintenance contract is when you install a new unit. By offering maintenance agreements to customers during installation, you can lock in your business as the customer’s go-to choice for everything HVAC. You should also offer service agreements to any existing customers who want to protect themselves from unexpected repairs or breakdowns on an older unit.
The Benefits of HVAC Maintenance Agreements for Your Business
Let’s take a look at the importance of using HVAC maintenance contracts, including the benefits for your business and for your customers.
Recurring Revenue and Guaranteed Future Income
Arguably the biggest benefit for your business is that HVAC maintenance contracts secure future income. By signing customers on for a long-term contract, you can rest assured that you’ll have recurring revenue for the duration of the contract.
Recurring revenue is safer and more reliable than the project revenue model. The more customers who opt for an HVAC maintenance agreement, the more guaranteed income you’ll have coming in.
Higher Customer Lifetime Value
If your typical customer only calls you when they need repairs, you’re not making money off of them most the time. This means even if you retain customers long-term, you’re still not maximizing your customer lifetime value (CLV). And HVAC businesses with a low CLV are forced to rely on incoming leads to generate more revenue – and their margins are thinner as a result.
HVAC maintenance contracts allow you to inspire customer loyalty, ensure you’re the first person they call with HVAC concerns, and increase your CLV with recurring payments.
The Work is Straightforward
Performing routine maintenance checks for long-term customers is generally an easier gig than trying to figure out a new customer’s system for the first time. With an HVAC maintenance contract, you get to know what to expect at each checkup or service call.
So, not only are your technicians receiving more work on a regular basis, but the jobs are actually easier. The work is more predictable, requires less troubleshooting, and is an all-around better experience for your team members.
HVAC Maintenance Contracts Are Great for Your Customers, Too
HVAC maintenance agreements aren’t just a great deal for your business and your technicians – they’re also beneficial to your customers. Here’s why.
More Affordable HVAC Service
These agreements typically provide bi-annual intensive maintenance checkups as well as a reduced rate for any other service needs that pop up. Though fees vary based on your business, location, and services provided, most HVAC contracts are typically less expensive than scheduling two service calls per year.
Customers can also save money long-term. There’s less likelihood that they’ll have to spend a ton at once to repair or replace a damaged unit, because they’re paying you a smaller, steady fee for ongoing maintenance.
Preventative Care Keeps Their Unit Up and Running
A HVAC maintenance agreement allows homeowner to ensure their HVAC system is kept in good condition. They’re less likely to experience a breakdown that leaves them without air conditioning in the summer or heat in the winter, because their units are checked at the start of each season.
Their Warranty Remains Intact
Many warranties on HVAC units are only considered valid if the unit receives regular maintenance and care. By entering into a service agreement, your customers are able to keep their warranty intact.
5 Bonus Tips for Maximizing Customer Lifetime Value
Here are a few other things you can do to boost revenue and provide more value to your loyal customers.
1. Keep Track of Your Customers
The first step to better customer relationship management is gathering intel. The more you know about your customers, their service history, and their HVAC needs, the better you can connect with them and inspire loyalty.
It helps to create a database or use a CRM platform to organize information about your leads and customers. Start with the basics: their contact information. It’s important that you can easily find a customer’s phone number, address, and email address all in one place.
The more details you include about the customer (like the size of their home, unit type and age, as well as service history with your company), the easier it will be to manage your customer list and offer appropriate services and estimates in the future.
2. Build Stronger Relationships
The nature of the job is that you spend more time ‘getting to know’ your customers’ HVAC systems than actually interacting with your customers. That said, a personal touch can go a long way in any type of home service industry. Personalized emails, thank you cards, and even phone calls to check in throughout the year are easy, low-effort ways to build stronger customer relationships.
3. Send Out Personalized Offers
You can also strengthen your customer relationships by offering custom promotions to thank customers for their loyalty. Since you already have your customers’ emails, you can break your list of contacts into groups based on different factors. Look at things like the types of services they typically need, their location, and how long they’ve been a customer. Then, you can send out emails tailored to each group. Remember to further personalize each email with the customer’s name.
4. Create a Loyalty Program
It can be tricky to encourage loyalty in customers you only see a few times per year. So, you need to give them a good reason to hire you again, rather than some other local HVAC business. In addition to the tips above on how to build stronger relationships, you can incentivize customers to hire you again with a loyalty rewards program.
Even a simple points-based rewards program shows your customers that you value their loyalty. For instance, your customers could earn points for every maintenance checkup they schedule or gain points based on how long they stick with you on a service contract.
5. Keep an Eye Out for Cross-Selling Opportunities
Cross-selling is another way to increase profits and provide more value to your customers. If some of your customers aren’t taking advantage of all your services, you might have an opportunity to increase the amount of value you provide for them – while also increasing your revenue.
Lock in Future Revenue Today
HVAC maintenance contracts might just be the key to increasing your revenue and keeping your schedule full all year round. To make transactions and payments even smoother for your customers, it’s a good idea to automate payments and scheduling. Find out how you can start automating your HVAC maintenance contracts with Housecall Pro.