Posted by Kindra K.
May 17, 2019
If your home-service company is like many others, it relies on a steady stream of calls from customers in order to stay in operation. Yet if your phone stops ringing for whatever reason, your business could be at risk. But what if there was a way to put your finances on autopilot, allowing your company to weather even the worst of off-seasons? That’s the type of transformative effect recurring service agreement can have for businesses that make house calls.
If you’re unfamiliar with the term recurring service agreements, or if you’ve heard of recurring service agreements but aren’t sure how they can apply to your business, this article introduces the essentials and includes some tips to help you learn how to sell recurring service agreements to your customers.
Though the specific format can vary by industry, recurring service agreement (sometimes called a service maintenance agreement) generally refers to a document that outlines an ongoing arrangement between a business and a customer.
Recurring service agreements are nothing new, although they’re perhaps most commonly associated with the telecom industry, in which internet providers use them to ensure the reliability of their clients’ connections. However, now that more aspects of the economy are shifting toward subscription-based services, more businesses are offering recurring service agreements — including a growing number of companies in home-service industries.
The biggest benefit of offering recurring service agreement is, of course, the recurring revenue that your business stands to earn from your customers — especially when there’s little to no extra effort required on your part. But recurring service agreements also offer other advantages to your company and its clients. Here are a few:
Recurring service agreements can be tailored to individual clients so that the agreement covers aspects of your service that matter most to the customer.
Recurring service agreements protect both you and your customers by guaranteeing the quality of your service and spelling out your clients’ financial obligations.
Recurring service agreements provide a quick and convenient solution for your customers by allowing them to pay a fixed cost for your services.
Depending on the industry in which you work, the terms of your recurring service agreement could vary wildly from another type of home-service company. For instance, in the realms of HVAC, electrical, plumbing, and pest control, the role of recurring service agreements is similar to that of a warranty. In this scenario, your customers make monthly payments as a form of insurance should an issue arise. On the other hand, for carpet cleaners, maid services, window washers, and similar businesses, recurring service agreements revolve around for recurring services that are generally performed on a monthly or quarterly basis.
Based on the type of services your business offers, your standard recurring service agreement could follow a variety of formats. Generally, however, all maintenance agreements should include the following components:
Services to Be Provided — Specify the type and scope of your services along with any additional details about your offering. Will you be providing recurring maintenance at your customer’s home each month, or does the nature of your work only require you to respond to issues as needed? How much will your customers pay for these services, and when does the agreement expire?
Performance Standards — Providing a consistent level is service is a key component to delivering on your recurring service agreement. What kind of quality can your customers expect from your services? Define the specific standards your work will live up to and detail any processes your workers will use to assess the completion of a project.
Monitoring and Reporting — Will your business provide regular inspections or auditing services as part of your recurring service agreement? If so, explain how your workers will collect that data and state whether customers will have access to the information gathered.
In the Event of an Emergency — Give your customers peace of mind by providing them with an action plan in case an emergency strikes. Appropriately set expectations by defining how quickly customers can expect an emergency response and how rapidly issue are likely to be resolved.
Consequences for Failing to Meet Commitments — Both you and your customer have responsibilities you’re required to uphold as part of a recurring service agreement, and if either one of you isn’t able to abide by the terms of the agreement, there must be consequences. Whether the customer has a right to terminate the contract — or if you reserve the right to pursue legal action — clearly state what’s at risk for both sides.
When it comes to selling customers on the concept of a recurring service agreement, perhaps the single most important factor is how your employees talk about the agreement’s terms. If your workers use language that’s too loose, it could leave elements of the agreement open to interpretation, which might lead the customer to feel misled when they read the fine print. And if your technicians only mention the monthly cost to customers, without highlighting any of the recurring service agreement’s advantages, your customer will be less likely to consider the recurring service agreement seriously. That’s why it’s so important to train your team members about how to position your recurring service agreement.
If you’re unsure about how to onboard your employees to sell recurring service agreements, here are a few tips you might find useful.
Hold a Training Session — Your employees will never sell any recurring service agreement if they don’t understand how they work. Host a comprehensive workshop introducing your team to the agreement and ensuring they understand it inside and out.
Make It Worth Your Workers’ While — Get your employees excited about selling recurring service agreements by offering them incentives to sign up customers. Either cut your workers in on the revenue or give them substantial rewards for reaching a certain level of sales.
Crunch the Numbers — Coach your crew to show customers how much money the recurring service agreement could save them by using a notepad and calculator to do the math right in front of them.
For home-service businesses that are new to the concept of selling their services as an ongoing arrangement, choosing the best time to broach the topic with customers can present a challenge.
So when’s the best time to bring up your recurring service agreement — before, during, or upon completion of a job? The right answer can vary based on several variables such as pricing, ease of sign-up, and the sales skills of your workers. That said, by introducing your business’s recurring service agreement at the end of a job, you’ll have the chance to crunch the numbers and show them how much they can save on their service by signing up for a recurring service agreement that day.
If your objective is to sign up as many customers as possible on a recurring service agreement, you’ll want to make the decision a no-brainer. One of the best ways to do this is by offering your customers additional incentives to increase the perceived value of your recurring service agreement. With that in mind, here are a few benefits you might consider offering customers to encourage them to sign on the dotted line.
Offer at Least 10% Off — You might have to tweak your margins to fit this into your pricing, but by reducing the cost of your services by at least 10%, frequent customers are more likely to be swayed by the potential savings your recurring service agreement makes possible.
Toss in a Free Service — If your recurring service agreements include monthly service calls, offer to have your workers perform “nice touch” tasks such as replacing aging gaskets or swapping out smoke detector batteries.
Implement a Referral Program — Encourage your customers to spread the word about your subscription-based services by setting up a referral program that rewards customers for signing up their friends.
By offering your services as part of a recurring service agreement, you can put your income on autopilot and earn more money than you would by waiting around for the phone to ring. So instead of depending on inbound calls to stay in business, embrace a subscription-based model to boost your bottom line.
Housecall Pro’s Recurring Service Plan can help you create a loyal base of customers that bring you recurring revenue throughout the year. This simple feature can be set up through our mobile app or on your desktop computer.
The mobile version allows you to show customers the recurring service plans and sell directly to them when you are out working in the field.
You can track and manage all customer recurring service plan details in one dashboard:
Create different recurring service plans that work for different customers and have them saved to your Housecall Pro software. This will help you combat “slow seasons” and earn you recurring revenue all year long.