Grow Your Business With Residential Maintenance Agreements - Kevin Nott

Grow Your Business with Residential Maintenance

Agreements

May 19, 2006

Four Basic Principles

• Match demand and capacity

• Ease their pain

• WOW your customers

• Personalize the experience

Typical Demand Cycle

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Sizing Business for Average Demand

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Demand Capacity

Sizing Business for Year-round Capacity Utilization

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Sizing Business to Maximize Demand Opportunity

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Demand versus Capacity

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The Key is to Match Capacity to Demand

Once the plane takes off, you can’t fill an empty seat

Ease Their Pain• Its all about perception• Perception is based on many differing factors• Perception can be changed by providing

believable information• Create perception of reasonable and factual

anxiety• Offer to relieve anxiety at a reasonable cost• Remove the perceived anxiety as promised• Deliver additional “feel good” benefits not

promised

The WOW Factor

• Its all about the experience

• Promise more than your competition

• Deliver more than you promise

• Consistency in every contact– Visit to visit– Person to person

Personalize the Experience

• People buy based on emotion and justify based on facts

• Emotionalize benefits

• Make them specific to the customer and the customer’s home

• Use this emotion when presenting options

Ways to Grow Your Business

• Acquire a competitor

• Get more customers

• Get more sales from existing customers

The Challenge of Growth

• Finding customers• Finding new products and services• Timing of new hires• Training• Vehicles• Inventory• Overhead constraints• Cash flow demands

Would Growth be Easier if You Could …?

• Choose your customers• Plan your hiring• Train future technicians• Match capacity to demand• Schedule demand to fill excess capacity• Predict cash flow• Ensure profitability in slow months

You can do this with maintenance agreements

With a Maintenance Program You…

• Own your customers

• Have more opportunities in front of customers

• Schedule the work to fill in the slow times

• Know staffing needs several months in advance

• Can predict the revenue and cash flow

• Keep technicians busy year round

• Get steady source of replacement opportunities

Maintenance Agreements Give You Steady and Predictable Demand

So you can set your capacity to meet the demand

What is Done on a Maintenance Visit and Why?

Dan DeardenField Service Representative

Salt Lake City Trane

Who Does Maintenance?

• Maintenance Technicians

• Service Technicians

• Installers

• Plumbers

• Any field employee

An Effective Maintenance Program is a Company-wide Culture

• Maintenance is the driving force for the business • It’s not just another product you sell, it’s the heart of

your business• All must believe that regular maintenance is in the

best interest of – The customer– The equipment being maintained– The employees– The company

• Maintenance customers are treated like royalty – because they are

How is that Culture Developed?• Name the program• Require all employees to observe a maintenance

being performed (preferably on their own equipment)• Give preferential pricing on all products and services

to agreement customers• Create an unbundled cost of the services• Every employee knows intimately the benefits• Always ask callers if they are a maintenance

customer• It starts at the top

Creating Your Maintenance Program• Develop a name

• Create a benefit statement

• Determine what will be done during a visit

• Establish benchmark time for each visit

• Develop pricing

• Determine SPIFF

• Develop a script

• Establish scheduling guidelines

• Create forms

• Create tracking system

• Develop renewal system

• Establish program goals

• Develop reporting system

Name the Program

• Name should be unique• Should create positive and descriptive image for

customers• Should not be confusing or misleading• May have a tag line or slogan attached• Get everyone involved in the process of naming

the program• Avoid names that allude to promises of energy

savings, extended equipment life or fewer repairs

Create a Benefits Statement• Minimize utility bills

• Optimize comfort

• Ensure safety

• Minimize repairs

• Extend equipment life

• Discount on products and services

• Priority service

What Tasks Will be Performed on a Maintenance Visit?

• Determined by Owner and/or Service Manager

• See Dan’s checklist

Establish Time for Each Visit

• Determined by Owner and/or Service Manager

• Consider all the tasks identified in the previous step

• Include travel time

• Include customer education time

Develop Pricing• Labor Rate

• Materials costs

• Number of annual visits

• Number of pieces of equipment

• Payment method

• Desired profit

Calculating Hourly CostTotal Paid Hours Annually 2,080Base Hourly Rate 16.00$ Base Annual Pay 33,280.00$

Payroll BurdensFICA (7.65%) 7.65% 2,545.92$ FUTA (.8%) 0.80% 266.24$ SUTAWorkers Comp 0.30% 99.84$ Medical 300.00$ 3,600.00$ Uniforms 25.00$ 300.00$ Other 10.00$ 120.00$

Total Annual Direct Labor Cost 42,308.00$

Available Work Hours 2,080Vacation Hours (80)Holiday Hours (64)Sick Hours (48)Anticipated Work Hours 1,888

Adjusted Hourly Rate 22.41$

Calculating Selling PriceNumber of visits / year 1 1 1 2 2 2 2 2

Number units visit 1 1 2 3 1 2 2 3 3Number units visit 2 1 1 2 2 3

Total Number of Units 1 2 3 2 3 4 5 6

Travel 0.25 0.25 0.25 0.5 0.5 0.5 0.5 0.5Customer Education 0.25 0.25 0.25 0.5 0.5 0.5 0.5 0.5

Direct Time 1.5 3 4.5 3 4.5 6 7.5 9Total Time 2 3.5 5 4 5.5 7 8.5 10

Hourly Rate 22 22 22 22 22 22 22 22Labor Cost 45 78 112 90 123 157 190 224

Materials Cost 5 10 15 10 15 20 25 30

Total Cost 50 88 127 100 138 177 215 254

Sales price needed to get50% GP 100 177 254 199 276 354 431 50845% GP 91 161 231 181 251 322 392 46240% GP 83 147 212 166 230 295 359 42335% GP 77 136 195 153 213 272 332 39130% GP 71 126 181 142 197 253 308 363

Gross Profit Dollars50% GP 50 88 127 100 138 177 215 25445% GP 41 72 104 82 113 145 176 20840% GP 33 59 85 66 92 118 144 16935% GP 27 48 68 54 74 95 116 13730% GP 21 38 54 43 59 76 92 109

Determine SPIFF• Offering maintenance agreements is part of

minimum job expectations• Spiff options

– By number of annual visits

– By pieces of equipment

– By number of years

• Typical SPIFF is $5.00 to $10.00 per annual visit– Agreements

– Tune-ups

Develop a Script

• Consistent, friendly greeting• Ask if caller is maintenance customer• Ask what prompted them to call• Capture critical customer data first• Capture equipment information

– Age– Make

• Payment terms• What else do you want to know?

Establish Scheduling Guidelines• Have a schedule book (manual or electronic)

– Two-hour blocks

– 4 blocks per technician

• Start schedule with slowest time of year and work back toward busy time

• Do furnace and A/C maintenance visits separately

• Schedule 1 piece of equipment per block

• Start with 2 to 3 blocks per tech per day (leave time for service-generated tune-ups and demand service)

• Don’t over schedule (don’t pay overtime for maintenance)

Create Forms

• Maintenance checklist

• Maintenance Agreement form

• Maintenance Performance report

• Bank/Credit Card Draft Agreement

Create Tracking System

• Customer information

• Equipment information

• Scheduling system

• Paper system

• Computer system

Develop Renewal System• Send postcard two weeks prior to scheduled renewal visit

– Reminding them of their appointment

– thanking customer for the privilege to serve them

– reinforcing the benefits of their service

• Technicians need to know if they need to renew an agreement as they are dispatched

• Technicians debrief immediately after visit on renewal success

• All non-renewals need to be contacted– Determine why they cancelled

– Attempt to reclaim the customer

Establish Program Goals• 85% renewal rate

• Labor rate

• 5% replacement lead turnover rate

• 95% first-time completion rate

• Accessory sales

• Customer satisfaction rating

• Others as desired

Establish Reporting System

• Tracking boards– Program goals– Individual and team

• Exception reports

• Profitability reports

• Other measurements required

Where do Agreements Come From?

• Tune-ups– Marketing– Service calls

• Equipment replacement

Maintenance Circle

Maintenance Base

Tune-Ups

Replacements

Replacements

Service

Maintenance

Accessories

Referrals

Converting Tune-ups to Agreements

• Its all about the experience

• Show the value

• Involve the customer

• Tune-ups done by Maintenance Technicians

Build Value from Start to Finish• Marketing

• Pricing

• Answering the call

• Scheduling the appointment

• Dispatching

• Performing the tune-up

• Educate customers about agreements

• Sign up customer with maintenance agreement

• Thank You card

• Quality assurance call

• Seasonal newsletter

Marketing Tune-ups• Focus on tangible advantages to customer• Take advantage of new customer acquisition periods

– Mid May to late June– Mid September to mid November

• Special offers– Preseason– Postseason

• Target marketing– Equipment over 10 years old– Age of home– Income levels– Zip Codes

Pricing Tune-ups

• Street rate should be a premium price

• Build in a “schedule today” discount

• No special discounts during peak season

• Special offer pricing– 10% to 20% off depending on time of year and

need for work– Never discount below price of maintenance

agreement

Answering the Call from a Tune-up Ad

• The customer is yours if you handle the call correctly

• Answer with a smile

• Never give out prices without benefits

• Talk about personal experience

• Talk about the company and the people

• Ask for the order

• Give customer two hour window

• Thank the caller for the opportunity to serve

• Assure them that they have made a good choice

Scheduling Tune-ups

• Screen customers– Schedule tune-up visits on equipment newer than 10

years old further into the season

– Schedule tune-up visits on equipment older than 10 years old ASAP

• Schedule time that is convenient for the customer• Send out reminder if over two weeks out• Always thank the customer for the opportunity• Remind them of the value and the benefits

Dispatching Tune-ups

• Call the day before to confirm appointment• Call 15 minutes prior to the start of the two-hour

window to give customer a closer time.• If technician is running late, call customer

immediately• When technician is on the way, inform customer

– Give technicians name

– Tell customer positive information about technician

– Ask customer to call if they have any concerns

Performing the WOW Tune-up• Shoe covers / Floor protection• Clean cut technicians with uniforms with name badge• Knock, don’t ring bell• Greet with smile and handshake• Introduce yourself and the company• Start with the thermostat• Ask the customer to observe• Introduce customer to the equipment• Show customer condition of equipment• Explain consequences associated with the condition• Explain each thing you are doing and benefits

Performing the WOW Tune-up• Ask customer comfort questions

• Explain benefits of equipment and accessories they don’t have but that may be beneficial to them

• Talk often about the benefits of regular maintenance

• Clean up area as good or better than it was found

• Point out how good the equipment looks

• Reinforce the benefits they will now get

Educate Customers about Agreements

• Ask customer if you can review what you have found

• Preventative Maintenance

• Not a start-up service

• Pricing reflects the timing

• Remind customer of condition of equipment

• Create reasonable anxiety regarding the condition

• Explain the benefits of the agreement

• Ask the customer if they would like those benefits

• Introduce the agreement as the solution

Sign up Customer with Maintenance Agreement

• Explain agreement options• Inform customer when you have openings for the

next visit• Ask customer to participate in the agreement

program• Call the office to schedule the next visit

Other Tune-up Tasks• Send a Thank You card

– After returning to service van, complete a personalized thank you card and envelope

– Include with the day’s paperwork

• Call the customer within 48 hours to see if the customer is satisfied.– Reinforce positive comments

– Immediately act upon negative comments

• Place customer on mailing list for newsletter

Hiring Maintenance Technicians• Clean cut• Works well with people• Detail oriented• Enjoys working with hands• Assertive• Stepping stone to Service or Installation• Where to find them?

– Applied Technology Colleges– High School counselors– Mechanics– Other in-home sales companies

Training Maintenance Technicians

• Industry training opportunities

• RMGA and EPA certifications

• Written list of tasks

• All tune-ups done the same way by all employees

Getting Replacement Leads from Maintenance and Tune-up Visits

• Approximately 5% of maintenance visits should result in replacement leads

• Report in when equipment is over 15 years old (or an age you feel comfortable with)

• Encourage homeowners with older equipment to get estimate for new system if only as a budget for the future.

• Keep database of this equipment and send replacement offers quarterly

How Many Agreements do You Need

• 1000 agreements for each million dollars of revenue

• 400 agreements per technician

Payment Options and Sales

• Monthly-pay and multi-year prepaid agreements provide the best opportunity to sell equipment and accessories

• Technician does not need to worry about renewal

• Customer does not have the sticker shock of both the agreement and the other sale

Get Started Now

• Set aside time to review this information

• Get out the checklist and make specific assignments with specific dates

• Schedule follow-up meetings to ascertain progress

• Involve your TM as needed

• Ask questions

Every time your plane takes off with empty seats it costs you money

Fill up the seats with maintenance work

Converting Maintenance Visits to Leads Takes Training and

Practice

Kalani WhiteTerritory Manager

Salt Lake City Trane

Questions?

Measuring Your Program

• Are the comfort consultants talking about your program?

• Are the service technicians asking customer is they are on the program, if not, would they like to be?

• Are the customers happy with the jobs you have done for them?

Now you can find out!

Customer Satisfaction Survey

• What questions are asked?– Do you have a maintenance agreement?– Were you offered a maintenance agreement?– Were efficiency options given?– Was a load calculation done?– How did you hear about us?– Why did you choose us?– Were you ask about cleaner air?


• Who should participate in the Survey?– Everyone committed to customer satisfaction.– Everyone who would like honest feedback from

their customers.– Everyone who would like to track their

company & employees performance.– Anyone who would like referral business.


How to get the most from your surveys!– Encourage your customers to participate– Stay focused on the customer– Show you appreciation– Talk to your installers and technicians– Lead by example– Advertise your results


How do you get started?– Instruction are on the brochure– Talk to your TM

How much does the program cost?– $600 per year (billed $300 semi-annually)– Includes all postage, surveys, and survey results

Sales Trane’ing Classes?

Sales Training: XLi Certified – 8 weeks of sales trainingBuilding customized presentation booksLaptop Presentations & Proposals Understanding Duct Work – Duct Design for sales peopleReferral Farming – All the leads you will ever needMini Boot Camps – Overcoming objections – Asking the right questionsKnow Your Competition – competitive review strengths and weaknessesSelling Clean Air – Trane Clean EffectsUnique Solutions -- Zoning, twining, PTAC, & Mini Splits Load Calculation: Manual, Computer, Pocket PCBuilding a Website13 SEER Plus – Selling comfort and accessories

Boot Camp – December 1st

Operations Training: Employee Retention, Managing by Margins, Understanding Financials, Service, Lead Generation, Installation, Management Structure

THE END

Thank you for your business!

Have a great night!