“One Minute Manager” Book Review

by: admin - Filed under: Must Read Business Books, Service Agreements

There are a few books that I consider standard operating policy for my company.
When it comes to management style “One Minute Manager” is the only book you need. 

The days of driving employees to perform have long gone.  Today only motivation and leadership works.  I think Mark Twain said something about “things need to be as simple as possible, but not too simple”.  This book has three simple principals that are proven methods.

We should treat our employees how we would like to be treated.

You can read this simple book in less than a day.  It is written in a story telling format that is entertaining.  You should read this book, practice the principals and give a copy to your managers.

Author, Kenneth Blanchard, Ph.D, has sold more than nine million copies of this book.

Managing and Scheduling HVAC Service Agreements

by: docCool - Filed under: Service Agreements

Those who haven’t started or managed a service agreement program may underestimate the complexities involved in scheduling and managing all the elements.  Things can get out of control quickly.

Companies with under a few hundred service agreements can utilize a manual scheduling system.  The addition of a spreadsheet will also help keep track of history and plan future workload.  It’s a good idea to overdo recordkeeping since each service agreement will represent several thousand dollars in service, repair and replacement revenue over the lifetime of the agreement.

A well designed software solution is the best answer, but if you are setting up a new program for the first time, you can get bogged down learning software.  Defer the software option until you have mastered the other requirements.  Program success will result from developing sales skills and delivering exceptional service.  If you have existing software, use it.  If you don’t have software, use a manual system and get the program up and running before spending six months learning new software.

What you need to know:

  • Number of service agreements.  Measure your growth and success.
  • Number of tune-ups, complete/incomplete.  (Two tune-ups per agreement).
  • Number of tune-ups to be performed each month.
  • Earned revenue.  Recognize revenue only for tune-ups performed.
  • Unearned revenue.  (tune-ups not performed)
  • Details of the equipment covered under each service agreement.

Manual System

If you are marketing single tune-ups as your marketing strategy, you want to convert that tune-up to a service agreement.  Don’t use your single tune-up as the first tune-up of the agreement.  The new service agreement will have two tune-ups and the last tune-up is performed at the end of the service agreement.  This allows your superbly trained PTS to renew the agreement during the second tune-up at the time the agreement is expiring.  You don’t want six months left after the last tune-up, at the end of the agreement.  Their is more urgency on the customers part to renew, since the agreement is expiring.  The PTS will renew many more agreements than a phone call or letter.  The PTS gets a bonus or spiff for each renewal.

Log the new service agreement in your spreadsheet and schedule the next two tune-ups paying close attention to the workload for each month.  You want to balance the workload.  You can use a separate tab on your spreadsheet for each month.

Place a copy of the completed agreement form in a 12 pocket, monthly expanding folder.  File the agreement under the month of the next tune-up.  At the beginning of each month pull the service agreements for that month from the expanding folder. Compare the paper agreements with the spreadsheet, schedule and complete the tune-up and place the copy back in the expanding file for the next tune-up.  Update the spreadsheet log.

If the PTS doesn’t renew the agreement, go visit the customer yourself and find out why.  Determine a countermeasure to be implemented to increase renewals.

General Guidelines:

  • Use the street address for service agreements and service files.  Label files “street name”, “street number”, “City”, “State”, “zip code”.  People move, but the equipment normally stays at the same address.  The service agreement is written for each piece of equipment and is not transferred.  Write a new agreement if your customer moves.
  • Write one agreement for each address, listing all the equipment at that address.

When you get ready to purchase software to manage your service replacement business, check back with us for recommendations.

Service Agreement Pricing Example

by: admin - Filed under: Service Agreements

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If you offer a service agreement to a customer, you have given them a choice to say yes or no. It is much more productive to give the customer a choice between a one year agreement and a two year agreement. The no choice is still available, but is much less obvious. Many marketers believe you should give the customer three choices, good, better and best. Try both and use the presentation with the best results.

Our single tune-up price needs to be higher than half of our service agreement price by at least 10%. We want our service agreement customers to receive the best pricing for all of our products and services. Two year agreements are discounted (one year price x 2 x .96) and three year agreement are discounted (one year price x 2 x .92). Multisystem agreements are discounted an additional 5%. (Price x .95)

The service agreement should be paid in full at the point of sale. Our pricing has included a discount for multiyear agreements and multiple systems.
The following pricing is for demonstration purposes only.

Single Tune-Up
One System $80.00
Service Agreement Two tune-ups per year (not seasonal)
One System One Year $150.00 Two Year $288.00 Three Year $414.00
Two System One Year $285.00 Two Year $548.00 Three Year $787.00
Three System One Year $427.00 Two Year $820.00 Three Year $1180.00

Renewing Service Agreements

by: admin - Filed under: Renewal, Service Agreements

We can’t stress enough the importance of having HVAC Companies and the Precision Tune-Up Specialist (PTS) renew the service agreement on the last tune up.  It is important that the PTS renew the agreement at a high rate.  To acomplish high renewal rates the PTS must be trained and have an outgoing personality profile. 

The service agreement should expire about the time of the final tune-up.  If the service agreement was converted from a single tune-up and the first tune-up under the agreement was performed six months after the single tune-up, the final tune-up is performed at the end of the agreement. 

Customers are much more likely to renew if the agreement will expire immediately after a tune-up.  Customers have a higher renewal rate when presented the renewal option in person.  Renewal rates in the spring are higher than renewal rates in the fall.  Never include the single tune-up as the first tune-up for a service agreement.

One of the objectives of our Maintenance Department is to level out the workload.  Make sure all PTS and service techs are trained and understand that we perform maintenance on all components on each tune-up in order that the AC and Heat are ready to go at any time.  Don’t promote or reinforce the concept of seasonal tune-ups with the customer.

If the service agreement does not expire at the end of the agreement start scheduling the tune-ups out so they eventually do expire on the last tune-up.  Mail a letter stating the features and benefits of service agreements along with an executed renewal agreement.  Follow up by phone and time the call about the same time the customer should receive the agreement in the mail.

Some companies pay half commission for PTS, tech and CSR renewal of service agreements.  I prefer to pay a lower hourly wage and keep everyone aware of performance based compensation.  If you want higher renewal rates reward higher renewal rates.

“Opportunity Manager” for HVAC Companies

by: docCool - Filed under: Hiring, Marketing, Service Agreements

Significant resistance to change exists within all HVAC Companies.  For this reason implementing change requires an unwavering commitment from the top.  In order to overcome resistance from service techs, dispatchers and others, when installing the “Maintenance Department”, the owner must appoint someone to manage the maintenance department and that person must understand success is not optional.  The owner is not a good choice for this position since he gets distracted with other day to day business.  We don’t want anything in the way of adding new customers and generating a steady flow of replacement leads.

The maintenance department is really the lead department.  The manager should be the “Opportunities Manager”, lead coordinator, sales manager, sales trainer, cheerleader and air conditioner maintenance scheduler.

Most of our high quality, high margin replacement leads will come from air conditioner maintenance agreement customers.  The maintenance department manager (Opportunity Manager) must be aware of how old the equipment is at each customer’s location and dispatch the PTS with the highest lead generation percentage to perform the tune-up.  In contrast, the PTS with the best tune-up to maintenance agreement conversion should perform most single tune-ups.

The lead coordinator (Opportunity Manager) personally takes every call to schedule sales presentations but the opportunity manager does not make sales presentations.  The information is recorded on the lead card and the comfort consultant with the highest closing rate gets the lead.  If we have more than one comfort consultant and he wants the best leads he must work to develop the highest closing rate.  A back up lead coordinator must be trained to take calls when the Opportunity Manager is not available.

The Opportunity Manager is also the sales trainer and conducts sales training for service techs in converting service calls to maintenance agreements.  Like all other vital Key Performance Indicators (KPI), the Opportunities Manager is responsible for tracking all sales related data including service tech conversion rates for service agreements and leads.

The sales manager duties required of the Opportunities Manager, will also require skill in personality profiles, in order to hire and train the best PTS and Comfort Consultants. 

The Opportunities Manager should debrief every comfort consultant after every presentation and every PTS after each tune-up as part of the continuing sales education process.

The Opportunities Manager reports to the owner on a daily, weekly and monthly basis.  The following records and reports are required.

Key Performance Indicators (KPI)

  • Replacement leads to sales closing rate for each comfort consultant %
    • From Service Agreement customers 85%
    • From non SA customers  25%
    • Maintenance agreement to lead % by PTS 10%
    • Service call lead conversion by service tech 10%
    • Service call maintenance agreement conversion by tech  25%
    • PTS maintenance tune-up conversion to leads by PTS.  10%
    • Single tune-up to maintenance agreement conversion by PTS 60% to 70%
    • Service Agreement renewal 80% to 90%
    • Maintenance Dept. P&L to budget.
    • Comfort Consultant commissions. $
    • Service tech commissions $
    • PTS Commissions.$
    • Direct mail, door hanger and other advertising programs to generate tune-ups. 3%
    • 1200 service agreements to support $1,000,000. In retail sales.

Owners of HVAC Companies that are serious about growing their business and profits won’t try to wear this hat and take the chance of being too busy, to be successful.