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welcome everybody to my office again I'm Chris with hvac pro blog today's topic is grow your business with maintenance contracts so I have to say this is a very important topic I appreciate everybody joining on time I'm actually just gonna move the video so you guys can see the screen right first thing I want to talk about is maintenance contracts in an HVAC business is it's a complete business decision it's being proactive it's really important if you want to you want planned growth you want to be able to hire the best technicians and not have tremendous peaks and valleys throughout the year particularly with income in your business I think maintenance contracts is the number one item in an HVAC business that can really change this for you so when I always get the question when should i implement this I gotta tell you if you don't have one it should have been yesterday all right implementation can happen anytime of the Year any day it's all in how you plan on charging your customer so some maintenance contracts depending on your business may be monthly payments I got to tell you that's a little tough to track unless you have a service to do that for you so if somebody misses a payment because their expiration date on their card changed or they have an expired card or whatever it is you got to have someone in your office or a service available to you to follow up on that payment rate so that's a little tougher but obviously a lot easier to sell because it's a lower monthly payment right so just like when you offer financing in the sales process if I'm offering a really low monthly payment for for maintenance for the year you can see how it's easy to say yes I personally stuck with annual payments I did this for a few reasons we used to send them out in January and I'll give you the some templates and stuff after this I'll show you where to get them we used to send them out in January would give a month for everybody to renew it really helped flatten our cash flow problem particularly during what used to be the worst months of the year for us that was January February in early March we did a lot of gas heat obviously if you're selling delivery for oil was hopefully up during that first quarter maybe not this past year I imagine but for most years you're still have a steady stream of income in that side of the business during those months I think a lot of mechanical contractors have a tough time if you're primarily your businesses retrofit and service those are the toughest months here in New England for sure so I stuck with annual payments to get that influx of cash flow and the key here is is we're going to account for that in a separate part of our business right so when we start doing that work come let's say March April depending on when the snows gone we're gonna start billing against that account right seems logical here but if you've never implemented this really important to track this for man-hours and for profit we need to show that this is a profitable part of your business ok so not only did it even cash flow and also for us evened workload right so if we can drive the workload in early April when I started going out and doing you know preventive maintenance on commercial projects commercial accounts for rooftops and then I started focusing on heat pumps early on and a cease once it got warm enough right I wasn't relying on the telephone to call I was sending out reminders come April first to tell my customers hey call me if you want a schedule otherwise I'm gonna be reaching out to you because I owe you the service right so having constant contact with your customer throughout the year depending on their systems and when they're planned for maintenance is really important right so you are able to increase communication your customers start to expect that from you which obviously you can start including other items when you start advertising to your customers even when it's really about getting you out there for that maintenance they're ready paid for ok so proactive decision really important the first piece I want to talk about is how to implement this on new installs and if you made it right before class started I actually had mentioned I kind of gave away my secret I really just included the price of the first year of the maintenance right in the in the proposal so we included it with every new quote on every system we sold we took that amount and put it into a separate account we pulled it out just like we would have for a labor warranty or an accessory or something else we sold on the job that didn't get put into the new install service billing department piece right so whatever account you want to call it so that way it was accounted for and we build against that account when we went out there for maintenance all right really important you track it correctly obviously if you're including maintenance new installations it really pairs well with labor warranties so if you have one year labor warranty you would include a one-year maintenance right if you had a two-year labor warranty it would be two years of maintenance and that cost would be bundled to build the value so imagine walking in and offering you know five years labor maintenance parts everything on all your installations you either pay for it as a customer today and you have all that planned maintenance and you're locking in that labor rate that you they normally you guys normally have today instead of dealing with price increases tomorrow right so that's the value and also the word of caution I would tell you right you don't want to go too far ell with that maintenance in case you do have things that influence your business with costs right so we're gonna be very specific as to what's included and what's not included in those maintenance contracts when we write those up all right so really easy with new installations so I always added that and it created a value when I proposed this to the customer and if it really came down to price with a customer and there were a long time standing customer and wanted to keep them or they really wanted to use me well guess what that's one of those things that most other contractors were not including so I would take that out and get my price down let's say a hundred bucks or two hundred dollars or whatever it is right so I never reduce the price without removing something of value right you never just drop your price that's like a cardinal sin so another note here is I really want to encourage you if you do this on that first one you send your technician or your service manager so that way they go through the entire system and when you present this in your sales process you talk about how your systems covered for everything for that first year in my labor warranty so I'm gonna come out for maintenance while you're still under warranty in case I find anything and with I find something everything's covered you don't have to pay right so it's really important and they see the value of that first one they don't you don't just don't want a tech walking in you know kicking the ductwork in the basement and saying how it's still here right you want them going through the coils cleaning everything writing down all the information everything you would promise as if it was a 10 year old system okay and let's be honest after a year I hope it's not really dirty it shouldn't take the tech the full amount of time it takes out a system that's been installed 10 years but it doesn't mean they should fly through it all right they need to give it the same attention and the same level of detail and the same explanation to that customer as if it was a brand-new maintenance contract for an old piece of equipment and the way to get this to work right I think and the way it worked well with the companies I've worked at or the company I owned at one time is to implement a spife program all right whether new installations it's included and there's a small spiff to the salesman when we get to service a small spit to the the service technician that renews that contract or the work that's going in for the renewals so I've actually worked at a company when we implemented a maintenance contract program we had zero on on one day I was there by the end of the year we had 300 maintenance contracts and I would say one of the biggest best things that we did in our company was a spife program including our Service Coordinator who was doing all the paperwork all right that's one way to make sure it gets done and it was paid out in a 401k type of incentive payment every six months actually we did it because of the way our business rolls right so we do a lot of service in the spring and then we kick up again in the fall so there was a huge influx of service contract money during those times and then of course renewals were annually okay all right so installations new installations are pretty simple but you you have to present the value so that way it justifies the additional cost I have to tell you I was much better at selling a maintenance contract at service alright when I was on on service there was if somebody did have a mains contract I'd feel defeated if I left without self once so and there's a few different ways to do it I'm actually reading a new book by Russell Brunson it's called traffic secrets I actually brought it just in case just came out but in the book and I want to give him some credit here it's not something that I came up with as far as this sales funnel and this is he lays it out for for website traffic okay but in the sales process or in service if you're a service service tech selling you can break it down into three parts right there's the hook you're casting the hook if you're throwing that hook out the story and then of course your offer and I used to make it sound something along the lines like this like I would go out on service because they had no a/c and I would find very quickly let's say a failed capacitor or a failed condenser fan motor something very obvious so I then after I've wrote down all my information all my notes anything that was obvious that need to be fixed I'd walk in I talked to the homeowner and I would say you know mrs. Jones your your condenser fan motor failed luckily we have one on the truck all right yeah I gotta tell you we usually find these things starting to fail when we do maintenance on on systems I'm sorry you don't have air conditioning I can get this fixed but I think you know on a system that's 5 10 15 how old it is you really want to go through the entire unit and just not provide a band-aid to it right so you know I got I gotta say I've done this X amount of years and just last week we found one failing and since they were a maintenance customer didn't have to pay for diagnosis and we actually give our maintenance customers X percent off right it's part of our program because we're flat rate if you guys aren't flat rate that's another thing you may want to consider totally different class to it than today all right so I tell the story and be honest somebody down the street or whoever whatever a friend was or wherever it was right and you know likely we found it starting to fail made the choice of replacing it ahead of time it was a lot less expensive and you don't have to pay for these diagnosis diagnosis fees and all this stuff and she got it X represent off I'll tell you what if you want me to do the maintenance today since it was so quick to diagnose it we can just charge you for the maintenance contract and I can give you that discount if you'd like right because I want to do what we did for mrs. Jones right and now I have them in that funnel okay so when we then have a maintenance contract sold they start seeing the value of it immediately okay and next year we get the renewal in the next year we get the renewal we start to raise the value of the business okay of course these are sold per system too so if there's multiple units you know sometimes it's not feasible for the technician to continue and do maintenance on everything because they have a full schedule they might have to smite the send a maintenance technician back to do the maintenance after you get the system running okay so the key here is you cast the hook you tell a story all right that's real don't make anything up homeowners know we all know all right and then offer something to the customer a reason to say yes today that's the key piece okay and the more the technician does it the more comfortable they are with it and the more they believe in it I got to tell you you're one when I first started it was really hard for me I was I was like 17 or 18 alright so that might have something to do with it just talking what customers and being comfortable okay but I gotta tell you I wasn't very comfortable because I didn't believe in maintenance and how it was gonna help the company and help me all right once we started flattening out cashflow and flattening out workload I saw it on everybody's faces and how happy people were to come to work we could take new calls and new customers we weren't running around this is another feature our company used to have on service nights and weekends unless it was a new installation under labor warranty or there were a maintenance contract customer those are the only ones we provide service for if it was after hours or on the weekends so it provided an incentive for our customers to sign up for that maintenance program as well on the service side okay also we weren't out there cleaning coils on a Saturday night okay so the technicians were much happier and you know what we left it up to the technician if they weren't a man his contract customer and you really wanted to help him you thought it was the right thing to do go ahead right but this is the minimum charge for a non maintenance contract customer so if people wanted to pay it and they were willing and you were willing to do the work you didn't have to but will pay overtime because they're paying X amount okay so hook story and offer really important so one other thing here on service really really important that I found helped us a lot was we standardized the price for a diagnostic fee and a maintenance contract it costs the same so we no longer had the conflict of well how much does it charge to have a maintenance done so someone would call and say oh I just need my system cleaned you'd show up and the system wasn't working right or they would they would say their systems not working because our diagnostic fee was less than our maintenance or whatever ended up being okay so really important standardize the price so that way your office always says the same price to have our technician come out it's a hundred nine or 139 or whatever it is okay like I talked about during peak demand if you already did all of this maintenance you're gonna have less failures of your customers and your operating systems that you installed in the past you're able to take on one new customers and you're able to then also hire the best technicians and keep them it's less seasonal work right so you're having all of that money up front in the year on the renewals and you're able to hire and keep the best technicians year round okay so you're gonna get better staff happier staff especially on the service side and if you provide a spife program to them it's gonna raise the value of your business and they're gonna get paid more so they're less likely to leave for a dollar an hour or whatever we have to deal with out there and on the labor side you know fortunately or unfortunately depending on how you look at it right now we're dealing with koban 19 but if you remember a couple months ago we had a labor problem right guess what next month we're gonna have a labor problem so if you couldn't keep your guys on staff I'm sure there's a company out there trying to hire them today okay so really important look for waste implement things that will keep your technician something different not all companies offer a spife program for maintenance contracts and they're really really easy to sell a technician on how to sell alright so I actually have templates to walk through most of the types or one or the other so I used to do a lot of maintenance on a cease heat pumps ducted obviously and furnaces and boilers right so I stayed away from oil so I don't have a template to offer you on the oil side but I'm willing to bet if your oil company you do plenty of maintenance because it won't run if you don't do maintenance right so I think we have customers that do gas and he sees you know most of those customers tend to not have planned maintenance so those little ones we actually had a sell right so on the maintenance contract side really important that these features are part of this if you don't have this yet I'll tell you how to get these at the end of the the training you know great at six-thirty here so first piece I want to say is you need to in-state specifically what and I used to call it an energy savings agreement included right because obviously maintenance would save energy alright so you can bring it however you'd like I think maintenance contract is probably the harshest word there's other ways of stating that and if you have a way that I haven't mentioned yet feel free or throw it in the chat unless you don't want your competition not alright so you also want to state what the contract costs very specific upfront all right and how long that lasts so if it's an annual basis calendar year an annual from when you send it in when you renew monthly whatever that contract is you want it stated in black and white where they're signing what is not included and this would be the most obvious things I'm gonna show you an example of what I had here in my templates I'll walk through them but it's really important to put a statement in there both the basic things that are not included so as an example refrigerant if we find the systems under charge and there's a leak leak diagnostic and refrigerant is not included with your maintenance contract right things along those lines also put a unique offer in there something for them to sign and send back to check today all right just like I talked about before so there's got to be a reason so I told you before one of my one of my unique offers was we provide night and weekend service only for maintenance contract customers or you'll get 20% off repairs if we find something while you're on maintenance or something along those lines you have a unique offer something additional that they're getting obviously you want to tell them how to pay ideally we love checks but I'm sure you all have a portal on your website or a way for them to pay as well whether it's PayPal venmo other re other ways out there the easier you make it for them to pay they're more likely they're gonna renew today all right so this is the top portion you know and in my templates it's a Word document you can just highlight it and type in the information yourself I just put in read what the template is for up in the top so you obviously want to remove this this is an AC only maintenance contract so on the top part of this is the standard salutation the home owner's name the quote includes how many maintenance visits right so I do one in the spring for an AC the labor and maintenance materials is as follows so I specifically state what we're testing and what's included okay I personally only included one-inch filters that were more of 7 or less anything more than that was an additional charge so like Aprilaire air Barre alternation I can't name all of them you guys know what I'm talking about the additional IAQ filters that are available obviously that would cost more so you want to state that in there you know if you have a lot of those that you're selling so we would check the electrical connections all the amperages thermostat settings replace the standard air filters right clean the condensing unit that is something that a lot of people avoid I made sure every technician I worked with clean the condenser if there is no spigot for some reason they were out there with a pump sprayer all right you clean the condenser whether it's a heat pump or an AC only every time all right I know that that can be up for debate with some of you guys I'm sure especially when you're busy but really important perceptions reality if the outdoor unit is not clean a homeowner does not believe it was maintained okay so we verified proper air flow so after setup we used to use static pressure but there's other other items out there like true flow plates or other ways of measuring airflow we'd obviously verify refrigerant charge we'd make sure that the temperature was above the minimum in order to provide that and then of course we've quote any needed repairs all right so really basic stuff here obviously condensate drain and pump we clean those things out at a tablet all the basic maintenance items but we spelled it out on the ticket for the customer so they knew the value of it all right so next piece how much it costs right and when do we want that check or payment by so the cost to provide the above services will total X I used to do at one time it was 109 I think we ended at 130 per unit of course when you start getting into multi zone heat pumps or ductless systems you might have a scale based on indoor units because obviously the indoor unit labor is X amount per unit that condensers the condenser whether it's a single zone or an H zone right so just make sure that the scale makes sense and it's offered the same way to all of your customers okay then you want to list out what is not included very important right so in this example and I'm not one to read slides but I want to make it very obvious here cost it's not included parts and labor not associated with maintenance and identify as a repair and this is told to the customer after we do the maintenance stuff if we find failures or something that should be replaced we're presenting those options to the customer before we leave right it's written down on the service ticket it's not something that you forgot to write or your technicians didn't complete the ticket because it's maintenance none of that is acceptable right because customer signs the ticket when you leave okay whether it's electronic or paper so not you can see here for example but not limited to adding refrigerant replacing air handler components any electrical component right due to wear or failure so really important you spell that out all right also giving them examples of other service calls that is not maintenance or who could require an additional visit like loss of cooling if they have no no air conditioning and you haven't done maintenance yet they can't call up and use that as a credit or something right that's a no that's a no cooling call that's not maintenance if we're out here we could probably do the maintenance for you at the same time but you're gonna probably pay a diagnostic fee unless it's really simple and easy okay also any quarter repairs we've already done what I used to do was I would make options on there on that service ticket when I did maintenance I always made my technicians provide at least three upgrades or options and then when my service coordinator scheduled it the following year she would ask the customer did you decide if you wanted to do any of the options from last year so we can bring everything with us because guess what we can put that in while you're out there on maintenance so there's no additional labor or there's X percent off for the labor if it's a really extensive repair okay obviously we state it's unlikely right but you're gonna be build a standard rate or whatever the rate is upon your approval once we diagnose the system right so really specific in there on how we do business and I'm gonna be honest I I always when I was early in my career I stayed away from flat rate but then I realized even when we were time of a material who are basically flat rate so if I told a customer how much something cost upfront it's gonna be about this I really couldn't charge him more so we're a flat rate anyway and and really it helped us on the diagnostic fee to get a fee that made sense cuz it was a flat rate diagnostic for the first X amount until you figure out what's wrong and then the repair cost X amount so it really helped us on this on the maintenance side as well because the guys could just flip open the book or scroll through we used an app for that all right and then of course that offer right so available in this year all customer agreement customers will receive 20% off any repairs and that's obviously found out during diagnosis while you're on the maintenance visit okay so we would offer that off of the standard rate of course if you're doing flat rate this is typically built into your pricing okay so you're not losing money don't think like you're giving everybody a discount okay it's just your non maintenance contract customers are gonna be paying more because you're not out there cleaning the system every year they should pay more let's be honest right you're gonna have to fix the system and clean the system while you're there all right and then how to pay so you can pay by personal check if you are make it out to X right or you can pay by credit card go to my website click on the shop whatever it is right make it easy and obvious for how to pay and you can even offer discounts if you wanted to pay a certain way alright you never charge more to part to pay a different way right that's illegal okay so gas furnaces the format's really similar it's just you're obviously you're gonna be doing furnace maintenance in the fall typically unless you're on on one of the oil plans with with hot water you might be doing something in the spring you never know but of course fall maintenance on a gas furnace or a propane furnace very similar stuff like you would on the indoor unit but of course we'd be checking humidifiers cleaning humidifiers and checking their settings and gas pressures so obviously and then of course picking up any additional repairs right so quoting any repairs so same format just a couple of additional or different things that we're checking but we're making it really obvious in the contract okay and then you can see if you're including this is gas E and an AC so this would be like an AC add-on so the contract would be for one visit in the spring for the AC one visit in the fall for the furnace right so obviously that that contract would cost twice as much as if you were just doing an AC or furnace because you're doing both for the year alright and then we're just combining it but I put it on one page for you guys to make it really easy in those templates this one is probably a little bit more unique so I tried to give you in the templates the ability to copy and paste multiple different ways so I put in there AC and a gas boiler because there's plenty of those in Cape homes and Colonials in here in the Northeast so you can see all of the AC stuff stayed the same when you get down to the bottom your boiler maintenance we were checking pumps and valve amperages expansion tank pressures obviously gas pressures and we would check water we would check gallons per minute based on temperature difference on the piping okay so obviously with today's high efficient boilers you might have to do some flushing and there might be some additional costs there you have to price that correctly for that type of boiler really important don't think every boil is the same this is more for a cast-iron boiler alright alright so main point here what I wanted to point out you shouldn't when it comes to maintenance you should not be waiting for the phone to ring all right if you're waiting for the phone to ring that's reactive and that's why you're not able to take on the number of customers this year that your your company should have been able to all right it's unfortunate most of our business and when I was a technician that's the way I felt until we had a maintenance contract program and my guys were busy as soon as the as soon as the snow was gone all right this gives you the ability to to get the best staff and keep the best staff and keep them keep them healthy and happy all right and if you're a business owner this is the way to increase the value of your business right because you're basically getting a subscription and that is known income every year if you sell a system right sure you get the profit on that system but that was a one and done customer if they're having you come back every year right that raises the value of the business and when you go to sell the business you know there's a lot of rules of thumb out there could be four or five times your annual income but if if you're you're just doing system replacements there's no guarantee that that new business owner is gonna gain that business obviously if you have maintenance contracts to sell that is a whole amount of income that's up for renewal every year all right so it's tracks buyers it's a huge difference when you go to value your business if you have recurring income all right so really important if you don't have those templates yet if you haven't subscribed to HVAC Pro blog if you just go to HVAC pro blog com click on subscribe the welcome email has templates for maintenance contracts in there along with a few other resources one of them is my e-book on a simple guide to low static duct design obviously there's a PDF download of rules of duct design as well along with my load calc a little scorecard I used to use to keep track of all the items that we need for system design so I have to keep looking it up every time when I did a low calc so a nice little scorecard I used to call it so all those resources available all you have to do is subscribe for free to the blog if you already subscribing you can't find it just shoot me an email I'm more than happy to send it over to you okay and you can probably most likely find it if you search it on my web page on Facebook I've posted it on Twitter at HVAC morin same thing on LinkedIn and then of course my new youtube channel which just started this month so this will be posted on YouTube hopefully by tomorrow as well as an audio-only version on my events page on hvac pro blog comm backslash events so last thing i want to mention before i wrap it up here if you didn't know I do offer residential system design classes unfortunately I can't do that in person these days given the situation but you can take this online in an e-learning format it's two hundred and forty-nine dollars you get 90 days access to 90 different pieces of the training so each recorded part of it which we walk through manual J site survey equipment selection for all the normal installations for manual s in a residence and then duct design from the basics about available static pressure total equivalent length all the way through sizing runs and trunks okay the longhand way with the worksheet before you dive into software okay so if you're interested if you go to the site HVAC Pro bottom you click on courses there's a link there I also offer just the duct design piece separate because I got a lot of questions for that separately the duct design only manual D is 149 the whole manuals Jas and E is 249 so those are being offered as we speak you can sign up at any time and if you have any questions as a student in there you can actually access me right through that platform or you can get me on social media there's a couple of unique pages that's for the residential system design class so if you guys have any questions feel free to reach out about those I really appreciate you guys taking the time tonight it looks like I went 2 minutes long I'm sorry I know it's nice out and I know my family is waiting for me to finish up so I can go for a walk with them so I'm gonna stick around for a few more minutes after I stop the recording if in case you guys have any questions but I really want to take the time to say thank you because I see a lot of familiar faces from the previous weeks this happens be my last one for May this year so if you found find this valuable and you want me to continue shoot me an email I'm just interested on how it's gonna work once it got warm out so you can see the attendees start to drop off today I get it I'd rather be out installing a system if I was in your your shoes so but if you found it valuable and you'd like to continue shoot me an email I'd like I'd love to hear if there's a topic you'd like to hear about more than happy to to work something out in future months all right so I appreciate you guys taking the time