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| Ek's Home | Forum | Chat | Electrical Links | |
| Subject - Annual service agreements | |
| SR Scott |
The posts made here are something I've come to really dig. Have checked out many a suggestion, link, idea, website, etc. Seems to me that the intention of this forum is being seen to fruition. We're thinking of instituting an annual service agreement and would be interested in any examples or suggestions in terms of: - costs -discounts afforded customer -benefits afforded customer - wording Thanks, this is a great place to hang out in my spare  time.Scott |
| kiwisholland | Hey Scott, did you get my email? |
| MONOLITH | I know a lot of the companies around my area doing are doing this. Their main goal with it is to make sure the customer would be a repeat customer, by giving them a discount on future work if they have the agreement. They sell the agreement (they call them memberships) for about $80, plus 10% off whatever work they had just been called out for. The theory is that now that they have the agreement, the homeowner will surely call them the next time, not someone else. I'll have to dig up the details, but I'm sure they provide (with membership) some inexpensive services for free, like 'home inspection', 'GFCI testing', 'Service panel safety maintenance', and other dazzling goodies that cost you nothing to do, plus 10% off any future work. The services they provide cost them almost nothing to do, the 10% gets added back into an inflated price, and they're guaranteed the future work. Everyone's happy, the EC is the happiest. Along these lines, another thing I've seen is the tiered warrantees. Go and put in some recessed lighting for whatever $ amount. During the sell, tell the customer you warranty it for 90 days at that price. For a 1 year warranty its $50 more, 5 years $100 more. Just a way some of these bigger companies are squeezing out more dollars from the consumer. And these are the types of ideas that are coming from the ESI-Type outfits. Personally, right now as a new company building a client base, I just tell people I guarantee what I install for life. If there's something wrong with what I do, I'll fix it. I'm sure when I'm old and grumpy and have a huge company, I'll won't be so generous.
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| kiwisholland | I am in the process of designing a service or safety agreement myself. Do any of you guys who offer them be willing to share the content? I too have seen service agreements for 79.95 or 89.95. I would like to add some real benefits to the customer, though and I don't know hwo to do it for that cheap. SR Scott had some great ideas when I discussed it with him recently, and I don't see how you could perfrom half these services in under 1 hour. I am thinking more like 2-3 hours depending on the size of the house. Are these aggreements supposed to be done at a loss just to get your name in front of the customer? Thanks |
| kiwisholland | check out http://www.grandyassociates.com/. |
| MONOLITH | It's 2005, anyone still own a cassette tape player?.... http://www.grandyassociates.com/servicesensetapes.asp Reminds me of the 80's when Mike Holt was selling cassette tapes of his classes. Overall it looks like a very similar to ESI thing, including the 'live human support staff', at cheaper prices. Sometimes you get what you pay for though. You buy it, then come here and share.  Hey. Actually, that gives me an idea. You know, if we really wanted to, or were interested in a particular item, several of us could chip in for the stuff and pass it around.  |
| wilkie | Our annual service agreements include: annual electrical safety analysis priority service no holiday/overtime surcharges 15% discount on all repairs 24 hr service fee/ service fee doesn't go up after hours We provide all of this for $99 per year. We do a comprehensive electrical inspection, complete with digital photographs, and generate a "to do" list and also a "wish list" if the customers wants. It is not set up to "get added back into our "over inflated price." The services we do provide cost us alot, but they also provide a tremendous value to the customer. Our prices are set in accordance with our costs of delivering our services with an ethical profit. I can provide you guys with example after example of customers who love this service that we provide. I sold one Tuesday night as a way to not charge the customer for a circuit diagnosis. While I was on a call about whole house surge protection the customer wanted me to find out why their landscape lights aren't working and could they expand on the low voltage system. I explained our service agreement and how it would also save them money on the entire project, and they LOVED it. They even bought a second one for their adjacent guest house. Now, case in point, did I sell this customer something they didn't need to add PENNIES back into our overinflated price, or did I provide a valuable service to the customer. Lets see..... I provided them a lower cost alternative to looking into their problem, they will recieve a discounted rate on all of our services and all the other benefits, they will get the peace of mind of knowing a professional has taken a serious look at their overall electrical system, and most importantly of all... they now have "their electrician." They don't have to worry about what to do or who to call if they have a problem. My 2 cents. |
| aline | I need a service agreement to have someone come out and replace all my burned out lamps. Some have been burned out for over a year now. Never seem to find time to get to them. 
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| kiwisholland | quote: HAHA, I said the same thing to the woman at Grandy Assoc. when I called. Anyway, you can get CD of the month from them. Past months are $9.95, and I purchased a few. Great for listening while in the truck. They have a manual in there on setting up a Service Agreement. I have been VERY happy with everything I purchased from them. Of course I never bought any tapes from them... |
| MONOLITH | quote: Sorry Wilkie, if my interpretation of the service contract gameplan offended you. Unfortunately I speak about things in a very honest fashion. You may indeed feel you are providing more of a service than just a marketing tool. But is it unfair to say that a service contract is a tool devised to generate both revenue and return business? Is it so naive as to assume that contractors find ways to recover the costs of the services they provide, when pricing the next job for that customer? Yes, we all wish to offer a positive and beneficial service to our customers, but ultimately that is driven by finding ways to generate revenue, and recover costs, yes? Am I not supposed to discuss these things in an objective manner, is it too critical of the electrical contractor, of which I am one? Perhaps I'm not supposed to openly discuss the things that are done behind the scenes that keep us feeding our families. Anyway, I didn't mean to insult anyone,and I apologize if I did. I'm just looking at what the service contract actually does for both parties involved. Perhaps I have just been exposed to too many contractors that I know that are adding that 15% discount right back into the price of the next job they do. Here, look at the following; And just consider this a little bit of comedy, a sort of 'make fun of ourselves' for a minute. No insult is intended. When I first learned about Service agreements, it was working for someone else, who interpreted them this way... "Our annual service agreements include: annual electrical safety analysis Look over the house for an hour, check the service, gfi's etc. make sure everything looks ok. Usually, we can find something that needs to be repaired, and that generates revenue, which more than makes up for the cost of the inspection. priority service We'll be the first one there to do the work and collect a check. Customer calls us before anyone else. Generates revenue. no holiday/overtime surcharges The actual time worked during holidays or late night for this individual is so rare, this is a negligable point, but sells them on the service agreement. Generates revenue, since we will be "their electrician". 15% discount on all repairs This is easily recovered by simply adding it back in to the price of future work. 24 hr service fee/ service fee doesn't go up after hours By having the service contract, we're guaranteed to get the work that might have otherwise gone to a competitor. This is a selling point that generates revenue. We provide all of this for $99 per year. We've guaranteed ourselves return business, AND got an extra $99. We do a comprehensive electrical inspection, See Item 1 complete with digital photographs, Which cost nothing, as compared to film development, and greatly impresses the customer. Generates future revenue. and generate a "to do" list This is the work you need to pay me to fix. generates revenue and also a "wish list" if the customers wants. Go ahead and think up some more work you would like to have me do. Generates revenue. ..They even bought a second one for their adjacent guest house. Heh heh. I even sold them TWO of them. So, in the wrong hands, you can see how many contractors actually use/abuse service contracts. I am not saying that's what you do. I'm just being realistic about some contractors. I use to work for one of them. Seriously Wilkie, sorry if I offended you. I just look at things from all angles, and often say things others might be afraid to. Gets me in trouble all the time. Cheers. |
| wilkie | Of course I am not offended. I believe you honestly speak your mind on this forum, and I respect that about you. I definately see your points. I can see where the agreement can be abused. I assure you that that is not our approach or philosophy about them. It seems you worked for an evil entity at some point in your career??? |
| MONOLITH | Yes, just before I went into business for myself, I worked for a 24 hour service company. As a matter of fact, they had just recently joined ESI as well. They suddenly came up with a bunch of forms and paperwork for us to hit the homeowner with, they started charging $250.00 an hour, they suddenly started doing little things to improve their image in the eyes of potential clients, etc. But they thought nothing of telling a homeowner they needed a service change, when they didn't really need one. They sold lots of interior panel changes, when a new breaker was all that was needed. I was once sent into an old woman's house who had an arcing breaker, and I changed out a 100 amp interior panel, surface mount in a basement, 12 romexs in the top, for $2400.00 dollars. It took me less than two hours. Let me say that again....$2400.00. Regardless of what we say here to each other, the cold stark reality is there is a ton of service companies out there that do not necessarily care about their customers, it's all about how much money can we make ASAP. And the very things we are asking each other about, like service agreements, are the very same tools they are using, in the manner I described in red above. Again, that's not to imply that this is the mentality of anyone here at this forum, but that's the type of manipulation of the customer, using service agreements, that I saw when I first learned of them. That's what I was reminded of when I first posted in this thread. My first exposure to service agreements was that it was a tool that EC's used to guarantee repeat customers, and extract more revenue from those same clients. In a strange bit of irony, it might seem like I'm stabbing my own self in the back, by criticising the very tool that could provide my family with revenue as well. It's just that there's a fine line between mutual benefit between EC and client, and manipulation for profit. To be the true, ethical, client minded contractors we say we want to be, we must strive for the former. But, with profit in mind, willpower can become an issue. Heck, I'm not even sure if I could always be completely honest, and not maximize my earning potential at the expense of the 'customer'. We did, afterall, go into business to put our own kids thru college, not theirs. I don't know, just thinking out loud at this point.  Thanks for letting me rant at your expense. Cheers. |
| MONOLITH | Hey Wilkie, I do want to say you did a good job with the service package. If I was a homeowner, I'd buy it myself. The digital pictures are a nice touch. I have no doubt that potential clients are impressed with your presentation. I'm probably going to start putting together something similar. Nice work, Thanks for sharing. |
| kiwisholland | Anyone willing to share the actual contents of what they do with their service agreements? I want to offer OTHER, more intensive maintenance tasks, but don't want to canabilize the service agreements. What are some tasks you offer with your standard agreements? http://www.koinstruments.com/cba-1000.asp |
| SR Scott | Its been a while since my original post regarding service agreements and have come to several conclusions after researching this. All MHO of course. Express Electric's is the one we're probably going to mostly mirror, Jamie's model is in my opinion a great one. The annual service agreement is an agreement, not a contract, it is therefore cancellable by either party at any time. I like that. Does the agreement encourage your clients to call you again in the future? ABSOLUTELY. As businessowners is that a desirable marketing tool? ABSOLUTELY! Dont know about the rest of you but I didn't inherit a pile of money before starting our business, would like to keep the business going with repeat customers if and when at all possible. So I like that. Twenty four service being provided, well, we kinda always have anyway, as long as people could track me down. There really haven't been that many true emergencies anyways, (would be much less if we didn't do smoke detectors). Now if a client is assured of 24 hours availability, would they like that? I think so. Will there be a ton of 24 hour calls? No. Will the customer feel better for choosing us? Some will. The truth of the matter is that we all try and do things to help establish in our customers minds that, yes, we are better than the next guy. We use better materials, or we're better trained, etc. How many people went into this business saying "you know, I think we can really do an average job out there serving our customers. Let's call ourselves "Pretty Good Electric". |