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What it takes to sell service contracts and warranties:
• A plan
• Enthusiasm
• Belief in the product
• Attitude
• Skills
• “Ready” response to objections
• The guts to ask for the order
• Practice, practice, practice

In a down economy with new housing starts significantly reduced, many in the HVAC industry are experiencing a slowdown in business. “One way contractors can make it through downturns like this is by having lots of service agreements,” said Ed Gancarz, principal of the SHA+RP (Successful Heating Air Conditioning and Refrigeration Professionals) Institute.

How do service agreements help? “When new construction takes a downturn as severely as it has, you still have plenty of work to do when you have service agreements,” Gancarz said. Service contracts can run between $200 to $400 each, helping cash flow, and they remove some of the seasonality of the HVAC
industry.

“In slow times, the question becomes what the heck can I do to both make money and keep my technicians busy?” Gancarz said. Some businesses end up laying techs off. “You don’t build loyalty from your techs that way and you don’t make money that way, either.”

There’s another big advantage to service agreements: they build customer loyalty. Contractors are in homes on a regular basis, forming relationships with homeowners as they perform regular heating and air conditioning maintenance. In the meantime, if something breaks, the customer is likely to call that
contractor they know. “They’re not going to take a name out of the yellow pages,” Gancarz said. “You get their repair work.”

Even in a down economy, service contracts are still growing six percent annually. “Service contracts are a $10 billion industry,” Gancarz said. “Of course, not all of that is HVAC, but the point is, do people buy service contracts and extended warranties? You bet they do.”

In the threat of a recession, consumers may be more likely to purchase a service agreement or even extended parts and labor warranties, because they know they might not be able to afford a new unit if their old one breaks. “They want to keep the old unit running,” he said. Customers can budget for extended warranties, protecting themselves from surprise HVAC repairs that can typically cost anywhere from $80 to $2500. And service agreements ensure that their old unit remains in tip-top shape.

Selling service contracts to customers is sometimes just a matter of offering them. Studies show that half of contractors and technicians aren’t even asking customers if they want them. “While technicians are in
customers homes, make sure they’re offering service contracts,” Gancarz said.

Although it might be too late to have service contracts in place for this down economy, it’s never too late to start preparing for the next business slowdown. Build customer loyalty, help cash flow and keep your
technicians busy by adding service contracts to your daily to-do list.

Edward Gancarz is the principal of the SHA+RP Institute. Its services include small business consulting and training, individual and group coaching, organization development, call center management and marketing and selling support. If you would like business training conducted at your Totaline store, contact your parts store manager or the SHA+RP Institute.

Phone: (315) 263-1234
E-mail: egancarz@twcny.rr.com

Download April 2008 Newsletter PDF >