Profitability was the top concern for 26.7 percent of those surveyed, and it should be. Industry studies show that the net profit of contractors of all sizes is between 2 percent and 3 percent. This is a ridiculously low number for those of us in a risky contracting business. While the survey clearly showed the concerns of the contractors, I would like to go one step further and offer one simple idea, which I believe will reduce the major concerns of over 60 percent of contractors out there.
What is the one thing you can do to reduce or eliminate the major concerns expressed by contractors? Sell maintenance agreements! How will selling maintenance agreements reduce your concerns? When you sell maintenance agreements the customer becomes your customer.
When the customer is your customer, the problems of competition (No. 3 on the survey) and price cutting (No. 6 on the survey) are significantly reduced or eliminated. If you have been doing a good job of providing routine maintenance for a customer, when that customer has a problem or a failure, you're the one they are going to call.
Do you believe you will have the same problem with competition and price cutting if your lead comes from a maintenance agreement customer as from a Yellow Pages ad? Of course not. You will have less competition, less price cutting, and you will be more profitable. Those were the three greatest concerns of 35.8 percent of those surveyed. Maintenance agreements also reduce the effects of the economy (No. 4 on the survey). When you have customers set up on a regular routine maintenance program, it is less likely for that program to be affected by the economy.
What about worker shortage and training (which placed third and tenth on the survey, respectively)? If you check with the successful and profitable contractors in your area, I believe you will find that they have a maintenance agreement program, and they have no problem keeping qualified workers. With a maintenance agreement program, contractors are able to keep their people employed during the traditionally slow months, which make for happier workers.
There You Have It
There, with one idea - selling maintenance agreements - we have addressed the greatest concerns of nearly 64 percent of those of you who replied to the survey.Here's how to do it. Have your service technicians offer a maintenance agreement on every service call they make. Offer the service technician a perk for every one they sell and remind them that by selling the company's maintenance agreement to the customer, they are providing for their own job security. (If you would like a copy of our maintenance agreement program, just e-mail me at the address below). Make the same offer to your office personnel who take service calls. You will be amazed at the success you will have.
Now, before several of you write me about the greatest concerns of the other 36 percent of the contractors surveyed, let me address those. I won't argue that insurance, marketing, government, the 13 SEER standard, and the change to R-410A are not concerns. However, I feel that things like the insurance industry and the government and its regulations are difficult if not impossible for us as contractors to change. So I recommended exerting our efforts on the things we can change.
By selling maintenance agreements you will be addressing the greatest concerns of 64 percent of contractors surveyed and be putting your efforts where you can accomplish results.
Guest columnist Butch Welsch operates Welsch Heating & Cooling in St. Louis. He can be reached by e-mail at Welsch1@primary.net.
Publication date: 08/15/2005