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Service agreements are the foundation of your company’s value — so make sure you maximize them

Nov. 17, 2021

Maintenance agreements are one of the most critical sources of revenue and value for commercial mechanical and plumbing service providers. Some experts say maintenance contracts are the lifeblood of a service contractor.

They also traditionally require a lot of time and patience to manage — and for most contractors these days, both of those are in short supply. 

With service contracts, you can establish a new and predictable revenue stream, create opportunities for pull-through work and increase the efficiency of procurement and inventory. Additionally, the customer base you build adds long-term value to your business (and can be the foundation of a successful exit strategy).  

Unfortunately, too many contractors fail to invest in building and maintaining their service contract base. Some continue to manage their contract base manually or with outdated office technology, or they partially implement a software solution that doesn’t adequately address existing inefficiencies and may actually create new ones. 

Without the right planning, strategy and goal-setting, you could end up in one of these frustrating and unprofitable situations:  

  • You avoid the headaches of maintenance management, and instead focus too much on installation, emergency repair and seasonality. 
  • You dump extra time and energy into the administrative tasks that keep a maintenance program running — record-keeping, data entry, manual scheduling, billing and other routine office work.

You’re either leaving money on the table or watching it drip away, unbilled hour by unbilled hour. Either way, inefficiency prevents you from achieving your goals and could even threaten the long-term financial stability of your company. 

Service and success

Service agreements are critical to success. With them, you can build a reliably profitable, well-staffed business that runs like a clock (and is attractive to potential buyers). Without them, it’s hard to ever establish the steady income stream needed for year to year stability. 

Pull-through work — additional work generated as a result of maintenance inspections — can mean $1-$3 in additional revenue for each maintenance agreement dollar. Combined with higher profit margins, those additional dollars can mean more money, achieved more efficiently. 

Not only do maintenance programs provide a built-in defense against seasonality, they’re resistant to shifting economic conditions. In a slow economy, customers may prefer to invest in maintaining existing equipment in order to defer large capital expenditures. 

Kickstart your maintenance agreements

To provide an immediate boost to your service program, start with the customers you already have. Leverage the established trust of those relationships to build an initial base. Data that’s already in your system, particularly equipment records, can be applied to streamline the set up. 

Spend time creating the right plan for your company and market. Factors to consider include the length of the contract, pricing, and renewal options. Exclusive deals and opportunities for members, like discounts or a referral program, can entice potential customers. The most important thing to remember is that you need an agreement that is profitable for you and attractive to customers. 

Prioritize contracts with new customers. Include service agreement information in your marketing plan. Make sure your techs and sales teams understand the importance of building a maintenance agreement base. Provide them with in-depth training and incentives for contract sales. 

It’s especially important to give techs the tools to effectively sell maintenance agreements. In addition to the confidence that comes from training, that means marketing resources to share with customers; easily accessible equipment and customer information, so they can recognize the right situation to make the offer; training material to help them answer any questions; convenient, transparent pricing; and a simple, easy to navigate onboarding process that streamlines the transaction for techs and customers. 

The right system, like BuildOps maintenance tasking, sets you up to tackle any job on the books with a range of features and functionality, including: 

  • Preloaded workflows
  • Automated custom pricing
  • Lightning-speed scheduling
  • Profitability metrics by customer, technician and job 

Request a demo to find out more about how BuildOps can help you level up your maintenance contract program. 

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