The Benefits Of Selling A Service Agreement.

January 31st, 2016

Service Price | Customer Service | Flat Rate Price Book

Are you selling a service agreement?

A tech goes to a house for a service call. He shows the customer a higher price out of 2 different pricing options. By adding up both the value rate and standard rate pricing, if the customer purchases the service agreement, they will not only get the lower “value rate”, but everything that comes with purchasing the service agreement, which could be anywhere from $99 to $300. There could even be different levels of service contracts, low end, mid-range, high end. Selling a service agreement can be a once a year contract or a lifetime contract (more money for the lifetime contract). Extended warranties could be based on cost of product sold e.g., $100 faucet = $25 extended warranty, $200 faucet = $50.

Benefits to using the service agreement and extended warranties

Assures uninterrupted business operations

During low work seasons, you can send your employees to offer maintenance services and checkups to customers who have bought service agreements and extended warranties. This means that your company’s operations will run smoothly and uninterrupted.

Ensure greater cash flow

Remember that service agreements are prepayments made by the customer. This means greater cash flow is guaranteed as customers who have bought the service agreements will make payments at the beginning of their service agreement year.

Customer loyalty

Extended warranties and service agreements will contribute to customer satisfaction. Your employees will always meet with a customer for regular checkup and maintenance services. This will strengthen customer relations which will translate to loyal customers. Service agreements mean that the relationship is ongoing, and hence they will always look for services from your company rather than your competitors. With the mention of “Life Time Service Agreement” implies….a life long relationship with the customer.

Discourages idle employees

A service agreement will entail regular maintenance services for the customer. To make use of the idle employees, you can send them to perform those duties during slow work days.

Better competitive advantage

If your competitors are offering extended warranties and service agreements, then more customers will prefer your company. You will have the advantage over your competitors due to the value-added services you provide your customers through the purchase of service agreements and extended warranties.

Retain of employees

During slack times, or slow days, your employees will be performing their maintenance services to those customers who have bought service agreements. This means that your employees will be busy all through, and hence they won’t have time to look for work elsewhere.

Increase in company value

A company with many service agreements and extended warranties to their customers has greater revenue than those without. This means a guaranteed sale as customers will be loyal building a  close relationship.


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