How to Sell Service Agreements and Make Money

if I were to take your service agreement

program and fix it what would that do to

you do you ever feel like your service

agreement program it's like having gum

on your shoe but there's just something

wrong with it just something dragging

about it

and if I were to fix it I wonder if you

could think of two or three key points

that would make it better for example to

have a service agreement program we all

know you have to run those maintenance

calls tune-up calls are those service

agreement visits right but I'm going to

show you that that's not necessarily the

worst problem let me show you something

you know our industry says that your

company is only worth the amount of

service agreements the amount of

customers you have under contract is

that true I don't really think so with

service agreements we're trying to buy

something aren't we loyalty loyalty is a

good thing but I want to talk about the

five hidden costs that are hidden out

into open in your service agreement

programs let's talk about number one the

number one cost not necessarily an order

is simply an incentive right you give an

incentive to your service technician

right or perhaps a dis of dispatcher but

somebody gets paid money to actually

present and sign people up just sell the

service agreement all right well then

here's another cost secondly number two

is the discount okay so we have a

discount program anywhere from 10

percent to possibly 20 percent Wow

I mean you think about it the typical

service company in the United States has

a net profit of two percent to seven

percent and we're willing to take

fifteen percent off the top well you say

that's only for our service agreement

programs and we build the money in

really is that a great idea tomorrow I'm

going to talk about wholesale versus

retail and how the big retailers

actually make money with their customers

and are we doing it are we doing it the

way they should or can we fix repair

replace or you can have a better way to

do service agreements okay either way

that's a huge that's a huge amount and

you're giving that money back aren't you

all right and by the way at the end of

the year do you have an extra ten ten to

twenty percent on top of the custom

that are non service agreement customers

I mean really there's your balance line

show oh my gosh look how much profit we

have over here or is it like gum on the

shoe something about it's just not quite

right so so what's another what's

another cost okay of running a service

agreement program well let's see it

might be a free or reduced service

dispatch fee okay so you got a service

and dispatch fee and you're just giving

it away

now a typical service of dispatch for

you Danvers from $49 to 129 dollars

that's a large amount of money that you

put on top of it as a matter of fact in

the in the late 80s Early 90s etc etc

mid 90s a lot of us moved to flat rate

pricing and we thought flat rate pricing

was making us a lot of money

well you want to know the truth of what

really made you money in flat rate

most of us added a service and dispatch

fee the moment we went to a flat rate

pricing system I added $49 that's $50

$49 right on top of my service call

right on top of it back in 1995 do you

think that made a difference and now

some people are telling you you could

just give that away don't kid yourself

that is a huge and enormous cost all


what's another cost priority service

priority service you say that's that's

not a cost oh yes it is

I'm not saying it's not a good thing to

give to your members I'm saying it's a

huge cost because do you advertise in

neighborhoods that you want to do

business maybe with AB ad campaigns

marketing campaigns maybe radio TV but

what about billboards yard signs things

like that on door hangers in

neighborhoods that you want their

business and then on the day they call

the phone rings they actually call this

is your only chance to get them probably

for all the money that you spent but

you're too busy because you're out doing

priority service and even some

guaranteed same-day service for your


agreement customers that's a huge cost

and you have to track it you have to

account it for it but I'll show you how

to get the big fish and still take care

of your current obligations because I

believe in honesty and integrity but I'm

going to show you a better way okay and

by the way Thursday at 3 o'clock I want

you to attend my webinar click on that

register button because I'm going to

show you a better way now there is

another cost and this is the one that

probably is hidden because we don't

think about it and this is an enormous

cost and that is time how much time do

you allow your service technician to

offer sales sign up customers on your

service agreement club member

maintenance program how much time I've

heard anywhere from five minutes to

eternity eternity being as long as it

takes how much value are we putting on

these service agreement programs and

what are we getting back for that value

you now you wonder why oh it's just like

gum on the shoe just something about my

service agreement program that just

doesn't seem right sometimes it seems

like more trouble than it's worth

hey I talked to customers I talked to

hundreds and hundreds of people just

like you and I hear that over and over

and over so what's the problem the cost

of the incentives on top of the discount

on top of the the dispatch fee this

reducer giving away on top of the cost

of priority service on top of the

enormous amount of talented skilled

labor that is lying dormant while this

guy is trying to to discuss maintenance

programs with a customer these costs are

accumulative they all add up or better

yet they all add down now I want you to

attend my webinar because I'm sure you

there's something that we can do about

this tomorrow I'm going to do a video

and show you the difference between

wholesale and retail what do you do and

what are the big retailers do what are

the Giants do how do they exchange this

enormous downside in cost for a huge

value we'll talk about that tomorrow

don't forget to register for the webinar

and hey I'm Rodney cope from the new

flat rate and I'll talk to you again