The following post was first published on the ZenHVAC blog. It is republished here with permission.

Let’s get something straight: Fires suck at scheduling. Where am I going with this? Read on.

Depending on who you talk to, full maintenance contracts are either the best thing to come along since sliced bread, or a sure-fire way to financial ruin. How can one person’s secret to success be another person’s road to ruin?

To understand the huge difference in opinion, you first need to look at what a “full maintenance” contract is.

What’s in a Full Maintenance Contract?

A full maintenance contract is basically an insurance policy that covers the parts and labor required to keep a customer’s HVAC equipment in good working order; pretty straight forward, right?

The prospect of footing the bill for all the material and labor to maintain and repair a customer’s equipment can be a pretty scary proposition, and for good reason. Handle it wrong and you’re financially hosed for the term of the contract. So why do so many service companies swear by them? Because if you do it right, it’s beneficial to both you and the equipment owner.

Giving the equipment owner the ability to budget the costs associated with the upkeep of their HVAC equipment gives them piece of mind. For the homeowner or light commercial building owner this means being able budget what would normally be an unknown. For a manufacturing facility it means not only being able to budget the cost, but also reduced production down-time.

Good for the Company, Too

But how does it benefit the service company? Simple: it reduces or eliminates unexpected service calls and gives you a known source of income. Some of you are probably thinking, “So what? I make money on service calls.” My answer to that is: really?

The average efficiency of a service technician is less than 50 percent. Shocked? If you really know your business you’re not. How can a technician’s efficiency be that low? Let’s take a look:

When equipment breaks down, it normally happens during a temperature extreme. The problem with that it’s not just a trickle of one or two service calls that comes in; it’s a flood.

The technicians handle this flood by running from job to job like firemen, putting out the proverbial fires as quickly as they can. What do you think the call-back rate is for a technician working that way?

If the increased call-back rate caused by running your techs ragged isn’t bad enough, your dispatching efficiency goes down the tubes also. Running your techs like firefighters means the fires will determine your scheduling. And guess what? Fires suck at scheduling.

Letting the fires determine where your techs go means increased odometer millage, increased fuel consumption, and increased wear and tear on the trucks. And just to add insult to injury, the increased windshield time means a decrease in the amount of calls handled.

Where Do Contracts Fit In?

How does a full maintenance contract change any of this? It doesn’t, at least not if you handle the accounts like a firefighter.

But, when implemented properly, a full maintenance contract will free up your service group to take on more customers without increasing the number of technicians and without running them ragged.

One word of warning: Do not run out and start converting customers into full maintenance customers before you know how to do it correctly. There are many consulting companies that can get you started on the right track. Of course, if you like running your business like a fire department you always have the option of painting your trucks red and putting flashing lights on top … and that can be pretty cool … if you’re into that sort of thing.

More: Five Easy Tips to Get Service Techs Selling.

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ABOUT Ian Stewart

Avatar photoIan is a veteran journalist who has covered sports for various news outlets. Previously, he was managing editor for an electronic-book publishing company and a public relations writer.