Author Info: Don Napier is a territory manager for JB Warranties. Connect with him on LinkedIn.
HVAC contractors: If you’re only relying on manufacturers’ limited parts warranties, you’re missing out on an incredible opportunity for your HVAC company. Extended warranty programs have several benefits that you may not be aware of.
Need some convincing? No problem. Here are five benefits of selling extended warranties for your company.
1. Improve Your Marketing ROI
The addition of a warranty program can significantly improve HVAC customer lifetime value and deliver an excellent return on investment for your service business marketing spend.
The cost to target and market to the right types of customers is often high. Once you have a new customer, you want to ensure that you’re the company they call. That single install visit or even a complimentary year of coverage may not continue to produce results with that customer in the following years.
When you supply a full 10-year warranty to your customers, you will be the one who customers call when they need maintenance or repairs. You’re locked-in with this household or commercial client – repeat customers. The lifetime value of your customers increases with extended warranties on that single installation.
However, customer lifetime value can stretch beyond that initial purchase and the 10-year warranty period. The average lifespan of a residential system is about 10–12 years across all brands. By adding 10-year extended warranties on all of your installs, you will likely get the call for the replacement system when the time comes. A 10-year warranty is an investment in the future of your business.
Your HVAC business has spent ten years servicing and maintaining the equipment and building a relationship with your customer. When the day comes that the system is condemned, due to economic or upgrade/efficiency factors, you will have already earned the replacement business based on your established relationship with your customer.
Additionally, the trust and brand loyalty you’ve established throughout the service you’ve provided can translate into word of mouth referrals — warm leads. Those warm leads mean lower customer acquisition costs when generating residential HVAC sales.
In the long run, selling an extended warranty to your HVAC customers can help you increase sales and improve your return on marketing investment.
2. Enhance Customer Satisfaction
During a sweltering summer or a brutal winter, one of the worst things that can happen is to have your air conditioning unit or heating system stop working. You’re not only uncomfortable, but you’re also going to have to come up with the money for repairs.
Unfortunately, these problems can occur, no matter how excellent the equipment or installation. When those problems arise, customers will be desperate to get HVAC service repairs. With families dealing with ever-tightening budgets, they can’t make financial decisions out of desperation that may put their family’s economic well-being at risk. An extended warranty helps limit that risk when it comes to heating and cooling equipment and labor costs.
An HVAC extended warranty offers customers peace of mind and protection through coverage of replacement parts and labor costs. Your customers will appreciate that you have their best interests in mind with the parts and labor warranties you offer.
There’s another perk for homeowners when they buy an extended warranty if they ever decide to sell their homes. For example, JB Warranties offers plans that transfer, free of charge, between homeowners. That’s an added perk a homeowner will appreciate when working every angle to pique buyers’ interests.
3. Boost Customer Retention
You have a lot of options when it comes to building customer loyalty and retention. However, one of the easiest ways to do it is to lock-in loyalty with an extended warranty. After all, an HVAC extended warranty that names you as the service provider guarantees that you will service the system if something fails.
Perhaps you’re concerned about “sticker shock” when it comes to selling extended warranties — you’re worried that one line item could sour the deal. How you position the program makes all the difference.
Don’t offer an extended warranty as an “after the fact” added cost, “Here’s your quote. And, by the way, you can also purchase an extended warranty.” Incorporate it into the initial quote. “Here’s your estimate, which includes a 10-year labor, parts, and compressor warranty that also covers the refrigerant.”
Do you notice the difference between those two approaches? The first scenario sounds like you are just looking for an additional transaction. The second scenario conveys your desire for a long-term relationship focused on customer service and peace of mind.
4. Reduce Company Liability
Do you offer a year (or more) of coverage on new installations? It can be tough to gauge how much this will cost a contractor in the long run. Time and again, contractors that have gone down this road end up with a lot of red ink at the end of the year due to unreimbursed warranty work, no charge courtesy visits, etc.
With an extended warranty program in place that reimburses you fairly for your return trips to correct mechanical failures, you can more accurately project your service liability and reduce that amount that comes back to bite you at the end of the year. Additionally, any type of “self-insured” warranty or coverage can be a drag on your company’s bottom line to creditors or a potential buyer further down the line.
When you have an unknown base of coverage out there who can call on you at any time, it’s difficult to gauge what that may do to your profits. A warranty program that is appropriately funded and backed by an underwriter turns that liability into an asset. That same customer base that could have taken away profits now becomes a long-term source of referrals, maintenance, and positive business growth!
5. Generate Additional Revenue
How does generating additional revenue without having to add inventory or headcount sound? Pretty good, right? Well, as you may have guessed, that’s what the right extended warranty program can offer your business.
With the initial sale, you can increase your profits with the markup on an extended warranty. Post-sale, that extended warranty guarantees you as the service provider for the customer’s equipment.
To maximize results, you should spend time training your people on how to sell extended warranty programs. If your team doesn’t get it when it comes to all of the benefits, they won’t accurately and confidently explain the extended service warranty to your customers.
Ready to Benefit from an Extended Warranties Program?
As a business owner, you spend a lot of time working to manage and grow your HVAC business. Wouldn’t it be nice to have a secret weapon in your business plan that:
- Improves your marketing ROI?
- Enhances customer satisfaction?
- Boosts customer retention?
- Reduces company liability?
- Generates additional revenue?
Drop by the JB Warranties website to learn more about the best extended warranty program HVAC industry. While you’re there, register for your Premium Protection Dealer Account today.