How to add 25% to your turnover with Service Contracts | ft. Michael Israel | Ep.388

Discover how service contracts can be a game-changer in boosting your business turnover by 25%! In this insightful episode, we delve into the world of service contracts and uncover strategies to leverage them for substantial business growth. We'll explore the nuts and bolts of effective service agreement implementation, sharing tips and tricks that have proven to yield significant turnover increases for contractors and field service businesses alike. Tune in to learn how to harness the power of service contracts for your business and witness a remarkable 25% growth in your turnover. Join us in this journey to financial success with service contracts!

Watch the video version of this podcast at https://youtu.be/VaN491bAtHw

Discussion Points:

02:35 Who is Michael Israel?
04:57 Extended service agreements increase overall costs.
07:10 Benefits of HVAC contracts for homeowners: peace of mind, guaranteed inspections, efficiency.
11:02 Advantages of scheduled maintenance prevent breakdowns.
14:32 Consistent revenue stream through planned service agreements.
18:29 Peace of mind when someone inspects problems.
20:22 Advantages of showcasing expertise in electrical space.
24:40 Flexible maintenance contracts cover different parts, hours.
28:14 Protection, discounts, inspections ensure reliable performance.
32:26 Service contracts generate steady revenue and prevent breakdowns.
34:08 Seeking feedback on implementing service and maintenance agreements.

Resources:

• Visit Zuper.co at https://www.zuper.co/
• Get in touch with at michael@zuper.co
• Read our blog on this podcast here: https://www.thesiteshed.com/service-contracts-trade-strategy-michael-israel/

Have a conversation with us! Go to tradie.wiki/pod and book a call.

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Connect with me on LinkedIn. For more podcast episodes, you can also visit our website.

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Transcript

Michael Israel [00:00:00]:

If you do need something, let's say you need your coil replaced or a fan replaced in the HVAC in the air conditioning unit, then typically you also get some kind of a discount for the parts and maybe even for the labor because you have signed up for a service agreement.

Matt Jones [00:00:32]:

Michael, welcome to The Site Shed Podcast.

Michael Israel [00:00:35]:

Well, thank you very much, Matt. It's, it's my pleasure to be here. I appreciate it.

Matt Jones [00:00:39]:

Where are you doing us today from?

Michael Israel [00:00:42]:

I am speaking to you from Albuquerque, New Mexico.

Matt Jones [00:00:45]:

Wow. I think you're the 1st New Mexican repel on the show.

Michael Israel [00:00:51]:

But let me ask you, have you had any old Mexicans on then?

Matt Jones [00:00:55]:

No. Yeah. Well, that's it. No. No. I haven't actually. There you go. You're the 1st Mexican, period.

Michael Israel [00:01:00]:

Well, I'm I'm an old New Mexican. How's that?

Matt Jones [00:01:02]:

Old New Mexican. Okay. Cool. Awesome. Well, thanks for joining us today. We're here to talk about, Flexible service contracts.

Michael Israel [00:01:11]:

Sure.

Matt Jones [00:01:11]:

This has been a topic that I've been wanting to explore for a long time. We have dabbled with it, In the past, to a degree, you know, service agreements and things like that, but I think there's so much opportunity out there for, trade businesses and contractors and all that kind of stuff to really leverage their database and client list better, you know, using these service service contracts. Sure. Especially the ones that have that just ongoing repeat aspect to it, you know, like plumbers that do block drains and lawn care that do, you know, gardeners that do lawn care and just all that kind of thing. Like, there's so much opportunity there.

Michael Israel [00:01:50]:

Oh, for sure. Yeah.

Matt Jones [00:01:51]:

So I'm super keen to dive into this and get a get a feel on your expertise from this world because it's, I think a lot of a lot of There's there's this I mean, we're we're we're a marketing agency, so there's a lot of, like, people that come to us, and they kinda have a bit of a churn and burn mentality. Like, it's we need we need new leads. We're more like, yeah. Yeah. You do need new leads, but you've also you don't want that to come at the cost of neglecting your current customers, you know?

Michael Israel [00:02:15]:

Exactly.

Matt Jones [00:02:15]:

So, yeah, Yeah. I'm super keen to dive into this. So before we do jump in, can you give us a bit of a rundown as to, who you are and what you do, where you're from? Wanna know where you're from now.

Michael Israel [00:02:25]:

Sure. Sure. Well, as I mentioned, I live in, Albuquerque, New Mexico. I actually just moved here about a year ago from Las Vegas, Nevada where I was there for about 15 years.

Matt Jones [00:02:34]:

Oh, wow.

Michael Israel [00:02:35]:

But, yeah, I've I've been in the service business, the field service business for literally my entire working career. I started working for IBM, when I was 19 years old going to school, and I started as a night dispatcher for dispatching technicians and also a parts room clerk at the same time. So Mhmm. I've been in field service in one fashion or another for over 50 years. I spent about 20 years actually as, in field service operations where I actually manage teams of, service technicians, parts rooms, dispatch centers, technical support centers, etcetera. And then for the last 30 plus years, I've actually worked for the most part in software that is dedicated to managing field service operations. And in the interim, I've also been an analyst, a field service analyst, just couple of the, significant analyst firms. Yeah.

Michael Israel [00:03:23]:

Right. So I know the business of service and field service actually pretty well.

Matt Jones [00:03:27]:

Sure. Yeah. And do you have sort of similar experience to me in a sense of, People aren't really businesses aren't really capitalizing on their the reengagement aspect to what they're doing with their in with their business. Are they kind of Too heavily dependent at the cost of their existing customers on new fleets?

Michael Israel [00:03:47]:

Yeah. I I think that's true to some extent. I think it's especially true on the on the

Matt Jones [00:03:51]:

Reactive stuff.

Michael Israel [00:03:52]:

End of the market that we're tell talking about primarily, you know, the trades, the the workmen, the plumbers, the HVAC technicians, etcetera, etcetera. It's not uncommon at all in in, the enterprise businesses, for example, in high-tech businesses. It's very, very prevalent in high-tech businesses, especially to have, service contracts be really commonplace. Sure. And to actually have a Salesforce in place that does nothing but sell service contracts.

Matt Jones [00:04:23]:

But is that kind of is that kind of the SaaS model?

Michael Israel [00:04:26]:

No. It's been that way even before SAS. Yeah. So, I mean, it's probably expanded somewhat with SAS just because SAS Software lends itself to those kinds of capabilities a little bit better, but, I mean, I I was in field service long before SAS came along and, field service selling field service for field service technician operations was always a really high priority in some of the higher tech industries. Trees. Mhmm. And there's a reason for that. I mean, it's profitable.

Michael Israel [00:04:57]:

So if you think about even even in the trades business or in the, Let's say the the, retail business, the homeowner retail business. If you go into a store and you buy a television or you buy a refrigerator, or whatever you buy for your house, a new water heater, whatever. Almost inevitably, what is the first thing that they ask you when you go to pay for They ask you, do you want an extended service agreement? Right. Right? And the reason they do that is because they know Historically, that if you buy a service agreement, odds are that the money that you pay for that agreement, either you pay for it in advance or over time or whatever. But the money that you pay for that service agreement will be much more, sometimes much more, than the cost of delivering service under that agreement.

Matt Jones [00:05:51]:

Right.

Michael Israel [00:05:52]:

So it's a it's a very profitable enterprise for organizations. And, personally, I'd love to see, the trades, the the kinds of businesses that we're talking about here, adopt the practice of selling service contracts aggressively. I'd I'd love to see them do do that more often. It'd be good for their business.

Matt Jones [00:06:14]:

Yeah. I think Yeah. And so let's let's jump into how that might look for, you know, and maybe we can pick a vertical and just structure that. Maybe the, You know, like, we have a lot of clients to do, you know, solar, electrical installations, and, those kind of things do have, like, aspect and element To them, then why you know, obviously, the initial installation, but then the may the maintenance fee upkeep, the monitoring of the system to make sure that it's running optimally and that the Our customers using it to its advantage. And, you know, I think that would be, you know, an interesting thing to, off angle to attack on how that might look from a service, agreement perspective.

Michael Israel [00:06:52]:

Yeah. Sure. We can talk about solar if you want. We can talk about I'm a little bit more point with HVAC as an example. If you wanna talk But heating, ventilating, and air conditioning, it's it's a good example. And and and, h the HVAC industry is, I think, much more prone to selling service contracts than perhaps other industries.

Matt Jones [00:07:10]:

Sure.

Michael Israel [00:07:10]:

And, I mean, if you're if anyone is a homeowner and they have air conditioning, heating units in their home or, in their condominium or wherever it is that they live. Probably many, many people have Contracts with a single HVAC provider that that stipulates that Someone, a technician, will come to your home probably at least twice a year to inspect the HVAC the air conditioning system to make sure that it's operating correctly. And, so they do that in the spring, obviously, before summer gets here. And in the winter and in the fall, they'll come and inspect your heating system make sure that the heating system is operating correctly. And so and and there's a couple of advantages to that for the consumer. One is that they have a guaranteed pretty much a guaranteed date that somebody is gonna come by and look at their system and make sure that it's operating correctly and hopefully efficiently for the upcoming cooling or heating season. And, so that gives the consumers a bit of a peace of mind. Right now, of course, they're paying for that service, But it's part of the agreement, the service agreement that they signed with the company.

Michael Israel [00:08:24]:

The other thing that typically goes along with that is that if you do need something, let's say you need your coil replaced or a fan replaced in the HVAC in the air conditioning unit. Then typically, you also get some kind of a discount for the parts and maybe even for the labor because you have signed up for a service agreement. Whereas if you did not have the service agreement I'm just gonna pick some example numbers. Maybe the rate, if you don't have a service agreement is $150 an hour, for a technician to come out. And there's a minimum charge of, say, 1 hour, so you're gonna pay $150. If you have the service agreement, the technician is gonna come out anyway for a scheduled visit. And that $150 an hour is probably waived because you've paid for this that in the service agreement, in many many instances. And if some parts are needed, then you're gonna get a a discount on the parts that are needed as well as as a part of that service agreement.

Michael Israel [00:09:19]:

So you may pay a flat fee for that maybe twice a year. Maybe you pay once a year for the service agreement, but you have that peace of mind that you're going to have a steady service at a scheduled date. And if there's any material extra material needed, you're gonna get somewhat of a discount on that material. So that's a typical, service agreement in in the HVAC industry. And there certainly may be variations, of course, but, that's the baseline typically for a service agreement in HVAC. Yeah.

Matt Jones [00:09:47]:

We have quite a lot of, clients that are in the h HVAC space, Predominantly over here in more cooling than heating. Yeah. So a lot of air conditioning. And and this is it's it's It's a conversation that constantly comes up because, of course, like you mentioned before, summer comes around, everyone with air conditioner calls the air con the the, you know, Their air conditioner provider or Google's little whatever, and they won't get their air conditioning service because it's not working the way it should be or whatever. But, of course, all the air conditioning Providers at a point in time are not interested in servicing. All they wanna do is install because that's where they make Yeah. Sure.

Michael Israel [00:10:24]:

Sure. Of course.

Matt Jones [00:10:25]:

Yeah. That money is and so very I mean, some of them have a good process around this and some of Don't like, having that having that cadence built into their annual calendar where at a certain point in time, which They decide not so much the cut the client. Of course, you've gotta work in with them, but if you leave it to the point where it's like, my air conditioner's broken, come fix it, The chances are it's at that point, they're too busy to do it. So I think having, like, this scheduled program in place where they can actually structure it according to, You know, for here, for example, like, in the winter, it makes sense to service your air conditioners because they'll be ready for summer, not do it when they break.

Michael Israel [00:11:02]:

Yep. Exactly. Well and and and there's a number of advantages. 1, you just mentioned when they break. If you have routine regularly scheduled sir service, excuse me That shouldn't break. Then More many, many times, that's gonna preempt any breakage because the technician that's on-site that is doing the inspection of the equipment, If there is something wrong or if there's something that is imminently going to go wrong and it's it's apparent, then that can be that can be prohibited because the Repair can be affected right then, when the technician is on-site or maybe the next day if they had to order a part. But, you know, instead of The thing breaking down 6 months from now or 3 months from now, and all of a sudden you've got a emergency call out in the middle of the night, and you don't know you don't have a technician available because you Know that there was gonna be an emergency call out in the middle of the night. So there's some real advantages to having the scheduled maintenance, of course.

Matt Jones [00:11:53]:

I I think a lot of the

Michael Israel [00:11:55]:

Sorry. Go ahead, please.

Matt Jones [00:11:56]:

I was just gonna say a lot of the actual, the the like, the manufacturers, they have They have, like, like, a like period where you have to you have to service them to maintain the the warranty.

Michael Israel [00:12:09]:

Yeah. That would make some sense. Absolutely. Right. And companies certainly wanna take advantage of the warranty for as long as they can, the distributors and dealers and and repair people. They don't wanna be paying for that out of their pocket if they can get some reimbursement for the warranty. I agree with you. Correct.

Michael Israel [00:12:23]:

Wholeheartedly.

Matt Jones [00:12:24]:

And I think sometimes you don't Surely know that. Like, they might go get a must new Mitsubishi air conditioning unit installed in their home and not understand that they have to get it serviced much like your car in order to, you know, maintain the warranty of it.

Michael Israel [00:12:36]:

Yeah. Well, I mentioned earlier that some companies, especially the larger companies and the more complex equipment, for example, They have people that do nothing but sell maintenance agreements

Matt Jones [00:12:47]:

Yeah.

Michael Israel [00:12:47]:

Because it's such a huge revenue source. So, from a from a the service provider standpoint, the servicing company standpoint, I think there's a number of advantages to service contracts. We already talked about 1 and that a very important one. It's profitable. It's a profitable service overall. Certainly, there are circumstances where You may sell a maintenance agreement for, I don't know, let's just pick a number, $250 for a year. And certainly there are times when the cost of servicing that equipment would exceed the $250. But by and large, for the most part, statistics and studies have shown that When you sell a maintenance agreement, more often than not, your cost of servicing that equipment under the agreement is going to be less, sometimes significantly less than the revenue that you've generated.

Michael Israel [00:13:38]:

That's why it's a profitable business overall. But there's a number of other advantages for the service provider who is selling the service agreement as well. One is We talked a little bit about scheduled maintenance. You know, you're gonna have a an HVAC technician come out twice a year at least. So you know what your schedule has to be at those peak periods. So you can plan accordingly for those schedules, staff wise and perhaps parts wise. So you can plan in advance and instead of being caught off guard and all of a sudden having a bunch of repairs because something broken, you don't have enough technicians or enough parts to cover the repairs. So it it allows you to plan in advance, which is very, very important, of course, to all businesses to be able to plan as much as they can in advance so that they avoid unnecessary overtime costs and shipping costs for emergency parts deliveries and things like that.

Michael Israel [00:14:32]:

So that's that's very important. It's also a consistent revenue stream. Now, you know, we've talked a few times already about revenue. But if you know that you have a 100 customers just to pick a number that are on contract and they're gonna pay every year at a certain time of year, that's That's revenue that you can plan on as opposed to just wondering when is my next install gonna come up or when is my next time and material A break fix service call kinda come up. Certainly, you're gonna have those as well, but the the planned maintenance is a is, provides you the ability to not only schedule things according to the plan, but also generate. You you know what revenue is coming in according to the scheduled plan as well. So that's really important, obviously, to all businesses is is being able to forecast your revenue accurately. I think 2, couple other Things that are really important is it if if you have a service agreement in place with a customer, you can not only count on that revenue every 6 months or every year, every quarter, however often the payment terms are.

Michael Israel [00:15:41]:

But you can also count on that customer probably If you if you deliver good service and the customer's happy with your service, the customer's gonna stay with you. They're they're not gonna go look for competitors, You know? And they're not gonna switch and churn to somebody else if they like what you're doing. If your price for the service agreement is reasonable, they'll stay with you. So you can plan on that customer and that associated revenue and the ability to schedule the technicians year after year after year. The other benefit that's hard to quantify, but we all know it's there, and that is a referral business. If your customers are happy with the service that you provide and they're happy with the service contract that they have with you and the price of the service contract for the service that they receive. They're gonna refer you to somebody. They're gonna refer your company to somebody else, and you're going to to get additional business as a result.

Michael Israel [00:16:37]:

I agree that's hard to measure. You can't say, well, I know I'm gonna get 20% more customers precisely. But what you do know is that you will get more customers. The only thing you don't know is how many. Right? So there's a lot of benefits not only for the user, the customer, but there's a lot of benefits for the business that's providing the maintenance agreement service as well.

Matt Jones [00:16:58]:

Well and I think, like, from from our point of view, You probably skipped over the biggest one, and that is and we have this a lot, especially if they're Electricians that can do a track or their like, into the direct back and solar or whatever it might be. There's the opportunity there On the, shade maintenance visit, look for other opportunity.

Michael Israel [00:17:25]:

Oh, for sure. So So I'm selling. Yeah.

Matt Jones [00:17:28]:

Yeah. We're selling, And, you know, and just, like, you know, looking and even some of our, you know, clients sort of okay with, you know, in the plumbing vertical. You know, they might go and do a pipe remodel to someone another 12 month, you know, regular the drain check, and then go out there and they go over there. They go through the, you know, 15 point plumbing checklist where they check the hot water heater, and they check all the other things as part of their process, and And they're just looking for opportunities.

Michael Israel [00:17:51]:

Yeah. No. I think that's a that's a very good point, and we kind of alluded to it. But I'm glad you brought it out specifically because If you are going out going out on a on a periodic scheduled basis, it's a perfect opportunity to, help the customer understand that, Gee, if you did this to your water heater, it might last longer. You know? So, yeah, it might cost you $50 to put in a new control of some kind. But if it extends the life of your water heater by 2 or 3 years, that's worth it. Right? So you're generating additional revenue. Pardon?

Matt Jones [00:18:24]:

Yeah. The the peace of mind for the sorry to interrupt you.

Michael Israel [00:18:27]:

That's quite alright. That's quite alright.

Matt Jones [00:18:29]:

The the peace of mind for the, the the homeowner at that point When they know they got somebody coming out who's gonna be looking for problems is is one more thing they've got at well, potentially a 1000 of things they have to they have to be concerned of, especially, You know, for the you know, if it's something as serious as like a block drain, you know, if you repair the section of pipe, chances are, you know, in 6 months' time, there's likely to be Some sort of route intrusion coming somewhere else in a different part of that service. So, you know, having the peace of mind knowing that somebody's gonna come out and actually check that before The charges in house again? You know, that's that's a quarter of a life.

Michael Israel [00:19:03]:

Yeah. No. I I completely agree. A service contract in many ways is an insurance policy. You know, you're taking out insurance that that something's not gonna go wrong. But if it does go wrong, Then you're guaranteed that you're gonna have the service people available to take care of it and take care of it at a, hopefully, a reasonable price for you and in a in a speedy fashion, especially if it's any kind of emergency. And that that's another thing that I've noticed, here where we live, and I think elsewhere where we've lived as well, is that If you have a service let's stick with the HVAC HVAC example. If you have a service agreement with an HVAC company and you have a problem with your air conditioning unit.

Michael Israel [00:19:43]:

Many of the service agreements that I'm familiar with will prioritize you because you have a service contract over other customers that do not have a service contract. So if all of a sudden your HVAC It breaks in July in Las Vegas, Nevada, where it's a 115 degrees, and you've got, you know, you've got 10 people that are have broken air conditioners, and they're all demanding service immediately. If you have a service agreement with that company, Most of the companies that I'm familiar with put the you, the customer, at the top of the list, right, versus those that do not have a service contract. So you get some You get some preferential treatment, which is good.

Matt Jones [00:20:22]:

But the other thing that we see really useful, especially for our clients that are in the electrical space at the moment, You know, there's so much evolution in that space right now in the space of everything from, you know, solar Technology through the home automation, through the, you know, anything in between, basically. And having that, that site visit booking where you can go in, you can it might be something as simple as updating the, you know, the software for The technology they're using or what. And a lot of this guy can do this stuff remotely as well, which is quite quite useful as part of the agreement. But just being on top of these things to make sure the system they have is running off play and and with the newest the best technology. You know? Like, that can have significant impact on even things like, You know, the the power bills. So, yeah, there's there's a lot of advantages in getting out there and, you know, showcasing the expertise and helping people use the thing the best they possibly can, which you couldn't really do unless you're getting back out there and But we don't.

Michael Israel [00:21:24]:

Yeah. No. I think you're raising an excellent point, actually, because if you don't have a service agreement, you're not gonna have somebody visiting you likely that can advise you on the newer technologies and the and the best the best practices, etcetera. If if nobody's coming to your house unless something breaks or to your business unless something breaks. Then you're losing the opportunity of learning new things that would be beneficial for you, the homeowner, or you, the business owner. So there there again, you know, it just comes back to the fact that having a service agreement Cannot only be profitable, it cannot only help, you know, be beneficial for the customer, but it can be beneficial for you, the business, because you're you're engendering customer loyalty like I talked about before. Customers are not likely to shop around if they're happy with what you're doing. And as I mentioned before, they're most likely gonna provide some referrals on occasion to their friends and family about your business.

Matt Jones [00:22:24]:

Mhmm. Let's shift gear a little bit and move sort of more into, like, the practical application of what a service agreement might actually look like from a Deployment technology sort of standpoint. Because I know a lot of a lot of our a lot of listeners and viewers out there, you know, will be very, comfortable with and actively using job management, field management, project management software for their Insert trade here. So how does the, the maintenance agreements integrate with what they're currently using to in the interest of simplicity.

Michael Israel [00:22:59]:

Yeah. No. I think that's a great great questions. The really robust, service management systems like you mentioned. And I work for a company that provides a service management system as I think you know, I work for a company called Zuper, and I've worked for field service software companies my whole entire life. So, most of the service management, what we call field service management systems, incorporate some kind of, service contract functionality in their software already. All of them that I'm aware of Keep track of the warranty information about when when did a product go under warranty, when does the warranty expire. The better ones will also keep track of with the manufacturer's warranty.

Michael Israel [00:23:41]:

So if you're a dealer of an HVAC system, you may install the system at a customer and and provide the warranty for 5 years. But perhaps the manufacturer has a warranty of 10 years. So, you can go back against the manufacturer and reclaim some some costs as well as a as a dealer. But as I said, most, if not all, of the the Robust service management systems that I'm aware of have the ability to define service contract, maintenance contract terms right within the software itself, including defining what is covered. So we're talking about flexible maintenance service contracts here. So I don't know if this ever happens, but I'll give you a hypothetical example. Let's say, again, I'm an HVAC company, and I'm going to sell a maintenance agreement for my air conditioning unit that's, you know, right outside my house. But for some reason, I want to exclude the coil.

Michael Israel [00:24:40]:

Don't know why, but let's say I want to exclude the coil. So I could I could create a maintenance agreement that covers all the other parts of the air conditioner, but not the coil itself. And if I wanted to have the coil covered, I could, but maybe there's an extra price to have the coil covered. So You can define in in flexible maintenance contract capabilities that are inherent in many field service software solutions. You can define different terms, different things that this the maintenance agreement covers and and and provide different pricing. You can even even, provide different hours of coverage. So for a business, you might provide hours of coverage that are, say, the, 24 hours a day, 5 days a week, depending upon the what the business needs are. Whereas typically for a homeowner, it might be, you know, just, 8 hours a day, 7 days a week, or 5 days a week.

Michael Israel [00:25:36]:

So you can define different coverage terms, different cost to go along with the coverage, different discounts that might be covered, especially in a business. You know? I'll I'll come and inspect your HVAC systems 3 times a year. And, oh, by the way, I'll also give you a 25% discount on any parts that you buy. So contracts can be, can be very, very flexible. And, for a typical homeowner, There are a lot of flexibility is typically not required. But when you get into the business environment, small business, medium sized businesses, where you're doing more facilities management, for example, facilities maintenance. Then the importance of having the different flexibilities with the defined within a contract, is is key. So it's it's fairly common.

Michael Israel [00:26:26]:

I'm sure many of your listeners, if not all, have heard the terms bronze, silver, gold, platinum contracts. You know, you get different levels of coverage, depending upon what level of contract you buy.

Matt Jones [00:26:37]:

Yeah. Sure. And is there, in your experience, like, a right and wrong way to present this to customers? I know there's a lot of, You know, over the years, we've had clients that have tried it and they've had sort of resistance and, my answer is, oh, yeah. Probably presented it properly, but I know there's a lot of people sorta have that, what's the word, I suppose, animosity towards Somebody trying to sell them something they potentially don't need when the reality is, like, the interest is actually It's actually within their interest to to maintain these things much like your car.

Michael Israel [00:27:16]:

Yeah. No. I I I think you're absolutely right, especially, especially in the, residential end of the of the spectrum. People are typically more reluctant to spend money on a service contract. In a business, especially a large business, there's, like, almost no reluctance at all.

Matt Jones [00:27:31]:

Sure. Yeah. That makes sense.

Michael Israel [00:27:33]:

Because but the reason is because they recognize it as an insurance policy that is good for them.

Matt Jones [00:27:38]:

Well, yeah, that's right. If your air conditioning goes out, your tank can't be in the office.

Michael Israel [00:27:43]:

Yeah. And it's just it's not just the air conditioning in businesses. It's your whole IT system. In hospitals, it's the whole hospital system, all the equipment, everything. You can't afford to have an MRI machine go down Right. In the middle of a of a procedure or go down for a long period of time because they generate 1,000 and 1,000 and 1,000 of dollars worth of revenue. Right? So so it's understandable why homeowners would be more reluctant. But I I would say to answer your question, The best way to try to sell the service contracts is to sell the benefit.

Michael Israel [00:28:14]:

And the benefit is, number 1, you're protected. If something does go wrong, you're protected. You're gonna have somebody available generally on a higher priority basis to come and respond to you. You're gonna probably get some kind of a discount on material and on labor as a result of being part of the contract. And you're guaranteed to have inspections x number of times a year that are aimed at finding anything that is that is, you know, in danger of going wrong or finding anything that maybe it doesn't need to go wrong, but it needs to be it's not gonna go wrong, but it needs to be calibrated. You You know, it needs to be inspected to make sure that all the parts are working properly and there's not a lot of rust or water damage or anything that's gotten into the air conditioning unit, which as a consumer, you would not know, you know, unless you go open up your unit, and I and I'm sure some people are capable of doing that. I'm not. But, you know, it just provides them with peace of mind that the equipment is being being inspected, that Once it's inspected, it's going to work reliably for a a longer period of time.

Michael Israel [00:29:22]:

If you have it inspected on a regular basis and maintained on a regular basis, It's not only gonna work well for a longer period of time, the product itself is gonna last longer. The life of the product is longer.

Matt Jones [00:29:34]:

So it's how you sell it, selling the outcomes.

Michael Israel [00:29:36]:

Yeah. Exactly. You sell the benefits. Right? Deremphasize the cost and sell the benefits of what you're getting through the cost.

Matt Jones [00:29:45]:

Yeah. I I agree. I mean, this is it's essential it's a same conversation we have with clients even at the level of copywriting, like, no one cares about The the the specifics within the process, they just care about the outcome. Like, what what is what is the result look like? What is the result look like? I think as business owners, we kinda get caught up in that sometimes because we wanna communicate things that we would wanna hear because we have that technical background of our Insert trade, whatever that might be. Whereas clients, I always say, make it pass the mom test. Like, if your mom can read that and understand it, she would because then then that's Then publish it.

Michael Israel [00:30:24]:

Yeah. Yeah. No. I I agree. And I think you've just mentioned something that's really, really important. You sell it from the customer's perspective. What's the benefit of it for the customer if they buy this? What is the potential benefit? What's the long term benefit? And as I mentioned, the long term benefit is everywhere in All kinds of equipment everywhere, whether it's in your home or in a business or whatever. If you maintain it and take care of it well, it will last longer.

Michael Israel [00:30:55]:

That's almost inevitably true. Right? So do you wanna spend $5,000 or $15,000 for another new air conditioner next year, or would you rather wait another 5 years because you took good care of it and it's gonna last another 5 years? I know the I know what my answer is.

Matt Jones [00:31:14]:

Yeah. Yeah. Another question which I pretty much doubt it, there's not gonna be an answer to specifically. But is there any kind of Ballpark percentage average on what a customer that has set up and deployed a scheduled preventative Flexible maintenance agreement within their business in terms of, like, percentage revenue they might be able to add on to their existing business as a result of Deploying and implementing something successfully?

Michael Israel [00:31:40]:

I I can't give you a specific answer. I I will give you a generality, and keep in mind that this is a generality. I've been a part of numerous surveys that we've done of field service organizations. These are all to businesses, though, not to homeowners, but it may give you an idea. And, what we have found consistently, and I've done this, you know, several times over the past 12, 14 years, is that service in in many industries generates at least 25% of the total revenue for the business. And in many, many cases, it generates 40% or more of the profit. Wow. So, and, again, I want to emphasize that's that's surveys for businesses.

Matt Jones [00:32:24]:

Residential.

Michael Israel [00:32:26]:

But I would imagine the trend is the same for for residential and and very small businesses. That if you have a service organization that is well structured, should well run. The technicians are talented. They're skilled that you're going to definitely generate more revenue than you would if all you did was sell, sell, sell product. And if all you did was respond to break fix issues, If you if you have service contracts in place, you will have a steady revenue stream. You can plan on it being there every month, month after month after month. And because you're taking good care of the products through the service contracts, the products are more likely, or I should say, much less likely to break down. And when you have to send a technician out on a breakdown fix, Generally, that's more expensive because you gotta maybe pull them off another job.

Michael Israel [00:33:20]:

You gotta call them up in the middle of the night or on the weekend. You have to postpone other jobs because now you gotta respond to an emergency. So revenue revenue generated from service contracts is certainly gonna add to the overall revenue for the company, And I believe strongly that's gonna reduce the costs, the service costs.

Matt Jones [00:33:40]:

Look, mate, this has been a fantastic conversation. It's something I wouldn't want to for a long time, and I feel like we've covered most things here unless there's anything that you think we've missed.

Michael Israel [00:33:50]:

No. I think, the all the important things that I wanted to convey, I believe I have, and some of them I've conveyed twice or more. So pardon pardon the redundancy to your audience sometimes. But I I don't feel you know, I don't feel bad about that because those are those are important issues.

Matt Jones [00:34:08]:

Sure. And I I just want I would like to even maybe throw it back out there to you guys listening or watching this, just to ask what your experience has been with, how implementing service agreements and preventative maintenance agreements and all that kind of stuff. I know it's been a pretty hot topic of conversation over the years within the community and stuff like that. And Some of you guys have done it well. Some of you guys have done it okay, and some of you guys have just Not

Michael Israel [00:34:29]:

done it.

Matt Jones [00:34:30]:

Not done it. Not have much success at all. And I'm I'm keen to hear what your feedback would be. So wherever you say this come through, let us know in the comments and give us some feedback on that.

Michael Israel [00:34:39]:

Yeah. I'd love to hear I'd love to hear the comments too when you get them as well, Matt.

Matt Jones [00:34:42]:

Yeah. Well, I was gonna tell you, if there's anything there that you guys would like any expansion on specifically in what we've spoken about, because we have kind of given you, I suppose, a 30,000 foot overview here, but, if you want any if you want us to go deeper or anything, let us know in the comments, and I'm sure I can, coax Michael into coming back on the show and, answering some of the more specifics. Absolutely.

Michael Israel [00:35:02]:

That would be my pleasure again. Thank you.

Matt Jones [00:35:04]:

Michael, where can, the listeners and the viewers get hold of you if they need to?

Michael Israel [00:35:08]:

Sure. There's a couple of ways they can find me, at Zuper. They can go on to Zuper, z u per.c0. That is our website, and I wanna emphasize this, Scott, c0.com. Zuper.c0. They can also email me directly. My email address is michael, m I c h a e l, at zuper.co. And if they wanna struggle through LinkedIn, they can find me on LinkedIn, Michael Israel.

Michael Israel [00:35:33]:

I wanna caution you that there is a very famous artist named Michael Israel, and that is not me. Okay. So Go on, Pete. So you're gonna have to scroll through a couple pages.

Matt Jones [00:35:42]:

Just climb it, mate. As As long as he's still alive, just claim it. Yeah. Alright. Awesome. Mate, it's been great talking to you. Thank you so much for your time. And,

Michael Israel [00:35:50]:

Likewise.

Matt Jones [00:35:51]:

For the listeners and viewers out there, I'll have links Where do you go to Michael in the show notes? So, you can head across there, to get a hold of the details that he's just left behind. Otherwise, that's a wrap. Thank you, sir. Enjoy your evening. I don't

Michael Israel [00:36:05]:

I will. Thank you very much. It's been my pleasure. Thank you for having