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Home Warranty Handcuffs - Reclaim Your Freedom

• Is your Company too reliant on Home Warranty Work Orders? 

• Have you lost the ability to obtain Retail Customers?

• Is your Company stuck in a cycle of Home Warranty Business where the Cost Pressure is constantly going lower while your Business Costs to Comply with Quality Standards is going up?

My name is Sean Marzola;  I’m the VP of Business Development here at myServiceForce, Inc.  I sit in a unique position… somewhat of a “cat-bird’s” seat over the Nation;  I get to see everything that the successful Contractors do as well as what the unsuccessful one’s do.  This White Paper is going to focus on helping Residential Home Warranty Contractors achieve balance in their business and, hence, success.

The best I’ve ever heard it said is by a pretty successful Contractor doing Home Warranty work for over 20 years.  He views it like this:

“Home Warranty Companies pay my Business to Run a Sales Lead”.

When I heard this Contactor say this, it really resonated with me.  In short, I was over thinking it and I’m betting you may be too.  This single phrase says it all. 

Now if you think AHS won’t approve of this message, that is the irony;  AHS wants Contractors to have a balanced business.  It is one of the core beliefs about their business model.  They can’t do it for you though --- it’s not their place.  Me?  Think of me as the Consultant to your Freedom.  Let’s guide you:

Problem & Solution:

the Problem:

I’ve seen it over and over and over again;  even the long time, successful, Home Warranty Service Contractors get into a vicious cycle of bending over backwards for Home Warranty Work and because Compliance & Quality Standards are increasing, there is less time to spend on ole fashioned Marketing for Retail Customers.

The view becomes:  I work for XYZ Home Warranty Company.  (or if this isn’t the view, it becomes the reality when other processes to obtain other channels of work break down)

the Solution:

First off, you’re all independent businesses for a reason, so why get “handcuffed”?  It defeats the entire purpose of being in your own business.

Now the reality is that we all work for someone --- even the most independents among us.  But who is it that we really work for?  When in the Residential Service Contracting business, the basics still hold true:  the Customer is King.  Service the Customer and you’ll be that go-to company that they call later.

Do you want your independence back?  Then read on:

• Desired Outcome:

• Turning HW Calls into Retail Leads for the next 20 years (not necessarily all of them, but some percentage)
• Becoming self reliant on Retail Customers as 65+% of your business (vs. Home Warranty at 65-100%)

Let’s think fundamentals for a moment:  the basics that my Father taught me in the Residential Construction business hold true in ANY Contracting business (Service or Construction)  and they’re probably things you, as a modern day Service Contractor, try to teach your kids:

1. Customers are your best Advertising
2. Focus (but be Flexible with the Changing Times)
3. Right Tools vs. Wrong Tools = Time Saved is Worth the Investment

These were the 3 basics I learned on the job from the time I was 7 years old all the way through College.  As a kid, it seemed like a broken record.  I had ZERO idea, while as basic as can be, how strong those three lessons are --- the ultimate foundation themes for ANY type of business, in fact.  Those themes carry through to the Marketing Plan:

So if you’ve lost your way in the Retail Side of your Business, you can gain it back:

1. Home Warranty Sales Leads

1. Treat Every Home Warranty Work Order like it’s Your Only Customer.
1. Again, as that wise Service Contractor Told me --- Home Warranty Work Orders are simply the process of being paid to call on a Sales Lead.
2. Therefore, the only Objective is to get a Great Reference / Repeat Business
3. Do not prioritize the Profit / Job.  The Profit will work itself out over time --- on Home Warranty Work, the objective is to:
1. break even
2. pay the bills
3. get that REFERENCE
4. Profit = the Retail work that comes from these References / Repeat Customers
2. Focus on 1 or 2 Home Warranty Companies as Call Committed
1. 1… MAYBE 2.  Drive the number of calls up to as many as you can.  The more WO’s, the more Sales Leads, the more Retail Customers possible.
3. Diversify among Home Warranty Companies & Other Sources
1. That is, try NOT to be a Call Committed Contractor with others, BUT, try to obtain work from as many as possible… just not a ton of it.  You want the diversity, but you don’t want the cost pressure (cost pressure happens when one is call committed --- therefore try to limit that to 1 or 2).
2. Here is an example:
1. AHS                                committed
2. Fidelity                             committed
3. First American                  get what you can
4. Old Republic                    get what you can
5. Home Buyers                   get what you can
6. Other                               get what you can
7. Etc...                                "                       "
3. Here is a list of Home Warranty Companies that Service the Nation:
1. http://www.homewarrantyreviews.com/reviews
2. There are 43 Companies listed here (some may have consolidated with others since this list was published)
4. Diversify the concept of Sales Leads through other Sources too:
1. Home Depot
2. Lowes
3. Sears (maybe)
4. Service Magic
1. You can find a FREE Application for Service Magic on www.myserviceforce.com the Online Business Center --- FREE for mSF Basic Members HERE
5. Angie's List
6. etc...

2. Retail Marketing

1. Mindset --- Every Home Warranty, or other Work Order Lead Source, is an Opportunity to get a Retail Customer --- getting paid to run a Sales Lead
2. Train Tech’s the same
1. Challenging as can be --- you must train the tech’s to manage the Home Warranty Customer who gets denied.  Even within conflict lies an opportunity to be a hero.
3. Marketing Materials and Actions:
1. Take Actions at Every Home
1. Mini Calendars and/or Refrigerator Magnets work well
2. Offer a Major Discount to be Called Back (outside of Warranty Work) on the Leave Behind
3. Have the Tech hang 5-10 MANDATORY Door Hanging Ads for every Home Warranty WO that is done
1. Door Hanging Ad should have a Highly Discounted and/or Free Coupon Offer of some type
4. Collect an Email Address for as many Home Warranty WO’s done as possible
1. Email a “thank you” note after EVERY WO --- even when the work is denied by the Home Warranty Company
2. Use a denial as an opportunity to solve the problem for the Policy Holder
2. Email Marketing
1. Delivery
   
1. Depending on the size of your list many companies offer free trials of their email delivery services
2. Have you staff manually send via your webmail program or Outlook
2. Subject Lines Sell
1. Appeal to your Customers Emotions
1. Ex 1:  "Keep your Family Cool This Summer with Routine Service from XYZ AC
2. Ex 2:  "Keep your Appliances in Tip Top Shape this Holiday Season with ABC Appliance
2. Keep Subject Lines Short and Sweet
3. Provide an Offer to Act On
1. Save X% if you Call and Schedule Before Y Date
2. Coupons work Well
3. Marketing Messages have to be:
1. Consistent
2. Frequent (not every week, but not 1X / yr either)
4. Get Professional Help:
1. There are professionals out there that teach Service Contractors how to penetrate the Retail Business model.  Two that I have heard excellent things about are:
1. www.nexstarnetwork.com
   
2. www.serviceroundtable.com
5. Manage expectation and build for the Long Haul:  marketing is not a light switch for instant results.  The expectation should be to convert some percentage of the Home Warranty customers over to Retail Customers.  If you get 1,000 Home Warranty calls per year and convert 100 of them to retail customers (roughly 10%), in 10 years, you’ll be busier than you can imagine with a healthy, diversified, yet focused (on Residential Service Contracting) business.

3. Automation:

1. Software:   This is no longer a nice-to-have, it’s a must.  I’m not going to preach here.  In short, mSF has a tool that can help everyone.  If your company uses these tools, you’ll make more money.  If your company chooses not to automate, at least, a portion of the process, you’ll leave precious profit dollars on the table. 
   
2. Automatic Email Marketing:  myServiceCustomer is a product that will enable automated email marketing.  Watch out for its release later in ’10.
3. Green.  (Automation promotes Green Service Contractors)  It’s in the news and it’s in the hearts & minds of every voter, regardless of party.  Latch onto the wave here as it’s part of how society will judge who they deal with… ‘nuff said… pitch it and do so consistently… it will help over time.

4. Multiple Trades:

1. Many professionals are teaching Service Contractors to be multiple trade organizations.  This can be daunting.  I suggest walking before you run, but do move in this direction in the long term as it is the trend among Residential Service Contractors who are thriving vs. merely surviving.  

Summary:

Almost always when I’m asked the question of Revenue Generation, I offer up what I see other successful Contractors around the nation doing.  Also, almost always, I’m immediately told that these methods won’t work (said by the person asking for the advice). 

Well they certainly won’t work if one is not open to changing the way business is being done.  I see this taking place all around the nation.  I very much worry about the Service Contactor who does not embrace change.  There is a new breed of Service Contractor and it takes all the good from a long time business, such as yours, but adds some of the latest concepts in Automation and Other Lead Sources that are not the way folks did business in years past.

You CAN increase revenue.  You just have to work at it, focus on it, and use the right tools for the job;  then give yourself the time to allow that work to build up into results.

When I look at the Nation of Service Contractors from my “cat-bird” seat here at mSF, the difference between a healthy Service Contracting business and an unhealthy one starts with an attitude toward growth and then these best practices. 

Again, it won’t happen overnight.  It takes an effort.

You too can do it!  You can.