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  1. #1
    Join Date
    Jun 2012
    Location
    Louisville, KY
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    141

    Question Commercial service warranties

    Hi everyone, I work in sales for an HVAC extended service agreement [ESA] company doing business in USA and Canada. Seems like many residential contractors are selling ESA's like there's no tomorrow, but when I get to talk to commercial/industrial/food service/etc. contractors, seems like many are hesitant to offer anything besides the factory's extended compressor warranty.

    Seems to me that an ESA to lock in your customer for 5 or even 10 years doing PM and any repairs needed would make sense one way or another (customer retention, revenue on sale and servicing of the ESA, etc.) but I would like to have you all's take on this from the point of view of someone who is out in the field all day every day doing the work.

    Much appreciated!

  2. #2
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    Feb 2010
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    Cal
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  3. #3
    Join Date
    Jun 2012
    Location
    Louisville, KY
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    Funny stuff btuhack! (albeit off-topic!)

  4. #4
    Join Date
    Oct 2010
    Location
    Baton Rouge, LA
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    I think BTUhack was making the point in a funny way lol

    He says you are here

    He is here



    Why would we sell your product that siphons money from us through you when we sell ours which is a full service contract they pay us directly to fix any issues at our cost for a yearly cost from them.
    If you're too "open" minded, your brains will fall out.
    Artificial intelligence is no match for natural stupidity.

  5. #5
    Join Date
    Jun 2012
    Location
    Louisville, KY
    Posts
    141
    Sure is an interesting way to put things, XcelTech!

    While I agree that "in house" service contracts can make a lot of sense, IF DONE RIGHT (and I have seen it done very wrong), I believe for financial and compliance reasons to offer an ESA which is fully backed by a renown insurance company is a partnership that benefits both the contractor and equipment owner.

    On one hand, an "in house" ESA can be very negatively affected by outside factors, for instance an OEM making a defect-prone product which may drain the "stash" of money accumulated from annual agreements very quickly.

    On the other hand, the equipment owner can rely on the agreement being in force even in case the original contractor goes out of business or refuses to provide service, or if they just want to use someone else.

    But I was mainly wondering, specifically for commercial clients, if there is a particular problem with ESA products which does not apply (or to a lesser extent) to residential clients.

  6. #6
    Join Date
    Oct 2010
    Location
    Baton Rouge, LA
    Posts
    1,113
    Commercial companies do full service contracts which include the cost of all repairs and labor.
    Government contracts do not buy warranties.
    Commercial companies get contracts that require monthly upkeep.
    Commercial companies are required to have X amount of insurance to do almost all their work.
    Commercial companies build in monetary redundancies know that some contracts will be a bust and some will pay three times over.
    A defect prone equipment is noticed, if it is less then a year old most OEM's cover the cost, if its over a year old money is added to the year cost for this purpose.
    We are not owners, we don't want the owners buying what you are selling we want them buying what we sell.

    "David you can get that ESA from Joe insurance but they are gonna have contracts that state item repairs X is worth Y amount but Trane doesn't agree and wants Z more. Joe's insurance says they will pay X amount per hour of labor but our labor costs Y more. You can get that or you can get Y amount of labor and X parts for free from us cause we don't put a maximum amount on our Full Service agreements. If it cost us more to repair then you pay us then that's a gamble we took. Plus, Joe's Insurance doesn't guarantee nor pay for 2 hour responses and after hours/holiday calls. Is Joe's Insurance company showing up or caring for you personally, no, but we are wouldn't you feel more comfortable with someone you know locally? I know you have been happy with our service, haven't you? David we know your equipment and we understand your needs. David we will be out here next week for your first PM, just sign here and get this monkey of your back, I know you have more important issues you need to attend too."

    So getting an ESA from another company is wasted money.

    ESA companies place limits on the amount of money paid for repair costs.
    ESA companies require extra paper work.
    ESA companies do not cover anything a full service contract doesn't cover.
    ESA put limitations on labor costs.

    They are just no good for commercial work with companies that do 5 million plus a year or more that don't need a financial back up.
    If you're too "open" minded, your brains will fall out.
    Artificial intelligence is no match for natural stupidity.

  7. #7
    Join Date
    Jun 2012
    Location
    Louisville, KY
    Posts
    141
    I am glad I asked, that makes much sense put into perspective. Thank you, XcelTech, that answered my question very well!

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