What service Companies Should Know Before Partnering with a Warranty Provider
For HVAC and Plumbing businesses building a relationship with home warranty providers like American Home Shield, First American Home Warranty, Cinch, and others can often be lucrative, offering a steady stream of jobs with little to no marketing, and the potential for long-term contracts. Entering into this type of partnership requires careful consideration of key factors to ensure it’s a good fit for your business.
1. Tracking Key KPI's:
One of the most critical factors that warranty companies look for in their contractor partners is the ability to consistently accept jobs and complete jobs on time. Warranty providers monitor these KPI’s consistently to not just gauge the efficiency of crews, but also to decide where work is sent affecting contractors bottom line.
Job Acceptance Rate: This KPI reflects how often your company accepts jobs assigned by warranty partners. A high job acceptance rate indicates that your team is dependable and ready to take on the work. The software operating system can help, auto accepting jobs that fit into your companies niche.
Time to Acceptance: This KPI reflects how quickly your company accepts jobs assigned by warranty partners. Partners value a quick time to acceptance, as it provides their customers a higher level of service and priority.
Job Completion Rate: Warranty providers also closely monitor the completion rate of jobs. Timely and accurate is crucial, as delays or unfinished work can result in customer dissatisfaction.
2. Payment Terms
Before committing to a partnership. it is essential to fully understand the payment terms that come with working under a warranty contract. Unlike traditional HVAC/Plumbing jobs, payments from warranty providers can sometimes involve delayed payouts or lower margins.
Payment Schedules: Ensure you are aware of the payment cycle. Some partners may pay monthly, while others might have longer payment intervals.
Service Fees: Warranty jobs typically come with pre-set rates. Make sure you understand how these fees align with your business model and cash flow needs.
Reimbursement for Parts and Labor: Determine whether the warranty provider covers the cost of parts and labor and whether there are any reimbursement caps are in place.
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3. The Importance of Diversification
Receiving work from warranty companies is a nice way to receive consistent work assuming that key KPI’s are being met. Diversification becomes important as you may want to explore alternative ways to gain customers.
Working with several warranty companies is practiced, and can lead to more work being received on a consistent basis, however it is important to review your contract to double check if there are non-competes in place.
Staying consistent with private work outside of the warranty ecosystem is also a key consideration for diversification in the space. Private work may have higher margins, and combining a strong presence in a local market with warranty work can result in a strong fiscal outcome.
4. Compliance Requirements
Compliance with licensing, insurance, and other regulations is non-negotiable when working with warranty providers. Warranty companies often have stringent requirements to ensure their contractor partners adhere to industry standards and legal regulations. Failing to monitor, and meet these requirements can jeopardize a partnership. Methods for regulating compliance can be to assign a staff member to constantly monitor both the company and technicians compliance, or leveraging a software system to automatically monitor compliance of documents, to alert management when that is in jeopardy.
5. Communication and customer service
Warranty providers expect their HVAC and Plumbing partners to delivery high-quality customer service, as the work you perform directly reflects on their brand. Clear communication with customers about job timelines, expectations, and service details is crucial.
Responsiveness: Make sure your team is responsive to both the warranty provider and the end customer. Quick responses to job requests, service times, and progress will help build trust with both the warranty provider and customers. An easy way to get ahead of this is to invest in a solution that automatically contacts customers with updates, and statuses to take workload off of a back office team and ensure communication.
Customer Satisfaction: Warranty companies often track customer feedback as part of a performance evaluation. Ensuring your team is proactive, knowledgeable, and professional on every job will help maintain a high satisfaction level.
