In this post
Start with an uncomfortable exercise.
Open wherever your agreements live. Count how many expired in the last twelve months. Then count how many of those were actually declined: a customer who said no, as opposed to simply running out while nobody was looking.
For most contractors the second number is much smaller than the first. Which is good news, because a lapse is a process failure and process failures are fixable.
Why agreements lapse
Nobody looked at the date. The most common reason by a wide margin. There is no list, so there is no trigger.
The customer did not get what they paid for. They bought two visits and received one. At renewal they are not making a price decision, they are making a fairness decision, and they are right.
Nothing memorable happened. Somebody came, did something, left. Eleven months later the customer cannot say what they got, so they cannot judge whether it was worth repeating.
The only contact was an invoice. No report, no reminder, no conversation.
It was sold under pressure. Plans sold to hit a number renew badly. Why the pushy version costs more →
Nobody owned the follow-up. It belonged to everyone, so it belonged to nobody.
Five of those six are operational, not commercial.
What the rate is worth
Before the process, the size of the prize.
Illustrative: 180 active agreements at $299, with members spending about $180 a year on repairs, at a 45% margin.
| At 62% renewal | At 80% renewal | |
|---|---|---|
| Agreements lapsing per year | 68 | 36 |
| Value lapsing | $32,700 | $17,200 |
| Retained instead | - | 32 agreements |
| Additional recurring revenue | - | $15,500 |
| Additional gross profit | - | $6,900 |
Example figures on illustrative inputs, not a forecast.
It also avoids the cost of replacing those customers, roughly $310 each in acquisition on these assumptions, or another $10,000.
A renewal cadence
The timing should be yours. The structure is what matters.
| When | Action | Purpose |
|---|---|---|
| 90 days | Identify. Create the task with an owner. Audit the visits. | The list exists, and somebody owns it |
| 60 days | Email with the year's reports attached | Remind them what they actually received |
| 30 days | SMS reminder | Short, personal, from a named person |
| 14 days | A human calls | Where renewals actually close |
| 7 days | Final notice | Honest deadline, not manufactured urgency |
| On renewal | Schedule the new term's visits immediately | Stops the next lapse before it starts |
| On decline | Record the reason | The only way to fix the cause |
The 90-day check is the one that matters
Before any reminder goes out, answer one question: has this customer received every visit they paid for?
If not, deliver it first.
Asking someone to renew when you owe them a visit is the single most avoidable way to lose an agreement. It converts a routine renewal into a complaint, and the customer is in the right.
This is why the renewal list needs a visits-used column next to every agreement. A customer at 1 of 2 is not a renewal conversation yet. They are a scheduling job.
See the list → The renewal view shows every agreement at 30, 60 and 90 days with visits used beside it.
What actually moves the rate
Deliver the visits. Everything else is secondary. An agreement where both visits happened, on time, with a report each time, renews on its own merits.
Send a report after every visit. This is what the customer has to remember in eleven months. A visit with no report is, from their side, indistinguishable from no visit.
Contact them early. Ninety days, not ten. At ten days you are asking for a decision under time pressure, which invites "let me think about it", and that is a decline with extra steps.
Give it one owner. A named person, a list, a rhythm. Renewals that belong to the office in general do not happen in July.
Make renewing trivial. Reply to a text, click a link, say yes on the phone. Every extra step loses people who were going to say yes.
Record declines with reasons. Price, moved house, sold the property, went elsewhere, system replaced. Without reasons you cannot tell a pricing problem from a service problem, and you will guess wrong.
Handling the four objections you will hear
"We didn't really use it." Check whether that is true. If they did not use it because nobody booked the visits, apologise, deliver one now, and renew afterwards. If they genuinely declined visits, a smaller tier may fit better than losing them entirely.
"It's gone up." Say why, plainly. Costs have risen or the plan now includes more. A vague increase reads as opportunism.
"We're getting a new system soon." Excellent news, and a different conversation. Record it, and make sure whoever handles replacements knows.
Silence. Silence is not a decline, it is an absence of contact. That is what the day-14 phone call is for, and it is why the cadence ends with a person rather than another email.
Measuring it honestly
Calculate renewal rate as:
Renewed ÷ (Renewed + Declined + Lapsed)
Excluding the lapsed ones (the people you never managed to reach) produces a flattering number rather than a useful one. Those are precisely the agreements a process would have saved, and leaving them out hides the problem you are trying to fix.
Track it monthly, by plan tier and by which technician sold it. Both comparisons tell you something.
Frequently asked questions
Why do maintenance agreements lapse?
Most were never declined. They ran out while nobody was looking, because no one owned the renewal and there was no list showing what was about to expire.
When should renewal contact start?
Well before expiry, with a check around ninety days out. That is the point at which there is still time to deliver a visit, fix a complaint or have a conversation, rather than asking for money at the deadline.
What actually moves the renewal rate?
Delivering the visits that were promised, being visible between them, and asking early. A plan whose visits were missed will not be renewed no matter how the renewal is worded.
What is a percentage point of renewal rate worth?
More than most owners assume, because the revenue compounds across the remaining life of the customer and the acquisition cost has already been paid. It is worth calculating for your own numbers rather than guessing.
How should renewal rate be measured?
Against the agreements that were actually due to renew in the period, not against total agreements. Measuring against the whole book flatters the number and hides the problem.
Related
- HVAC Maintenance Agreement Software →
- How to Sell Agreements Without Being Pushy →
- The Contractor's Agreement Checklist →
Want the renewal cadence running automatically, with a person stepping in at day fourteen? Talk to BDEVY →
Service agreements HVAC hvac agreement retention hvac maintenance agreement software hvac maintenance software