Service & Maintenance Contracts

Sign on the dotted line

Service and maintenance contracts make the security world go round. No dealer should leave the customer’s premises until a signed agreement is tucked into the client folder and on the books.

Face a fact of business life: There is not that much money in selling hardware today. Integrators and dealers have to work on the service aspect of every sales call to generate more revenue.

There are labor-only contracts, parts-only contracts and retainer plans. Each can have its place depending on the customer’s needs.

“Contracts are long for a reason and most of that legalese is important to protect your interest in the alarm equipment you installed and to protect your business should you get sued,” said Wendy Carlisle, a member of the Electronic Security Association and an attorney who specializes in security law with the law firm of Leonard, Street and Deinard in Minneapolis. “In case you are ever sued, the most important provisions are exculpatory clauses, limiting liability and damages in the event the customer has a loss. Also important is a provision that prohibits the customer’s insurer from pursuing subrogation,” she said.

“And, remember the contract does no good unless you have your customer sign it and you have a copy readily available,” Carlisle said. Both parties also need to understand what the contract says.

“Keep it simple,” said Rob Simopoulos, vice president of Advance Technology, Scarborough, Maine. He says that his experience is that giving a customer too many options simply confuses them. Instead, he offers customers an agreement that covers all of the customer’s needs without bogging them down in details.

“A lot of customers are more technology savvy these days but they are looking to the integrator to provide the solution they need. A good integrator should offer the single package that meets the customer’s needs and support requirements,” he said.

“I’ve learned that, if you give the customer too many options, it gets too complicated,” he added.

That said, Simopoulos said they offer a “unique approach” that guarantees, in the contract, all of the key elements of the buyer’s system. Each setup is different since everything they do is customized to a particular customer. Agreements which include managed services, card replacement, running reports and the likes are common. Most contracts include support, maintenance, parts and labor and maintenance. How many times does a customer neglect to update license keys prior to expiration? With in-house, proactive monitoring of such events, that problem is gone.

“The integrator has to look at all the aspects that come into play when they say they will cover ‘everything.’ Labor is very volatile…what if you budget four hours for a job and it takes 20?” asked Matthew Ladd, president, The Protection Bureau, Exton, Pa. He said about 80 percent of their Philadelphia-area clients have retainer plan contracts.

“When you offer a plan to a client, be sure to cover all your bases,” he added. The Protection Bureau offers a variety of plans to its customers. “We have up to eight variables for time, response, software upgrades, testing,” Ladd said.

“The simpler the system, the simpler the contract,” said Bill Bozeman, CPP, CHS, president and CEO of PSA Security Network, Westminster, Colo. He noted that a burglar alarm system agreement can probably make do with a boiler plate contract. “If you are integrating different parts and pieces, the answer is definitely different.”

“Every contract should have a very detailed maintenance agreement including service, parts and labor, on-site response time whether 8 to 5 Monday through Friday or 24/7 maintenance,” Bozeman said.

“Customers expect to be offered service contracts,” Bozeman said. These days, even the simplest purchase—a toaster or calculator—comes with an offer for a service agreement. When an integrator is working with a hospital or industrial site that runs 24/7/365, they better be prepared with a detailed contract offering.

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