How to Create a Rock-Solid Service Agreement

Have you taken a good, hard look at your service contract lately?

Here’s a better question: Do you even know what’s in your service contract?

If you’ve answered no to either question, it’s time to give this important document a much-needed overhaul.

I’m going to show you how.

I’m not a lawyer. But my previous career managing vendor contracts in the IT industry has given me a keen understanding about the nature of service agreements and how they can benefit both service provider and customer.

This knowledge has greatly benefited my company, Champion Pool Service, in Dallas. We have experienced 25% growth over the past three years, which I attribute in part to my service contract.

I suspect the vast majority of service professionals have a document outlining certain expectations and payment arrangements. But if it doesn’t drill down into the nitty-gritties, then you’re doing yourself disservice. The expression “Don’t sweat the small stuff” doesn’t apply here. It’s the small stuff that can cost big money down the line.

The dotted line

Before stepping foot in a customer’s backyard, you should enter into a written agreement that defines the scope of your responsibilities.

My service agreement has been years in the making and is drawn, in part, from dozens of occurrences that have inconvenienced my business or, worse, taken advantage of my services. As the old saying goes: Forgive, but don’t forget. That’s why I’ve been diligent about including policies designed to prevent common problems and keep my company running as efficiently and profitably as possible.

In 2013, I had a 12-point service agreement. Today, it has evolved into a rock-solid document containing 10 sections and 73 clauses that clearly delineate my company’s responsibilities from those of my customers. It also addresses holidays, late-payment fees, service-day changes and many other “housekeeping” items.

No detail is too small to address in the fine print. Mine happens to be 6.5 Arial Narrow font, which keeps the text to a single page. I recommend that your contract not exceed two pages.

A good service agreement does four things.

1. It establishes a relationship with the customer. A good onboarding experience inspires confidence, sets the tone and builds a foundation for a long-term relationship. It indicates that the pool is in the care of a true professional.

2. It standardizes your service. It’s important to establish from the onset what’s included in your service and — just as important — what’s not included. Without a thorough, well-written contract, you may be tempted to cater to the customer’s every whim, tailor your service to each customer or provide unnecessary concessions. All these drag down profits and growth.

Another way to put it: A good contract productizes your service. Selling your service as a product means you’ve established a standard quoting model that you can apply to all pools. This also allows you to apply add-on charges consistently when requests fall outside of your standard service.

3. It provides protection: We’ve established how important it is to define the scope of your responsibilities, but what about the responsibilities of your customers? This is where you need to exhaustively itemize your expectations of clients. This includes tasks to be performed between visits, such as maintaining adequate water levels, keeping a clean work area around the pool and equipment, and emptying skimmer baskets. Also outline how they should prepare for your call, such as restraining or putting up pets, and unlocking gates.

If they’re on partial service, they may have more responsibilities such as brushing the walls and removing debris at least twice a month. This may change depending on the time of year — which should be spelled out.

I also recommend addressing things that fall outside of your control.

4. It creates predictability. As we all know, cash flow is king. A good service contract can go a long way toward achieving dependable income. This is your opportunity to get the customer to commit to a standard price, a certain level of service and payment expectations. Be sure to spell out the consequences for failing to hold up their end of the deal, such as fees for late payments and charge-backs.

Five must-have stipulations

As I mentioned, my contract contains more than 70 clauses, many of which are enforced to protect my business and hold customers accountable. I’m going to touch on five terms that have really helped my company keep losses and unexpected occurrences to a minimum.

1. Indemnities: These could protect you from damages that occur through no fault of your own. Ultimately, your goal here is to prevent being wrongfully blamed and limit your financial exposure.

My service agreement stipulates, among other things, that I won’t be held responsible for damage caused by weather, lawn services, construction, organic stains, etching, corrosion, underground leaks or deterioration due to equipment breakdowns or malfunctions. It also holds me blameless should damage occur from draining a pool. However, we rarely have to address the dangers of draining. If the ground is dry, we’ll lower the water level or empty the pool for needed repairs. If it’s saturated, or if the forecast calls for rain, we’ll mention to the customer the potential risks involved, such as hydrostatic pressure, and reschedule when the weather is more cooperative.

While my contract assures customers that we will make every attempt to maintain proper water balance, it also acknowledges that factors beyond our control can greatly change the chemistry. The contract makes clear that we won’t be blamed for instances involving bather discomfort, plaster etching, calcium build-up and other chemical-related issues.

The same goes for pets. My contract notifies that we won’t be responsible for pet injuries due to chemical exposure or escaping from an open or unlocked closure because the customer failed to keep the animal restrained.

2. Equipment repairs: As a service professional, you should be allowed to make certain repairs without asking permission.

When my customers sign a contract, they pre-authorize Champion Pool Service to replace any parts not exceeding $50. However, I also give customers the option to decline such parts within 15 days of the invoice, at which point we’ll remove them and reverse the charges. But the contract makes clear that declining pre-authorized repairs could damage equipment, resulting in higher repair costs, additional cleaning fees and voidance of warranties down the line.

This policy goes a long way toward making our company more efficient. We’re not waiting for the go-ahead from customers to make minor repairs, and it helps keep the pool in good working order, which is why the customer hired us in the first place.

3. Cancellations and service changes: Like many pool maintenance companies, we provide service on a month-to-month basis. We request that they cancel service within seven days before the next billing cycle, in writing. We do not accept voicemail messages, notes passed to our employees, or verbal requests. These things get lost in the shuffle.

Of course, they’re allowed to cancel at any time. However, they’re contractually liable for the entire monthly invoice. This simplifies billing. And if they cancel before the fourth monthly invoice, they will be subject to a termination fee. I do this to minimize losses from short-term arrangements. Again, I want to establish a predictable service that generates dependable income.

To that end, I also charge a fee to reschedule weekly service cleanings, either once or permanently, to a different day. My employees are in certain areas on certain days. There is an administrative cost associated with reconfiguring their routes to accommodate these requests.

4. Rain days and holidays: If it happens to be raining during a customer’s scheduled cleaning, my company may perform a “rain check” in lieu of normal service. This means we check and balance the water, empty the skimmer and pump baskets only. I don’t want my crew risking their lives putting poles in the water amid a lightning storm, or spending more time outside than necessary during a downpour.

Including this clause clarifies weather-related expectations.

As for holidays, we observe New Year’s Day, Independence Day, Memorial Day, Labor Day, Thanksgiving and we take off the week of Christmas.

In the case of a rain day or holiday, no adjustment is made to the bill. If weekly customers request make-up cleans, they’re charged for an off-schedule service at current rates. On the flipside, if there are five service days in a month, we don’t charge extra for that fifth visit. So, it all comes out in the wash, so to speak. Again, we charge a flat rate, so this arrangement keeps billing easy.

One more thing about weather: If a pool is excessively dirty after a storm, we charge an hourly cleaning fee to begin 45 minutes after regular scheduled cleaning. This protects us from being paid ordinary service rates on heavy-duty cleaning jobs.

5. Recourses for customers: So far, this has all been very one-sided, but we want customers to be completely satisfied.

If a customer notifies us within 24 hours that they are not totally happy with a service visit, my contract states that we will re-clean the pool within four days for no additional charge or credit their account for a missed service.

I also include an algae-free guarantee for customers in good standing with the full-service plan. If a pool develops algae, we promise to arrive within three days, or on your normal service day — whichever comes first — to treat the pool unless we determine the cause is related to a problem outside the scope of our normal weekly service.

Ultimately, a good service agreement is the bible by which your business abides. Be sure to apply it to all customers. That’s not to say you can’t be inflexible, but when all else fails, the signed agreement is something you can fall back on.