A Guide on Annual Maintenance Contract in Field Service Business and its Benefits

If you are in a business where the products need post-purchase services and regular maintenance, it is favourable for the customers and the business to get into a contract for regular maintenance. The Annual Maintenance Contract (AMC) enlists all the terms for the mutual agreement between the two parties regarding regular servicing of the equipment.

Here we give you a deep insight into what is annual maintenance contract and the benefits of annual maintenance contract.

What is an Annual Maintenance Contract?

An annual Maintenance Contract or AMC in field service is a long-term contract between a field service organization (FSO) and the customer with a mutual agreement that the FSO will service the customer’s equipment at regular intervals to ensure it stays in good condition for a long. AMC document outlines the services provided by the field service provider and also includes the scope of work, warranty period, and other relevant details.

The customer pays an up-front amount to the field service provider for the AMC subscription and pays the subscription fee every year. However, the regular service and minimal repairs during the AMC duration are free of cost. Yet, the customer pays for additional spares installed.

For example, a hotel gets into an annual maintenance contract with an HVAC service company for one year. During this one year, the HVAC service provider performs routine maintenance on all the ACs in the hotel to ensure proper functioning. Additionally, if there are issues with any HVAC component, the HVAC service company repairs it free of cost as per the terms and conditions of the contract. This saves the customer from frequent costs for repairs and maintenance.

The annual maintenance contract lists all the details and terms of the agreement as follows.

What does an Annual Maintenance Contract Cover?

The annual maintenance contract contains the following:

• Details of both parties: This highlights the two parties entering into an agreement ie. the field service provider and the customer. 
• Scope of the work: The type of maintenance services the contract covers like routine maintenance, preventive maintenance, predictive maintenance, emergency support, etc. 
• Details of the equipment: It highlights the equipment covered under the contract for which the maintenance would get scheduled and all other additional services that require extra charges. 
• Terms and conditions for maintenance: The legal terms and conditions for the contract including clauses like the penalty for breaking the contract, etc. 
• Period and cost of the contract: It covers the period for which the contract will stay active and the up-front charges for the maintenance subscription. The contract is usually for a year and requires renewal after that.
• Frequency of field technician’s visits for servicing: During the contract period, how often the field technician shall visit the customer for service.  
• Payment Schedule: How often the customer has to make a payment for keeping up with the regular maintenance subscription? 
• The pricing structure for additional services: A formal pricing structure for all the additional services not covered under the contract. 

Benefits of Annual Maintenance Contract

An annual maintenance contract benefits both the parties entering into the agreement – the customer and the field service provider. Here’s how it benefits each one.

Benefits of Annual Maintenance Contract for Field Service Organizations

i) Optimize Service Technician Scheduling

With an annual maintenance contract, you can schedule technicians in advance preventing scheduling conflicts or missing out on any business opportunity. You can optimize scheduling by assigning jobs in nearby locations for the same day. This prevents the technician from commuting to the same location on different days and wasting time and fuel.   

ii) Better Finance Management

By having a fixed cost per year, you eliminate the risk of unexpected expenses. This reduces the amount of money you have to put aside for unforeseen events like equipment breakdowns, labour shortages, etc. With fixed income from existing customers, you can manage your finances well.

iii) Enhanced Customer Satisfaction

Customers appreciate receiving consistent service and support throughout the year. They don’t have to worry about calling during peak hours only to be told that the field technician isn’t available until next week. In addition, they don’t have to wait months before contacting you again. Instead, they can contact you whenever they need something repaired or replaced. Additionally, customers feel valued when you consistently communicate and solve the issues with the equipment before it becomes a major failure.

iv) Recurring Business 

An annual maintenance contract binds a customer to reach out to your field service company in case of any repair instead of swaying to the competitors. This gets you recurring business from existing customers ensuring consistent revenue flow for the sustenance of business in the long run.

Benefits of Annual Maintenance Contract for Field Service Customers 

i) Protects Customers from Unforeseen Equipment Failures

An AMC protects customers’ investments ensuring they receive quality service every year. When it comes to customer satisfaction, having an annual maintenance contract helps ensure that customers are protected against unforeseen repairs and expenses. Without one, customers could face costly repairs without knowing about it. With an AMC, there are no surprise repair bills. Customers know exactly what they’re paying for each month.

ii) Get Priority Access

With predictive maintenance in place, you need not worry about calling a field service technician as the field service provider predicts a repair in advance and schedules a field technician. Even if you forget or fail to notice your equipment repair, the FSO will keep up with the maintenance schedule. The best part is you get access to expert technicians in advance without waiting for long or making multiple service calls.

iii) Ensure the Long Life of the Equipment

Timely servicing ensures that the equipment performs well and prevents any major breakdown before it occurs. This reduces downtime and also extends the lifetime of the equipment.

Conclusion

An annual maintenance contract ensures that the customer’s equipment stays in good condition for longer with regular servicing. Manually keeping up with annual maintenance contracts in the field service business could be overwhelming and if you miss any service, you might also lose a customer. The best solution is to use an annual maintenance contract management tool. This tool not only keeps track of recurrent services but also alerts you before the service dues.

Unoservice field service management software comes integrated with the AMC management tool that helps you efficiently manage your contracts and the entire business from one platform. Try Unoservice FSM software for free to explore its functionality.

Frequently Asked Questions about Annual Maintenance Contract