ServiceTitan Memberships vs. Service Agreements: Navigating Setup and Management

For a podcast devoted to mastering the ServiceTitan platform, perhaps nobody is more equipped to share expert advice than Kathey Nielsen, a long-time ServiceTitan power user and now a consultant. She also comes from the trades, formerly working as a CSR, office manager, and general manager in the HVAC industry.  

“When we work with clients, we really come at it from the perspective of having sat in that seat,” Nielsen says. “We like to work on the operation side. We do a lot of ServiceTitan training.”

Live from Pantheon 2024, Nielsen, Owner of Operations Excellence, LLC (aka Chicken Lady Speaks), joins Mastering ServiceTitan podcast—where we get expert advice from power users—to discuss the ins and outs of membership management through ServiceTitan. 

With nearly a decade of ServiceTitan experience, Kathy shares her insights on:

• The differences between memberships and service agreements

• The importance of clear processes

• How to avoid common pitfalls when setting up and managing memberships

>>Listen to the full podcast on leveraging memberships with ServiceTitan now on Spotify, Apple, or YouTube.

Service Agreements vs. Memberships: What’s the Difference?

Podcast host Josh Lu kicked off the discussion by mentioning how people often confuse the two terms and asks Nielsen to explain the differences. 

“Memberships are more for the residential side, so it's like business to customer (B2C), whereas service agreements are for the commercial side, where they have maybe 20 or more units and it’s more business to business (B2B),” Nielsen explains.

Lu asked about the benefits of using memberships and service agreements and Nielsen says she likes to use a farming analogy to describe how the services offset seasonal cycles and keep technicians on the job year-round.

“I'm from the Midwest, so there are four areas of farming,” Nielsen says. “You work the soil and get ready to plant, that's your zero- to three-year-old equipment. Then you plant the seeds. That's your three- to five-year-old equipment. And then you let the sun and rain and humidity do all its work and that’s your seven- to nine-year-old equipment. And then harvest is your 10-year and older equipment.

“If you don't have clients in all seasons, you're not a viable company. Because if everybody's at the replacement stage, what do you do for the next 10 years? So, what memberships and service agreements do is they keep people in your circle,” Nielsen adds.

Getting Started with Memberships

When it comes to starting a membership program, Nielsen says the most important consideration for service businesses is seasonality, especially for HVAC companies. 

“The big thing people forget is, memberships aren't this big profit center. They're used to keep people in your circle. If I'm spending an inordinate amount of time as a CSR trying to book a membership, then that's just additional profit you're losing.

“You want it to be as seamless and as thoughtless in the process as possible,” Nielsen adds. “The biggest thing is you have to be really clear. A membership is what you sell. A recurring service is what you promise. And the recurring event is the act of doing.”

Membership Dos and Don’ts

Nielsen says services businesses run into problems with membership plans when they allow customers to “customize them to death,” rather than keeping plans simple and straightforward. 

“If you don't manage them correctly, it will be a big headache,” Nielsen says. “They have to be set up right, and they have to be managed correctly. I have lots of horror stories because people start out with this giant options package. Well, if you let your customer cherry-pick everything you offer, then it's going to be unmanageable.” 

When starting a membership program, Nielsen says businesses need to be smart about how they use deferred revenue, which is money received for services that have not yet been performed. She says businesses lose out on revenue when they perform membership services within the first month, as they incur the cost of delivering services without receiving enough money to cover those costs yet.

“You really want them to have skin in the game,” she says. “So, your first visit should not be the first month. In my opinion, it should be in six months.”

Beyond keeping membership plans simple, Nielsen says you need to account for the number of systems in the home. Businesses frequently make the mistake of booking all membership calls for an hour, yet a home with three systems ends up taking four hours, throwing the tech’s schedule off for the rest of the day.

Membership Management

When managing a membership program, Nielsen recommends designating a go-to person to lead the charge. She says the outbounding screen within ServiceTitan makes it easy to follow up with members. 

“You can say, ‘Josh, you're going to call on anybody due in the next two weeks and I'm going to call on anybody due the third and fourth week,” Nielsen says. “You can filter down by zip code, because if I can get everybody in a neighborhood, that's more profitable than driving all around town.” 

Many services businesses rely on maintenance visits during the slow season, but Nielsen warns about scheduling all maintenance visits during a single month or two. 

“I can't do 400-500 visits in one month. It's not feasible,” Nielsen says. “When you dump them all into one month, it's like digging through leaves to see who you need to call. But if I stagger them and make them seasonal, so the first visit is six months after the sale and the second visit is 12 months after the sale, now I don't have to dig.”

Nielsen suggests using less experienced techs on membership calls for customers with new systems as they typically don’t experience major issues and can learn on the job. 

“Once the busy season does come, I can put them on a no-heat or no-cool call on newer equipment and let them start learning,” she says. “Because you've got to grow technicians.”

Finally, Nielsen says you can’t make a customer use a service they already paid for but suggests creating a process and reaching out on a regular basis to try and book the appointment. Nielsen calls the customer every two weeks after the initial call for a total of five calls. 

“That gives them two and a half months to call me for a service they already paid for,” she says. “If they're not going to call me back in time, I'm moving on.

“It's kind of like buying a gift card,” she adds. “How many times do we get gift cards and never use them? That's why stores love gift cards. It's the same principle to me. You can only do so much.”

Evolution of Service Agreements in ServiceTitan

Nielsen says service agreements within ServiceTitan have come a long way since the early days when she had to manually enter each piece of equipment. It’s common for a big box retailer to have dozens of HVAC systems, multiple walk-in coolers, ice machines, and more.   

“In the past, you had to enter all of the equipment one at a time,” she says. “Now, you can take an Excel spreadsheet, dump it in, and bring that into your agreement.”

Nielsen also likes how ServiceTitan allows you to bulk upload and track needed materials for a commercial job, streamlining the process and reducing errors. 

“If you need filters or belts, it gives you a material list and you can do requisitions off of it and it gives you a report,” she says. “In the past, there was no good way to get that when you're trying to prepare for a job.”

Service Agreement Do’s and Don’ts

While memberships require communication with the homeowner to schedule the visit, Nielsen says the responsibility falls on the service provider for commercial work. 

“Oftentimes in commercial, you're not contacting them to schedule,” she says. “They're open for business Monday through Friday, or whatever their hours are, so it's just more a matter of putting it in the schedule and being consistent.” 

Nielsen mentions how smaller commercial buildings typically have fewer systems and often use residential equipment. In these situations, she prefers memberships over service agreements.

“In that case, I would do a commercial membership the way we've been doing them,” she says. “I wouldn't look at doing a service agreement. It's really for that larger building with 15 or more units.”

You can find this interview and many more by subscribing to Mastering ServiceTitan on Apple Podcasts, on Spotify, or our website, or search for Mastering ServiceTitan in your favorite podcast player.

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