How to Leverage Extended Warranties to Create Loyal Customers and Increase Revenue w/ Kevin Thornton

[00:00:00] Tersh Blissett: Hello, everyone out there in podcast world. Hope you’re having a wonderful day. I feel like every single time we go live, we’re laughing about something. Uh,

[00:00:09] Kevin Thornton: every

[00:00:10] it,

[00:00:10] Josh Crouch: it is literally as you press the button, someone says something stupid and we’re always laughing , which is good. We’re in a good mood.

[00:00:18] Tersh Blissett: You’re listening to a Washington Service Business Master podcast.

[00:00:21] I’m one of your hosts, uh, Tish Blit, sitting virtually next to my co-host, Joshua Crouch. Uh, today we’re gonna talk, uh, with Kevin Thornton [00:00:30] with JB Warranties and, uh, we’re gonna talk about, uh, several different things, but we’re super excited to talk about, uh, the partner. Between JB Warranties and Sarah, uh, Sarah’s one of our sponsors of the show, Billy, he’s one of the originals that, uh, really helped, helped us to step up our production efforts in general.

[00:00:52] So, um, she we’re super excited to, to see how that integration works because we know [00:01:00] Josh has been the person, I’ve been the person that’s in charge of. Entering warrant warranties after they’re sold. Sometimes that can be a challenge. Uh, there’s definitely times where it’s like an afterthought and you’re like, oh, crap.

[00:01:15] I was supposed to warrant, uh, register that warranty. And so, um, I, I’m super excited

[00:01:21] Josh Crouch: or worse. Or worse. Uh, and and I know, and there was a post out there the other day and I was commenting on there because people were talking [00:01:30] about warranties and their self warrant and stuff, and they’re like, well, that’s the way we’ve always done it.

[00:01:34] It’s fine. Yep. I said, well, you may want to talk to someone about that , because not only are you doing yourself a disservice in the future when it’s time for private equity to look at your business now, they’re not gonna tell you that They take off on the price for that.

[00:01:49] Kevin Thornton: Yeah. We were just

[00:01:49] Tersh Blissett: talking to Billy about that the other day.

[00:01:51] Josh Crouch: Yeah, exactly. And it’s, so there’s, we’ll, we’ll let Kevin go into that stuff more, but this, this is gonna be a, a powerful episode and I think it’s gonna be good for those that [00:02:00] maybe you don’t offer extended warranties or you’ve, you’ve considered, or you’ve tried doing it in-house and it’s just a pain to do and you, you don’t want the liability.

[00:02:08] Uh, Kevin’s gonna. Can I dive into that and how that can help you today?

[00:02:11] Tersh Blissett: And if you’re watching this episode, check out my Amazing Hat. It’s not our normal service business master hat, but it’s, uh, it’s a JB Warranty one. It’s close second, close

[00:02:21] Kevin Thornton: second.

[00:02:22] Josh Crouch: I keep checking the mail every day for mine, but I haven’t seen it yet.

[00:02:28] Tersh Blissett: We’ll have to get somebody

[00:02:29] Josh Crouch: on that. Maybe Kevin, [00:02:30] Hey, uh, Kevin. You know, somebody ,

[00:02:34] Kevin Thornton: he can’t say anything, so he’s just sitting laughing in the background. ,

[00:02:38] Tersh Blissett: uh, also wanna get a huge shout out to up Frogg and everything that they do to make the, the podcast. Possible. Uh, ref Frogg is the latest thing that they’ve had.

[00:02:47] They have out the, um, and we did the podcast episode on that. And, uh, if you haven’t checked out that episode, check it out. Um, we’ll tag it in the show notes. Uh, and last, but on Lease Company Cam huge, [00:03:00] we did, we had a, an episode that we recorded, um, at the women in H V A C R Expo, uh, event a couple weeks ago.

[00:03:08] And, Uh, that’s always a great, we always have fun, uh, talking, talking with everyone. Um, but they’re, they’re doing great things for our industry and it’s only gonna get better. So,

[00:03:22] Josh Crouch: I got nothing else. So let’s start

[00:03:27] Kevin Thornton: Are you looking for valuable business advice to [00:03:30] reach that seven figure revenue? Mark, do you want actionable tips to properly navigate through every business challenge you encounter along the way? Let Tish Blis and Josh Crouch be your guide in getting you to the top here at Service Business Mastery.

[00:03:45] Tune in as they sit down with world renowned authors in business leadership and personal growth, who share valuable insights about management, marketing, pricing, human resources, and so much more. Let their nuggets of wisdom gold guide you [00:04:00] in owning a thriving, profitable, and ever growing business. Here are your hosts, Tish and Josh.

[00:04:14] Tersh Blissett: Hey, Kevin, welcome to the show. Hey guys,

[00:04:16] Kevin Thornton: how are you? Good, good. Fabulous. I know what to get Josh for Christmas now, so maybe, maybe the big guy will show up with a hat under the tree. .

[00:04:25] Josh Crouch: Hopefully I, I can always use more hats. .

[00:04:28] Kevin Thornton: Nice. [00:04:30]

[00:04:30] Tersh Blissett: So I had to, uh, match my attire, uh, to, to my JB warranties hat today.

[00:04:35] Kevin Thornton: Looking sharp.

[00:04:36] Josh Crouch: Yeah. Yeah, dude, you’re so fancy. Well, I tried. I didn’t, I didn’t at all. I didn’t match shit to be honest. I just threw a t-shirt on and I had to cover my bald head. So , your, your two

[00:04:47] Tersh Blissett: greens are clashing . I know. They’re, I wasn’t gonna say

[00:04:50] Josh Crouch: anything earlier. Well, Ron Davis likes to point out that I dress like shit compared to you.

[00:04:55] So , he points it out every time you can.

[00:04:59] Tersh Blissett: [00:05:00] Yeah, it happens. So Kevin, for those who don’t know who you are, uh, what JB Warranties is, can you tell us who, who you are a little bit about?

[00:05:09] Kevin Thornton: Sure, I’d love to. So, JB Warranties, uh, leading, uh, extended labor warranty company across the us. Um, uh, me personally, I’ve been in the kind of software services space for, gosh, long, long time, three decades.

[00:05:24] Um, for the last, uh, approximately five, six years I’ve been in the field service. [00:05:30] Uh, space. I was a chief revenue officer of a, of a field service management company. Uh, you know, worked with another, uh, company that, you know, responsible for global, uh, sales in the, in the field service space as well. Um, something that’s, you know, definitely, uh, a lifelong pursuit.

[00:05:45] My dad was a contractor, worked with him, you know, summers and weekends, uh, growing. Uh, wasn’t skilled with my hands, um, you know, on on the, uh, on the rink? Yeah, on the rink or, or working with the tools. So[00:06:00]

[00:06:02] Josh Crouch: for those that, dunno, I was raising my hand if you, if you’re listening to this, because that, that is exactly who I am. Yeah. That’s why we have ter

[00:06:08] Kevin Thornton: fixes everything. I screwed it. We break everything. , . So, uh, yeah, so I’ve been dealing with, uh, j just over a year, but I’ve, I’ve known the, uh, the executive team.

[00:06:19] For really the, you know, 27 years since I’ve, since I moved down here to Dallas Fort Worth from, uh, from Canada. And, um, I talked to Jeff Bohannon, who’s [00:06:30] the, the president of the company. I said, Jeff, you know, congratulations, the company’s doing so well. They continue to grow and expand and really develop deep relationships with manufacturers, distributors, dealer.

[00:06:41] I said, but I think there’s a real opportunity to add more value. And, um, you know, through our conversations we talked about, uh, creating a, a marketplace. So on jb warranties.com, you can click on marketplace. It’s available to, to all dealers. So there’s products and services available there. We’ve gone out on behalf of our dealer partners [00:07:00] and negotiated favorable rates.

[00:07:02] And really what we tried to do, guys, Look at those types of products and services that help dealers do one of three things. Either help them increase their revenue, uh, help them manage their expenses or decrease their expenses. And thirdly, um, help them mitigate risk. Cuz as we know, there’s a lot of risk potential out there.

[00:07:20] A lot of these dealers are small family businesses, and I like to say they’re, they’re one catastrophic event away from bankruptcy. And so if we can help [00:07:30] them avoid that, then we’ve done a good thing. . And so the J B W sales team has really embraced it. So when they go out and visit a dealer, instead of them just saying, oh, the warranty guy’s here with a box of donuts every, you know, every quarter, you know, it’s actually, you know, the JB JB warranty guy here, and he is a small business consultant who’s a trusted advisor who can help us with, you know, a number of different products and services.

[00:07:52] So, Any of our dealer partners or, or even if you’re not currently registered with daily warranties, uh, that’s a free service that’s available, [00:08:00] uh, off of our website and we’d love everyone to take advantage of it. What, what kind of,

[00:08:05] Tersh Blissett: do you have extra donuts? Just mail ’em to me.

[00:08:08] Kevin Thornton: What’s that? Do?

[00:08:10] Josh Crouch: Those are gonna be nasty when I time to get to you.

[00:08:12] If you

[00:08:12] Tersh Blissett: have, well, just mailed me the gift certificate then.

[00:08:17] Kevin Thornton: I will get you. Yeah, I’ll get you a crispy cream now. I now I’ve got you both handed Right. A hat for him. And, uh, crispy Kreme gives, we’re we’re pretty easy to shop for. Yeah, it sounds like it. ,

[00:08:28] Josh Crouch: if there’s any other vendors listening to [00:08:30] this episode, , you know what we like ,

[00:08:33] Kevin Thornton: right?

[00:08:34] Tersh Blissett: Yeah. That’s

[00:08:35] Josh Crouch: hilarious. So, so, so Kevin, when you, so you, you mentioned your territory managers and stuff going around in these contracts. What, what do you guys hear? Like, what are some common things that. Contractors resist offering extended warranties. What, what, what are their common objections or

[00:08:51] Kevin Thornton: common things?

[00:08:51] Why? Yeah, yeah, yeah. There’s, there, there’s a few, um, you know, they’ll say that, well, uh, you know, we have to be, uh, we have to be the lowest [00:09:00] price bid. And in order to do that, we can’t layer in additional costs for an extended labor warranty, or our competition doesn’t offer it, so we don’t offer it. Some will say, well, we don’t see the value in, in the labor warranty.

[00:09:14] Um, it’s one of those things that’s kind of like, and, and unfortunately, you know, we’re, we’re all consumers, so we go to Best Buy, we go to Staples, we go to. You know, retailers and they’re always trying to, you know, jam extended warrants. You buy a $50, you know, piece of electronic, Hey, would you like a warrant to[00:09:30]

[00:09:30] No, I’ll just buy a new one if it breaks. Right, right. But so it really comes down to education. We really have to educate the dealers that in turn can educate our homeowners. Of the value of the extended labor warranty, cuz they’re making a big investment, right? They’re opening their wallet, they’re making an investment.

[00:09:46] 10,000, $20,000 and it’s like, hey, you know, you’re the, the parts coverage typically is covered by the manufacturer for 10 years. , uh, many cases the dealer is covering a one year label warranty because they’re standing behind their [00:10:00] install. Mm-hmm. . Um, but then what are you gonna do for the rest of the, you know, 5, 7, 9 years?

[00:10:05] Right. And that’s where we come in. So it’s really offering peace of mind. It’s, it’s kind of that worry-free comfort as, as some of our partners like to say. It’s like, hey, You know, for an additional, you know, 500 additional thousand dollars as you’re making this big investment, um, anything goes wrong with that.

[00:10:21] Um, with that unit over the next 10 years, just call the contractor and who’s gonna take care of it for you, right? And so, so it really is peace of mind what they’re offering, [00:10:30] um, why it makes sense for the dealer. There’s really a number of different reasons. A, uh, if they add and they bundle in that warranty upfront at point of sale.

[00:10:39] They can mark it up. So there’s some additional revenue to be, to be had on the front end, uh, for, for the, uh, warranty. And then with JB Warranties, the only contractor that is tied to that warranty that can perform warranty work is that contractor. So it’s really solidifying the relationship between the, the contractor [00:11:00] and the homeowner.

[00:11:00] And as Billy from Sarah likes to say, it’s all about owning your backyard, right? Yeah. So you’re basically creating. Wall around these homeowners that your com, your competitors can’t get into because you’ve, you’ve provided a new system and you’ve, you’ve got an under warranty for the next 10 years.

[00:11:16] That’s why service agreements and, you know, labor agreements are so important, and then, you know, you’re creating additional reoccurring revenue. So over the term of that, of that labor warranty, you’re the one that’s gonna be getting those [00:11:30] calls. So you’re gonna be getting paid from JD warranties, right?

[00:11:32] Based on your, um, negotiations. And as you mentioned earlier, um, you know, if you’re eventually gonna sell your business, it’s, and, and you have a third party administrator on your warranties, like JB warranties, that’s considered an asset. If you are doing it in your self-insured. In many cases,

that’s considered a liability.

[00:11:54] Because a lot of what these, what what the contractors do is they take the money in, they kind of sock it over [00:12:00] here and they, they kind of draw from it when they perform some work. And at the end of the year, whatever’s left over that funds the holiday party. That’s not really, really, yeah. I’m wondering how many

[00:12:10] act

[00:12:10] Josh Crouch: they, they, they, they come with the idea like they open a bank account.

[00:12:14] Maybe they start doing like, Hey, 2% of the sale will go here, 1%. I wonder how many actually stick with that every single day, week, month, year.

[00:12:23] Kevin Thornton: That’s a lot of work. It’s a lot of work. You can do it right. You have to set up deferred revenue accounts, and as you say, a lot of [00:12:30] dealers with the deals, they’ll take a percentage of sales and they’ll, they’ll, they’ll put it there.

[00:12:34] But why, you know, why, why not just stick to what you’re good at? Right? Stick to repairing stuff and, and stick to installing stuff and, and leave, leave that to, you know, the professionals and, and having a third party administrator just makes sense. And then the last benefit is, you know, in 10 to 12 years when that system.

[00:12:53] You know, uh, needs to be changed out. Who’s that homeowner gonna go to? What are they gonna go to? The, the guy that’s been, you know, in their attic [00:13:00] for the last decade? Right. You know, uh, helping with service agreements and changing out filters and, and doing all the repair work. So, um, yeah, those are kind of the main benefits for, uh, for the dealer.

[00:13:11] And again, it’s really peace of mind for the homeowners. Why, why extend labor warranties make sense? So do you find that,

[00:13:18] Tersh Blissett: go ahead. Go ahead. Go ahead Josh. .

[00:13:20] Josh Crouch: I was just gonna say, do you, so obviously there’s, there’s value in just offering that. Are you finding that the dealers that are

really taking this and running with it are doing anything [00:13:30] extra above and beyond with their packages, if you will, to, to kind of create additional

[00:13:35] Kevin Thornton: value?

[00:13:36] Yeah. And, and so bundled pricing is important, right? As opposed to, because you know what, it’s like. You, you go in with a, with a good, better, best estimate for a, for a home. And in their mind, they want the best , but they want the good price. Right? And so the first thing they do is they start looking line item by line item.

[00:13:54] What can we, what can we get rid of? What can we, and, and something like an extended labor warranty, uh, is an easy, [00:14:00] you know, easy, uh, line item to, to eliminate, to get your price down. So if you can bundle the price, kind of like a happy meal, Hey, the price is the price. If, well, I don’t want the labor warranty it.

[00:14:10] It’s still the same price, right? And so if you position it as a bundle price as opposed to line pricing, that will help, um, adding it onto every single bid, you know, the, the, um, If you look at the penetration rate right now of labor warranties probably in around 20, 25%. And so if we get dealer’s [00:14:30] condition where every single bid that goes out the door has labor warranties, we think that the, the attached rate will, uh, will be driven up.

[00:14:37] And again, it’s all about creating value, right? For, for the dealers instead of just, Hey, I want to sell you a unit. I want to, I want to install it and I’m gonna move on to the next one. It’s, no, I’m in your neighborhood. You see our trucks. We want to, we want to create a relationship with you as the homeowner.

[00:14:51] We want to be your go-to for not only your, your AC units, but your hot water. We, you know, we want to provide your, you know, as I mentioned, change out your filters [00:15:00] twice a year. We want to perform the preventive maintenance services, maybe get into water filtration. So it’s, it’s really owning your backyard and owning the relationship with that homeowner because if you provide good service, good products, at a good price, there’s no need for these homeowners to go else.

[00:15:17] What?

[00:15:17] Tersh Blissett: So, uh, um, what do you say to the, um, people who don’t want, like what happens if, like, okay, so let me [00:15:30] wrap myself around my tongue.

[00:15:33] Kevin Thornton: Uh, should we do some word exercises? sounds

[00:15:38] Tersh Blissett: like, what do you say to the contractor who, who wants to divorce that? So you, you mentioned that, uh, they, the 10 year warranty kind of.

[00:15:48] Yep. Latches ’em onto you.

[00:15:52] Kevin Thornton: Yeah. So we we’re unique in the marketplace where we allow, um, you know, let’s, if, uh, let’s say you sell your home [00:16:00] and you can transfer that warranty to, you know, the, the person that’s buying your home at zero cost, you can also transfer it to another dealer. So we have it where homeowners, maybe a homeowner goes sideways with a contractor.

[00:16:13] Says, look, I just don’t want them, they installed the unit, but I, I don’t want them set foot my house anymore. We’ll work with them to find another, uh, contractor in their area that, uh, you know, that’s part of the JV warranties family and, uh, and, and make that happen for ’em. The other thing, turfs that we do is we, [00:16:30] we understand that, you know, the demographics across.

[00:16:33] The states are, are different, right? The, the cost structures, I like to say if it’s Manhattan, Kansas versus Manhattan, New York are completely different. And that’s why we, if you look at our price book, we started an $85 labor rate all the way up to 300 labor rate per hour, right? Um, and we started, you know, two years to, to 12 years in many cases with, uh, with warranties.

[00:16:55] And, um, we’re starting to hear now, you know, from the, specifically from the [00:17:00] northeast, that. , you know, they’re looking for labor rates in the 400, 500 per hour, right? Because costs are just skyrocketing. And so, yeah, we’re very flexible. We, we’ve got the voice of the customer and we have the flexibility to build, you know, uh, packages that are labor only or labor plus parts allowance, you know, including refrigerant without refrigerant.

[00:17:22] So it really is a, a menu. And so the dealers, you know, we can work

with them and, and our TMS can work with them and say, look, let’s put together. [00:17:30] Let’s put together the labor warranties that make sense for you, right? Mm-hmm. , how long it’s gonna be, what the term is, what the labor rate is, what do you want to include, what you, what, what you want to exclude.

[00:17:41] Also gives ’em the opportunity to maybe, Sell a two-year labor warranty. So if they’re trying to hit a certain price point, and then it gives them an upsell cross-sell opportunity in 24 months. So, um, so definitely there’s, there’s some benefits there. You had mentioned earlier around, um, the administrative, oh, sorry, was there a question?

[00:17:58] No, no, go ahead. Keep going. Okay. You [00:18:00] had mentioned about the administration of the warranties, right? So you have to go in your, in your field service management application, sell the warranty. Send it back to the office. Maybe someone logs in, they start cutting and pasting data from their FSM into our, our website.

[00:18:14] Um, and so, you know, the, we were able to, uh, have a conversation with, with Billy Stevens over at Sarah, and as the relationship evolved, it’s like, hey, we think there’s a real opportunity, um, to streamline that. As you know, Billy and, and Sarah is [00:18:30] all about efficiencies. It’s all about simplicity and so, We’re very excited to roll out the first of its kind, uh, automation of warranties.

[00:18:39] And so how it works is that, uh, JB Warranty registered dealers that are using Sarah, they can add our warranties or they, they don’t have to add all of ’em, they can just add their favorites if they want, but they can add their, their warranty options in their price book, and then they can create bundles with those warrant.

[00:18:57] So that as they, as the, uh, [00:19:00] comfort advisors are out there, uh, providing quotes, good, better, best quotes, it can have different layers of, of warranties associated with it. Once, once the job is complete and paid for, uh, through an api, it automatically scrapes information out of that C record. So contact information.

[00:19:19] Um, install date, model, serial number, all of that, you know, necessary information is pulled through an API from Sarah over to JB Warrant. It populates a [00:19:30] warranty, it triggers payment between the contractor

and, uh, JV warranties. And then once we receive payment, we then shoot again through an api, um, a, a link to that warranty back inside Ofer for the contractor, and then an additional link into the customer hub for the customer to.

[00:19:49] So that’s pretty cool. Let’s, and they have their

[00:19:51] Tersh Blissett: whole record

[00:19:52] Josh Crouch: right there because you can look, because with Sarah you can log into the backend, you can see all of your invoices. You can, so you’re saying that there’s actually gonna be a link where they can [00:20:00] see their

[00:20:00] Kevin Thornton: warranty status? Correct. And then, and then the next step, Josh, is that, um, and this will be available early in the new year, is that, and, and we have a 91 day waiting period from the time that you purchased warranties to the time that you, you know, can, can process a.

[00:20:14] But the next thing is homeowner calls up to Sarah, says, Hey, I’ve got a, I’ve got a claim, or I’ve got a, a repair. They pull up the record, see that it’s under a, a JB warranty and they’ll be able to actually do the work. And then they’ll be able to click on that, uh, warranty from within their system [00:20:30] and actually, uh, submit a claim to us.

[00:20:33] Uh, automat. , uh, you’ll, they’ll be able to upload any, you know, uh, supporting documentation, send it over our, uh, customer, uh, service team, claims team will take a look at it. They will vet it, match it up, approve it, and then, uh, and then pay the dealer directly. Man, you’re

[00:20:49] Josh Crouch: making, you’re gonna make some really big companies really happy.

[00:20:53] Yeah. We’re, we’re like one that you with this regularly, like just what you’re, what you’re describing right

[00:20:58] Kevin Thornton: now. If you have [00:21:00] never dealt with warranties, talk to whoever deals with it in

[00:21:02] Josh Crouch: your company. and show ’em this, they’re gonna be,

they’re gonna be doing back flips. Like, yes. I don’t even think you realize how much work mm-hmm.

[00:21:10] that is to do all of these things and fill out the paperwork, and then s scan it in and email it and keep records. Like this is, I love what you guys are talking about here. And,

[00:21:19] Kevin Thornton: and, and the best part is, right. So we tried to tick all the boxes. Well, it’s too difficult to, uh, to process warranties. Okay. We, we’ve solved for that.

[00:21:27] Well, the cost of [00:21:30] FSMs are, are. Okay, so we’re, we’re solving for that as well. So what JB Warranties is doing is that any dealers that are purchasing our warranties from within Sarah are, they’re gonna be eligible for a co-op. And if the dealer is an elite dealer with any, any brand, so it doesn’t matter if they’re with, with Trane or with, uh, with Lennox or Goodman or Carrier, re rude, doesn’t matter if they’re part of their Elite dealer program, they’re entitled to a 5% co-op.[00:22:00]

[00:22:00] All other dealers are entitled to a 2% co-op, and those funds will be made available to the dealers on a quarterly basis to basically buy down theirs subscription costs. Oh, that’s what’s up. Yeah. Right. So that, that’s, that’s wrong with that. If I had a mic, I’d drop it right now, but that’s, no one else has done that.

[00:22:19] No one else has automated the process. And so any dealers that are, you know, on pen and paper or those that are thinking about a change, um, should, should definitely consider it [00:22:30] because we’re helping to reduce their costs. And again, that’s what our marketplace is all about, right? Helping reduce their costs and helping them to increase, uh, the revenue streams.

[00:22:38] And I think we’ve, uh, we’re gonna hit a home run with this that’s,

[00:22:42] Josh Crouch: I know you guys are still working on this, right? So, and I’m sure there’s a lot of back and forth with the data and the API connections and stuff. Do you guys have like a soft launch, like a

[00:22:52] Kevin Thornton: Yeah, we we’re in it now. Yeah. So we actually have a couple, uh, couple of accounts signed up under beta and it’s gonna be generally available [00:23:00] to all dealers here at the end of the month.

[00:23:02] And so the best thing to do is, you know, go through the process, sign up, and any, uh, any dealers that are interested, um, in, uh, I’ll find the link here and I’ll send it over to you. But any dealers that are interested in signing up for, um, Uh, for AER demo can do that from our marketplace. So just go to jb warranties.com, click on the marketplace button in the top right corner.

[00:23:26] And when you see Sarah, I think it’s the first, uh, tile that’s, that’s [00:23:30] listed. Request a demo through there. That way you’re tagged to JB warranties. And then once you get signed up, you’re gonna get, um, access to preferential pricing because of the relationship. And then, uh, once you go through your onboarding, they’ll be able to, at the end of it, activate the integration with the warrant.

[00:23:47] Um, and if you’re not currently using JB Warranties and you want to, when you sign up on our marketplace for the Sarah demo, also click JB warranties and, um, and that way we’ll get you signed up for both, uh, both [00:24:00] services. You can integrate it and then take advantage of the, uh, of the co-op.

[00:24:04] Josh Crouch: So for those listening to this episode and aren’t seeing the live recording, he’s talking about the end of November.

[00:24:09] We probably won’t have the episode quite done yet with Thanksgiving coming up, but he’s talking, so this will be live by the end of November,

[00:24:15] Kevin Thornton: 2022. Yep. Yep.

[00:24:17] Tersh Blissett: Uh, so Kevin, I got a couple questions here. Sure. You mentioned, uh, uh, upsell after 24 months. Uh, does that mean that you don’t have to. [00:24:30] Sell this right when the system’s installed, so we can sell this to an existing system.

[00:24:35] Kevin Thornton: Yeah. And, and as I mentioned, um, we work with all brands, so that’s important, right? Because not, not all warranty companies will cover all brands. Uh, we do. Um, you can purchase a warranty. on a system that’s up to two years old. Okay? So if it was installed 18 months ago or 23 and a half months ago, you can put a warranty on it even if you didn’t install it.

[00:24:58] So if Josh goes in and [00:25:00] installs a new unit for me and he

looks and he puts a

[00:25:02] Josh Crouch: warranty on that, you’re in trouble If I’m doing it,

[00:25:05] Kevin Thornton: and yeah, I know it. Yeah. We’re gonna have, we’re gonna have a lot of claims on that. Um, and then you look to the left and there’s another unit that was installed by someone else as long as it was within the last two.

[00:25:16] Josh can sell us a warranty on both those units and, and can be, he’ll be, he’ll be tied to it. So he’ll have the warranty work, uh, or the repair work, uh, assigned to him. Um, you can, again, when I was saying the two years, uh, tur, [00:25:30] you can put a two year warranty, right? So the warrant, the labor warranty’s good for two years, and then after two years you can then call the customer and say, Hey, you know, would you like to, would you like to renew that?

[00:25:40] Right? Would you like to renew it for another three years, another five years, another seven. .

[00:25:44] Tersh Blissett: Okay. So if they renew it for three years at the end of that, that’s, that’s five years Now, can they purchase more after that or is it Yeah.

[00:25:52] Kevin Thornton: Oh, okay. Yeah. You, yeah, you can pat purchase up to, I think it’s 10 years total.

[00:25:56] Um, and then at that point, you know, as you get a new unit, you can put a, a new [00:26:00] warranty on it.

[00:26:01] Tersh Blissett: Okay. But as long as they purchased warranties up until that five year mark, then they can continue to purchase it out to the 10 year mark. That’s correct. Uh, okay. So the next question I have is, uh, pertaining to, it’s not really pertaining to you necessarily, uh, more so the extended warranties in general.

[00:26:19] Uh, what would you say to someone who believes that if a system’s installed properly, you had a proper vacuum and, and, uh, commissioning process and everything? [00:26:30] That, that it shouldn’t fail in the next 10 years. What? How do you. How do you have that conversation with someone?

Yeah.

[00:26:36] Kevin Thornton: There’s a lot of moving parts, right?

[00:26:38] And yes, you hope that the, the product was, was, was, uh, produced and installed and, and was, you know, transported, you know, in ideal conditions. And it was installed by a certified technician. And you know, there’s rainbows and butterflies. Everything’s great. That’s what we all want, right? The same thing with purchasing a car, right?

[00:26:57] You hope that the car’s gonna last past the warranty. [00:27:00] But there are some lemons out there and, and stuff goes wrong. So it’s really, you know, it’s insurance for when you need it, right? Mm-hmm. and, and hope you don’t need it, but in those cases that you do, and so it’s, again, you’re just providing that peace of mind that if something does go wrong, um, you’re covered.

[00:27:16] Right? You’re making the, the, the financial decision now, uh, and you’re making the investment now for, you know, the potential for future, you know? Mm-hmm. , uh, issue. Yeah,

[00:27:26] Tersh Blissett: so that makes sense to me. Um, I guess playing devil’s [00:27:30] advocate, a lot of times people would say, . Uh, I’ve heard, I’ve heard business owners and, and I’ve even been guilty of saying this myself.

[00:27:37] If it’s gonna fail, it’s gonna fail in the first year or two years, uh, because that’s gonna be your callback window. Uh, obviously if it’s not maintained, the filter’s never changed. You know, you get flood back to a compressor, compressor fails. Mm-hmm. , that’s the extenuation circumstance. But if as long as it’s well maintained mm-hmm.

[00:27:53] and, uh, so what happens to. Tech to the, uh, business owners that are seeing [00:28:00] this, you know, couple hundred dollars or a couple thousand dollars that they’re spending on a warranty, and, uh, they’re not having any claims at all. Mm-hmm. . And so then they’re seeing, okay, I could just throw this at the bottom line and take my, take my chances.

[00:28:14] What happens if they take their chances and they lose?

[00:28:17] Kevin Thornton: Right. And again, you’re hedging your bet, right?

Yeah. And so in some cases, and in fact we see Tish where, um, the, the highest claim rate is actually in the kind of three, four, you’re 3, 4, 5. It’s almost like a, it [00:28:30] almost works like this, right? Um, and in many cases, in the, you know, if I’m installing a unit and I’m trying to, you know, uh, have my price as low as possible, I’m thrown out a one year or two year, but I’m not accounting.

[00:28:42] And so I’m taking the kind of the quick $10,000 sale right now, but 18 months from now, all of a sudden they get that phone call and say, Hey, well this is under warranty. You gotta, you gotta take care of it, right? And all of a sudden it’s like, well, shoot, I, I just incurred 800 or 600, $800 in labor cost because I’m on the hook for something I sold two [00:29:00] years ago.

[00:29:00] So managing that and maintaining that, it, it just, it’s a whole lot easier if you just get into the, uh, into the cadence, the process of, Hey, you know, we, we put a labor warranty on this. And so even during that first year, that second year, You know that your labor, your labor costs are, are covered. The other thing that we’re trying to educate our, our dealers on is, look, 85 bucks an hour now and $85 an hour in your, in eight years from now, it’s not gonna buy the same.

[00:29:29] Right. We, we’ve all [00:29:30] seen Yeah. Sell $85 a year ago versus, right. Yeah. I mean, that’s exactly right. Yeah. If you like a dozen eggs for 85 bucks, can’t you . So, uh, so we’re really trying to work with our dealers to say, look, make sure. and, and this is where again, shameless plug for, for Sarah, when you talk about efficiencies and you talk about profitability in the financial health of your business, you wanna make sure that you know your numbers so that you’re, that you’re, you’re getting paid accordingly to not only cover your cost, but [00:30:00] but cover your profit margin, you know, your gross margins that, that you want as well.

[00:30:04] And so, um, we’re really talking about, you know, hey, maybe, maybe instead of 85, maybe it’s 1 0 5, or maybe. 1 25, 1 50. You really have to account for what you think that cost of living adjustment’s gonna be over that period of time. Uh, so that when you’re out there, you know it’s, you’re not taking in the shorts.

[00:30:21] So tell

[00:30:22] Tersh Blissett: me this, there’s, when we’re talking 85 or 105 or, or $300, we’re talking more [00:30:30] time and material versus wrench time. .

Um, as far as, cuz most of the times when we’re, we’re pricing out flat rate pricing, quote unquote flat rate pricing, uh, it’s not uncommon to see 2 50, 4 50, like th those are numbers that are right.

[00:30:44] Pretty common to see. Uh, and for somebody who only builds out based on rent time or flat rate time, to hear someone say 85 is like, that would seems really low. That would give Ruth King a heart attack. Um, right. [00:31:00] And so can you explain the difference or, or is that even in your wheelhouse, like the, the difference in that, like why someone would even choose 85 and what their, like, their flat rate price might be comparable to?

[00:31:14] Kevin Thornton: Yeah. And, and to be honest with you, as as we’re looking at 2023 pricing and above, uh, or beyond, we’re, we’re really reevaluating that. I, I really think that it’s gonna go away and it’s gonna be, you know, over a hundred dollars per hour. And, and if anything, like I mentioned up in the Northeast, we’re gonna be adding to [00:31:30] the, to the high end.

[00:31:31] Um, oh yeah. , and again, that’s per hour, right? So we’ve gone through and we have a repair schedule, so we know, hey, if, if this is the, if this is what the repair is, it’s three hours, right? So it’s $105 times, three hours, that’s what you’re getting paid, uh, labor on that. Um, or if it’s a four hour job or if it’s a, uh, 45, whatever it is, right?

[00:31:50] We’ve got that repair scheduled. And so, uh, all of our dealers know in advance what we’re paying out and how many hours we’re allowing. If it’s a, if it’s [00:32:00] slated for a two and a half hour labor, you know, to, to replace that unit and it takes the dealer an hour, we’re still gonna pay out at two and a half hours.

[00:32:08] Right. Unfortunately it takes him six hours because he didn’t have the parts and he had to go back and forth, back and forth, and he had, you know, three hours travel time, you know, um, he’s, he’s gonna get for that, you know, whatever that, that amount is. We al also offer a, a trip charge that that can be added in as well.

[00:32:23] So again, we’re extremely flexible in the number of warranties and the number of warranty options we have, because we [00:32:30] wanna make sure that we’ve got options that, that fit the dealer. You know, based on if it’s trucking a truck and or if it’s a, you know, it’s a really large multi-location, uh, dealer.

[00:32:40] Tersh Blissett: So, how do we see into the future?

[00:32:42] How do we know what we need?

[00:32:43] Josh Crouch: I’m be, I’m gonna hit, I’m gonna hit the mute button. .

[00:32:46] Kevin Thornton: I, yeah. I can see in the future my goal. My goal is

[00:32:49] Tersh Blissett: to talk over Josh .

[00:32:52] Kevin Thornton: Something to say you’ve been successful.

[00:32:58] Josh Crouch: Go ahead, Trish. Sorry. [00:33:00] Yeah. I

[00:33:00] Tersh Blissett: as a, as a business owner, um, we all want to grow. We all want to be rich, and we all want to retire when we’re 25.

[00:33:09] Some of us are successful at that, some of us aren’t. Uh, but we all want to, we want to know the future and we want to, we want to sell it. We wanna purchase it low and sell it at high. And you know, I mean that’s, but if we purchase it at $85 like you mentioned earlier, and 10 years from now, $85. [00:33:30] $85, right.

[00:33:31] What’s the chances that someone’s gonna be like, um, Just come and say, Hey, I’m just not gonna warranty that because I can’t do it for $85. You know what I mean? Yeah.

[00:33:39] Kevin Thornton: That’s a concern for sure. And that’s why our tms, we have these convers. Um, and we do role playing around overcoming objections and those sorts of things.

[00:33:48] We, we really try to educate, um, you know, our relationships with our OEM partners and their tms and the distribute distribution TMS as well, that, you know, again, knowing your numbers and, and, [00:34:00] um, you know, making sure that you know what you should be charging, uh, on for an hourly rate. And that’s why yeah, we’re gonna start seeing these numbers increase, you know, into the, as I mentioned, 1 25, 1 50, 200 bucks an hour.

[00:34:13] Uh, just because the cost of everything’s going up. The cost, you

know, the, the cost of, uh, acquiring a new employees going up, you know, the trucks are going up, the, the cost of gasoline’s going up. It’s just, you know, it, it, it’s just what we’re dealing with. Trish, can I talk?

[00:34:29] Tersh Blissett: Depends [00:34:30] on what you wanna ask. . ,

[00:34:32] Josh Crouch: he, he shouldn’t ask that question.

[00:34:34] So I wanted to go back to, uh, Kevin, you mentioned the bell curve of when you see most failure rates, because most, like tur said, most people think maybe it’s like the first year or two, and you said it’s like years three, four, and five. Do you have any data of like the most common reasons why

[00:34:48] Kevin Thornton: that. No, I don’t.

[00:34:50] Um, I’ll, I just got, I, I just got the kind of summarized data and, and that’s something that we’re looking at and we’re kind of digging into as far as really looking at [00:35:00] different classifications of, of the types of failures when they’re happening, why that is. Um, but yeah, we don’t, we don’t, we don’t have information that we can share, uh, publicly around that, unfortunately.

[00:35:11] Okay. I was just curious. Say that privately later. Yeah, yeah, yeah, yeah. If you mute everyone else, I can tell you the answer. . Well,

[00:35:17] Josh Crouch: I was just curious if it was like, because a lot of times when somebody gets something new, right? They, they might wait a while to get that first oil change on their car. Cause like, oh, it’s new, it’s fine, everything’s fine.

[00:35:26] Right. My, my tires are fine. This is fine. So that new unit [00:35:30] runs for a couple years and they really. Taking care of it. And that’s where I was, I was trying to go with it, and I didn’t, I didn’t know if you had data to suggest that

[00:35:37] Kevin Thornton: that was the case or not. No, they’re, maybe they’re not, you know? Yeah. You’re supposed to change out your filters every six months.

[00:35:41] Maybe they’re skipping it, right? Or it’s extending, or it’s weather

related, or, you know, there’s been some stress to it. There’s, there’s multiple reasons for, for that. Of course. .

[00:35:50] Josh Crouch: Okay. So that’s why I was trying to interrupt Tur, cuz I, we were like, this is like four questions ago now, but That’s okay. You’re welcome.

[00:35:59] Tersh Blissett: is there a such [00:36:00] thing as, as just getting a warranty for the second half of the 10 years?

[00:36:06] Kevin Thornton: Oh no. Um, we have, there, there are some warrant. No, you have to, it has to be within the first two. It’s gotta have

[00:36:13] Tersh Blissett: a, my goal is to make you say, um, no, uh uh, no, I accomplished it So guilty. .

[00:36:21] Kevin Thornton: Yeah. I’ve, I’ve shared everything that I know about our warranty business I’ve shared with you.

[00:36:25] And so my, my knowledge bank is depleted, as I say. Uh, my, my main [00:36:30] scope and, and day-to-day is really working with, with partners and like,

[00:36:33] Tersh Blissett: yeah. So my thing is like, uh, I’ve. Maybe I’ve made this up in my head. I don’t know. Maybe I’ve heard somebody talk about it. I don’t, I don’t have any idea. There’s, there’s all kinds of voices up there that are trying to argue to see who’s gets out.

[00:36:46] Uh, and sometimes the one that gets out don’t make any sense, but mm-hmm. , uh, it’s, I thought that, I had heard that there was a warranty that like you could buy five years, but you didn’t have [00:37:00] to start the five years until the fifth year because of. Older? No, I don’t know. I guess like your bell curve you’re talking about, it’s starting to fail at five year mark.

[00:37:10] I don’t. . Yeah.

[00:37:12] Kevin Thornton: Yeah. And again, you can just imagine, right, because the older the equipment, the higher propensity of, of repairs

[00:37:18] Tersh Blissett: doesn’t make any sense for JB warranties, but it makes great sense for your’s

[00:37:22] Kevin Thornton: there. Tons,

[00:37:26] Josh Crouch: church

[00:37:26] Kevin Thornton: voices, questions

[00:37:27] Tersh Blissett: like, well just ask Ian, like [00:37:30] if there was a weird off the wall question.

[00:37:32] I asked the HR guy that. I tried my best to stump him, but I couldn’t. I

[00:37:36] Josh Crouch: think, I think, I think we should make your questions get pre-approved before the show.

[00:37:40] Kevin Thornton: What ? What? Hey, I got a

[00:37:42] Tersh Blissett: question for you. Would, did, would you ever pick up a hitchhiker?

[00:37:45] Kevin Thornton: Ooh hmm. No. Not in this day and age. No. No. Absolutely not.

[00:37:55] Absolutely one hun . So you’re saying there’s a chance, [00:38:00] it, it’s the, you know the thing, right? We all wanna think

[00:38:03] Josh Crouch: we would, right? We all wanna say like,

[00:38:05] Kevin Thornton: if someone really needed we word maybe, but I don’t know. They, you know, psychos come in all shapes and forms, so I’d have to say a hard no there true

[00:38:14] Tersh Blissett: story.

[00:38:15] Just ask my ex. Yeah. What did I say that loud? That was wrong. Wrong with that? The wrong voice came out that time.

[00:38:26] Anyways,

[00:38:27] Josh Crouch: Josh, we have completely this up. We have [00:38:30] completely derailed. We’re off the tracks. Yes. Yeah. Good job, Josh. I don’t even know what we’re talking about anymore. , whatever. So Kevin, you gave, you gave some, uh, we can go to your site, sign up there. Is there anything else that we should know or the listeners should know before.

[00:38:47] is there a way that they can take a look at rate sheets or anything with, without signing up? Is there any like low hanging fruit type stuff we

[00:38:53] Kevin Thornton: can send people? Yeah, probably the best thing we can do is, uh, is to kind of, you know, if, if they want to learn [00:39:00] more, we can, we can coordinate a call for them. Um, we do have literature that’s available that we can send out.

[00:39:07] It, it really takes 90 seconds to sign up a, as a registered dealer, once you do, we’re gonna provide all the information for you. We have a, a standing promotion for all new dealers. There’s a, there’s a discount on the first warranty that’s sold. Um, every new dealer is, uh, assigned to a a territory manager.

[00:39:27] They’re gonna do an outreach, um, if [00:39:30] they’re within close proximity, they’re gonna come in and visit, walk it through all the different programs, or else we’ll do a Zoom call. So it, it really is convenient. Very, very simple, uh, you know, to, to get engaged with JB warranties if you’re not. .

[00:39:43] Josh Crouch: Awesome. No, that’s, that’s great.

[00:39:45] This has been, uh, I appreciate you shedding some light cuz Billy tells us enough to keep us really excited. Yeah. But not enough to be like, oh, like he’s not like letting us like spilling the beans. Right. He’s kinda like, opens the can a little [00:40:00] bit.

[00:40:00] Kevin Thornton: It’s,

[00:40:00] Tersh Blissett: it’s like that insurance car guy that has like the fish hook and he’s like,

[00:40:05] Kevin Thornton: just enough.

[00:40:06] Yeah. With like

[00:40:07] Josh Crouch: the dollar bill that’s like hanging from the fish show and he’s like, as soon as you get close he pulls it away from

[00:40:12] Tersh Blissett: you. Yeah. I’m sending Billy some waiters for Christmas cause he’s not got to me. He’s like, Ooh, you wanna know something. Yeah. . I kidding,

[00:40:19] Kevin Thornton: kidding. Well, and, and Billy’s been so successful with, you know, the.

[00:40:24] HVAC companies that he’s built. Um, and I’ve had the pleasure of, of bringing, we [00:40:30] actually, because we’re so close to the Sarah office, we can bring dealers, uh, down to the office. They can do a walk, walk around, uh, check out the, the Billy Go operations, see how they’re utilizing Sarah, get a chance to do a, an onsite demo, um, which is, which is absolutely great when they’re, you know, when the industry average right now is four, six, maybe 8% on the high.

[00:40:53] For profitability and EBITDA for, for these dealers. And you know, we’re seeing UHS [00:41:00] customers that are, that are, you know, pulling out 24, 26, 28, 30%, you know, profitability on the annual business. That’s wild. Uh, annual basis, you know, that’s life-changing for these businesses. Right. That, that allows them, that equity to expand, to grow, to upgrade their trucks, to go hire people.

[00:41:18] Um, and you know, that’s awesome. And, and so culturally, Sarah and JB Warrens are, are aligned. Um, they’re really trying to help, you know, change the lives of these dealers. And that’s what [00:41:30] we’re trying to do through our, our, you know, warranty business as well as all of our new partnerships through our marketplace.

[00:41:35] So it’s, uh, definitely a, a great, uh, great.

[00:41:39] Tersh Blissett: So if you want, uh, the best. Regional manager, definitely Will. Will is the man. .

[00:41:47] Kevin Thornton: Will Basco my good friend. He just happens to be mine. Yes, yes. , you’re not biased at all. Will you deserve a raise? . And as you

can imagine, you know, with Will and [00:42:00] see, he’s, he’s fortunate cuz he’s got the Bulldogs right.

[00:42:03] And, and they’re perennial. Perennially good. Um, down here in Dallas, you know, it’s the, it’s, it’s our little kind of horn frogs of tcu, undefeated, no big deal. Um, we’re number four right now, so yeah, we’re pretty, we’re pretty. Come on now. We’re pretty excited. George’s number one to be. I know. So we’re having our little time.

[00:42:25] We just, so Brian and I, of course were going at it last weekend cuz he’s [00:42:30] a, he’s a big longhorn. And so TC went down to Austin and, and kicked some Longhorn butt.

[00:42:35] Tersh Blissett: So, uh, Brian wore a Longhorns jersey. I saw that to the UGA game. . I’m sorry. , yeah. Oh, him and Evan and who else was it that was there? They were ing against the Georgia Bulldogs in the Georgia Bulldog section sitting right behind me.

[00:42:53] I was laughing.

[00:42:54] Kevin Thornton: He’s a Marine. He’s kind of bold that way. So, Oh,

[00:42:58] Tersh Blissett: I love Brian. He’s great. Yeah, [00:43:00] Brian, uh, will needs a raise, by the way.

[00:43:02] Kevin Thornton: What’s that? Said Brian will ate the res. That’s nice. Nice comment there. . Who said that? .

[00:43:09] Josh Crouch: I don’t know who said that to Brian. Said that.

[00:43:11] Kevin Thornton: Who’s that? Brian? That’s

[00:43:12] Josh Crouch: Brian.

[00:43:16] Tersh Blissett: That’s hilarious. That’s

[00:43:18] Kevin Thornton: hilarious. Of course they’re gonna spot Check me on all the stuff I talked about with warranties, right? It’s like, Hey, you kind of missed the mark there.

[00:43:24] Tersh Blissett: We’re gonna send him a, we’re sending Brian a transcription, uh, with good notes.

[00:43:29] Josh Crouch: I’m hoping Brian [00:43:30] caught the part about

[00:43:30] Kevin Thornton: me needing a hat.

[00:43:32] Hey, Tish. Make sure it’s a really big font though. Oh, for Brian? Oh yeah, for Brian. That’s a good, if you can get him like an audio book that would probably,

[00:43:40] Tersh Blissett: That’s what the podcast for is . That’s right. Kevin, we appreciate you hanging out with us. Everybody at JB Warranty is amazing. Uh, they’re always in many errors.

[00:43:51] Uh, y’all, you guys are always awesome to hang out with and, uh, huge shout out to you and, uh, and Patrick Lang, um, [00:44:00] for. providing that, that experience for us at the U G A game. It was a Georgia versus, uh, Florida game. Yep. And, uh, Patrick, he’s a huge fan of Florida. Uh, him and his family went to school there, unfortunately.

[00:44:12] Yeah. Um, they got their world rocked. Um, but yes, still with a smile. He, he was like,

[00:44:20] Kevin Thornton: Yeah, Patrick’s a good friend of ours and of course anyone that’s looking to buy or sell businesses, he’s business modification group is, is fantastic. So

[00:44:28] Tersh Blissett: shout to Patrick. [00:44:30] Absolutely, absolutely. Josh, you got anything else you want to add before we wrap things up here?

[00:44:35] Josh Crouch: No, we’re good. I’m a Badger fan. We sucked this year. So I got

[00:44:48] Thank you for

[00:44:48] Kevin Thornton: listening to this episode of Service Business Mastery. Now that you are equipped with essential business advice from this impactful conversation, you are one step closer to becoming the successful

owner of your. [00:45:00] If this episode has been helpful to your business journey, don’t forget to subscribe to the show.

[00:45:05] Leave a rating and share it with other owners

[00:45:07] Tersh Blissett: as well. Visit service

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