Pennsylvania’s OnSite Management grows its maintenance contract business to provide quality, routine care for customers’ septic systems and build a more consistent revenue stream.
To improve cash flow, operate more efficiently, lower prices, and boost customer loyalty while fending off competitors, OnSite Management Inc. in West Chester, Pa., employs a simple and inexpensive tool: maintenance contracts.
Jeff Rachlin, who owns OnSite Management along with partners Bud Baroni and Derald Hay, says the company has been using maintenance contracts for about 10 years. Slightly more than 20 percent of the company’s 5,000 or so accounts have signed maintenance contracts, and that number continues to grow.
“The rest of our customers just haven’t reached that teachable moment yet, where they’ve just had a major repair or watched the previous homeowner go through a $10,000 to $40,000 system replacement,” Rachlin says. “They figure ‘If it ain’t broke, don’t fix it.’ Everyone learns differently … but usually, cost is a big influence.”
OnSite Management – which tests, designs, inspects, installs and services septic systems in a four-county area in southeastern Pennsylvania – markets the contracts to new customers after installing a system, and to existing customers, but only after their system passes an inspection.
Rachlin says maintenance agreements benefit both customers and the company.
For customers, regular inspections save money in the long run by detecting small problems before they lead to costly system failures. And customers appreciate making smaller quarterly payments instead of receiving one large pumping bill. The contracts effectively enable them to amortize the cost of tank pumping over the life of the contract, which runs for three years. Furthermore, they end up paying less for service because the company can schedule pumping routes more efficiently.
For OnSite Management, quarterly contract payments generate more consistent cash flow, as opposed to one pumping fee charged every several years. In addition, contracts give customers a built-in motivation to stick with the company. (If a customer moves, the contract is transferable to the new homeowner; if the new owner doesn’t want it, the old owner may get a credit for work not performed, or might owe the company money if the payments made don’t equal the value of the work performed.)
“It takes them out of the market,” Rachlin explains. “When they have a problem, they know they can call someone who’s familiar with their system, instead of looking through the Yellow Pages or going on the Internet to find someone. Plus, it keeps their price down because the biggest cost for us is getting out to a job and back. So if we can schedule, say, six houses at a time, it helps us be more efficient, and we can pass those savings on to the homeowners.”
Rachlin says he settled on the idea for maintenance agreements when an HVAC contractor tried to sell him a maintenance plan on a new system in his home. “I figured if they can do it, why can’t we?” he says.
Here’s how the contracts work: In exchange for quarterly payments, OnSite Management performs two inspections a year, which includes a pumping, if needed. The technician checks the solids level and the structural integrity of the tank above the liquid level, cleans filters, flushes the laterals, and hydro-pressurizes the system once a year. If a tank is emptied, a technician also checks its structural components.
“Early on, we were going to do maintenance intervals three to four times a year, but we’ve found that twice-a-year intervals are more cost-effective,” Rachlin says.
As a bonus, homeowners that sign maintenance contracts get billed at regular hourly rates for after-hours emergency calls, Rachlin says.
Technicians fill out and leave behind a copy of a checklist so the homeowner knows when the inspection occurred, the condition of system components and whether repairs are needed. If it’s a serious issue, staffers send out a letter and/or make followup phone calls.
Rachlin declined to disclose the price of the quarterly contract fees, but notes it’s a direct function of how much time technicians spend on-site – a figure the company got a better handle on over time. “Our customer checklists show us solids-content trends … which help us better predict when a tank will need to be pumped,” he says. “That, in turn, allows us to schedule visits to other nearby customers, which boosts efficiency.”
EQUIPPED FOR THE WORK
Technicians use the company’s four Ford pickup trucks to do inspections, and they can perform minor repairs during the inspections. Along with the pickup trucks, OnSite Management owns a 2007 Volvo truck, built by Advance Pump & Equipment, Inc. and equipped with a 4,000-gallon aluminum tank and a Demag-Wittig RFL-100 pump made by Gardner Denver; a J-3000 Jet Set portable pipe cleaner made by General Pipe Cleaners/General Wire Spring; a GenEye pipeline inspection and locating system, also made by General Pipe Cleaners; a RIDGID SeeSnake pipeline inspection camera; and a RIDGID NaviTrack Scout sonde pipe locator.
The company also relies on a 2007 Volvo tri-axle dump truck, a Mack single-axle dump truck, a 25-ton trailer made by Eager Beaver Trailers, a 25-ton trailer made by Rogers Brothers Corp., a 2011 PC 160 excavator made by Komatsu Ltd., a CT322 compact track loader made by Deere & Co., a 420D backhoe/loader manufactured by Caterpillar Inc. and a 2012 E35 compact excavator made by Bobcat Co.
PROFESSIONAL BACKGROUND HELPS
The company developed its own contract and inspection forms. The latter task wasn’t as daunting as it may sound, Rachlin says, because of his involvement with professional organizations and networking with others in the industry. He belongs to the Pennsylvania Septage Management Association, sitting on the organization’s education committee. He also teaches courses technicians take to become certified septic system inspectors. In addition, he’s a member of the National Association of Wastewater Technicians.
“Being a (certification) instructor allows me to stay on top of the latest inspection techniques, and belonging to NAWT keeps me abreast of things going on nationally,” he says. “Our forms continue to evolve over time as new technologies emerge and employees – and even customers – suggest changes. For example, the frequency of our visits (for maintenance intervals) changed because of customer input.”
Selling customers on the idea of regular maintenance is easier if they’ve just incurred a major expense, like a system replacement, or heard someone else’s story of problems uncovered in a time-of-sale septic system inspection.
“The bottom line is that maintenance is cheaper compared to replacing a system,” Rachlin says. “If we replace a system during a real-estate transaction, the buyer sees what the seller is going through – it’s a great teaching point,” he says. “They can see that with a maintenance contract, they don’t have to worry about that any more. It’s as close to flush and forget as you can be.”
It also helps that consumers are becoming more aware of the importance of septic system management, especially as more municipalities and/or states require septic system inspections before a home is sold.
Rachlin adds that educating customers is an important part of the company’s marketing and contract sales efforts.
“After we install a system, we go out and do an orientation,” he says. “The more they know, the better off we both are in terms of prolonging the life of the system. If it’s designed, installed and maintained properly, we believe it should last indefinitely. And the more confidence they have in us, the more likely they’ll continue to be our customer in the future. It’s all about building trust and relationships.
“Basically, I’ve found that it’s like a car, in that if you’re educated and you know it needs oil changed at certain intervals, you’ll do it,” he adds. “The same thing is true with septic systems. Once they’re educated, customers will follow up with service intervals.”
After pumping a tank and performing a 20-point inspection for a new customer, technicians leave behind a completed inspection checklist, a thank-you bag with a company refrigerator magnet that displays essential contact information, a brochure that explains how to take care of a septic system, and another brochure that provides details about the maintenance contracts.
The company also uses a website to educate customers and generate sales leads. Rachlin developed the site himself, and says it is responsible for service calls to more than pay its associated costs. Rachlin says he often directs customers to the website for more information, such as before-and-after photos of system installations and videos showing how technicians conduct inspections.
“Our biggest objective is to provide as much information as we can, and let customers pick and choose what they want,” he says. “It also establishes us as a progressive company that’s interested in helping homeowners understand what’s going on. For instance, if they see the kind of equipment that will be in their backyard, it alleviates the shock that occurs when you show up with a backhoe and
In terms of advancing technology, Rachlin says this is an exciting time to be in the septic service industry. Efficient drip-dispersal systems, for example, are opening up for development formerly unusable land, and offer more options for system repairs. And as care for new- and old-technology systems becomes more critical, maintenance contracts will continue to play an important role in the company’s success.
“They’re beneficial to customers because it gives them a better price for the work being done, and it helps us work more efficiently,” he concludes. “It’s a win-win situation.”