After a heated hour of postulations, accusations and gesticulations, the boss laid down the following goals:
1. The sales manager needs to increase the average invoice.
2. The CSR supervisor needs to book every call.
3. The dispatcher has to make sure every caller gets same-day service.
The end result? Service techs were waving at each other as they raced back and forth across the map trying to burn through their calls before sundown. Did the sales numbers come up? Not really. Did the profits improve? Not on your life. Did things get worse as techs abandoned ship in search of calmer seas?
In this shop, the boss managed to put every department at odds with each other. His attempt to improve business resulted in misery for everyone while making it even tougher to meet his ultimate goal of more sales. It doesn’t have to be that way.
Last month, I laid the groundwork for a management style that reduces key operating goals down to one number: value points. This month I’m going to show you how to improve teamwork using value points to get your whole company shooting for the same target. The key to remember is that, once you set your value point system in place, it becomes the “gold standard” by which all sales and production processes are measured.
Here are the main differences between value points and gross sales as performance indicators:
- Value points depend upon the number of billed services delivered rather than the total invoice dollars.
- Achieving the value point goal assures profitability, whereas gross sales require scrutiny to make sure that overhead is covered.
- The entire company can pitch in for value point productivity, whereas a gross-sales-driven culture relies primarily on the sales abilities of the field personnel.
Value points may seem incongruous with typical sales theory because achieving acceptable performance isn’t necessarily the same thing as meeting gross sales targets. Profits and efficiency, not just sales, are the name of the game. Your sales/production manager will love using value points because this system provides more options for motivating and coaching techs.
Getting Things DoneA fact of life is that kinetic guys who take pride in what they can accomplish with their hands don’t always come with the best communication skills. This is not a character flaw; it’s just the way things are. Kinetic people like to get things done. A value point system is a production measurement that these techs can get excited about because it focuses on getting things done.
Should your sales manager ignore important indicators such as close rate and average invoice? Of course not, but now, rather than being targets, they become guides for reaching the target that the entire company is aiming for.
Let’s look at a few management examples.
Larry is a great plumber with years of experience. Customers trust him because he genuinely cares about what’s best for them. Larry has been sporadic in achieving his value point goals so James, his manager, is trying to help him out. James discovers a couple of issues that have little to do with Larry’s salesmanship but everything to do with his value point production.
First of all, Larry needs help with his truck inventory. By coming up short on bread-and-butter items such as refill valves and flappers, Larry has been limited in the number of easy add-on repairs he can offer. He can’t sell what he doesn’t have on the truck, so stocking up with the basics will help his sales. James doesn’t have to invest in expensive faucets or other high-priced inventory; he just needs to make sure that Larry can offer add-ons without worrying about whether or not he has the stock on his truck.
Another production killer that James discovers is that Larry spends quality customer service time at the gas station or at the shop taking care of paperwork. An adjustment to his scheduling habits adds almost an hour per day of customer contact time. Customer contact is what we’re all about, isn’t it?
Any sales manager, using any system, would look closely at these two areas when trying to improve sales performance, but their importance is amplified when value point production is on the line.
What if Larry’s closing rate was the big challenge? It’s important to note that since value points represent getting things done, they also represent customers whose needs were met -- this is the “value” in value points. In a gross sales environment, he may be pushing too hard to turn every faucet repair into a new kitchen sink, resulting in missed opportunities. Since even the simplest repair produces value points, he can focus on doing more of the small jobs, resulting in a better closing rate, higher efficiency and happier customers.
What if Larry has no problem making sales yet his value points regularly come up short? James could try assigning him an experienced apprentice to help get the work done. Besides boosting Larry’s sales and productivity, he’ll be polishing the communication skills of a future technician.
Value Points & Other Team MembersHow can your customer sales representatives play the “value unit game?” Often CSR performance is measured by percentage of calls booked. This is a tough number to track because the tracking data is subjective and often is recorded by the person being measured. If the whole team is aiming for total company value points, then the performance data is no longer under the control of the CSR. There’s not an opportunity to soften mistakes with “fuzzy reporting” because the end result is an empirical number that the CSR can’t massage.
Traditionally, CSRs put calls on the board and dispatchers take them off. In a value point environment, the two roles work together more closely because the goal is not just to “put calls on and take calls off” but to get things done for customers. When the CSR realizes that, in order to ring up value points, the service crew has to actually do something for someone, he or she will see the importance of accurate booking and, perhaps, skilled call screening.
Not only does the mutual goal unite the CSR and dispatcher, it bonds the dispatcher with the service crews. As a service plumber, I learned the importance of being friendly with the dispatcher and I saw how rough it could get when the dispatcher didn’t like someone. When a dispatcher and service tech get into a battle, the company loses. If a dispatcher’s performance bonus is tied to the value points earned by the service tech, battles are less likely to occur and if they do, they’re more likely to be played out on more neutral turf.
The warehouse person, purchasing agent, mechanic and delivery driver can also find ways to boost value point production -- even if the same person wears all the hats. For example, a warehouse person may not care about the size of a sale but surely he can see the necessity of having the parts available in order to get things done for customers. If all these functions are focused on the tangible goal of value points, the staff can figure out the best ways to get the job done.
To use value points to manage your company, you’ll need the following:
- Your cost per value point. See my August 2003 column in PM for more on this. A simple calculator is also available as a September freebie at www.serviceroundtable.com.
- A system to track the value points produced by each service person. Your flat rate price books are probably based upon labor units, which can be translated into value points. Keep a daily journal for each service person.
- A bonus plan that rewards each supporting team member according to companywide value points achieved. Bonuses might be in the form of a lump sum or an amount per hour worked that would be paid during periods when the targets are reached. Use your imagination and make it fun!
- A bonus plan that rewards each service person for achieving personal value point targets.
As a reward for your efforts, you should see better billing efficiency, higher sales and better teamwork throughout your company. In addition, your customers will appreciate your focus on delivering more value. I look forward to hearing your success stories.