Hot Issues In The Industry
A friend of mine waited patiently in line at the Department of Motor Vehicles to get license plates transferred to a new car. All the while he was trying to hold his hand and particularly his finger up at an angle to minimize the pain in his hand.
Earlier in the day, a passenger had accidentally slammed a car door without realizing that my friend still had his hand gripping the door frame at the door hinge. Despite fast reactions, the door caught one finger and smashed it pretty hard. Now it was swelling up and throbbing; but he needed the license plates and figured he might as well get some errands done since he couldn't do much else, not even type on the computer to retrieve his e-mail.
When he reached the head of the line and presented his paperwork to the clerk, she processed it quickly. Seeing his unprofessionally bandaged finger she suggested, “You better get that looked at by a doctor.”
Thinking the injury was just a bad bruise, my friend replied, “It will be OK.” That response was the wrong thing to say to this motherly lady approaching retirement. She was insistent.
“Who are you, a doctor? Are you an X-ray expert?” She wouldn't let up until he agreed to see a doctor, which he did soon after getting his license plates. The lady turned out to be right in her guidance. The finger was broken and needed medical attention right away. The doctor's actions both relieved the pain and assured the finger would heal properly and grow back straight.
See A ProfessionalThe message here is simple: Sometimes we need to see a professional. We don't always know how to treat ourselves - or our business - when there are problems. Hiring a professional can save us a lot of pain, besides avoiding lost profits.
Although every individual business has some unique specific issues, the overwhelming majority of businesses have responded to our inquiries and consulting efforts with a handful of like challenges. Regardless of the location (worldwide - more than 500 companies), the hot items of concern are remarkably similar. Let me share the ones that top the list and then let's see how to select professionals to help solve these barriers to maximizing our profits.
Issue No. 1: Lots of volume, not much profit. A common dilemma facing service and repair businesses today is how to increase profit. With sufficient business to keep all the technicians and staff busy, it would seem that the profits should be rolling in, but they are not. What we are seeing time and time again is the business owner's or manager's search for “getting more business.” Increase the volume and you'll increase the bottom-line profits, right?
Unfortunately, it doesn't work that way. It's a commonly held belief that volume and profit are automatically tied together. They are not; it's a myth. And assuming they are directly related can lead management down the wrong path to success.
The issue here is margins. Some businesses have actually increased net profits and not increased volume at all, or even had it decline slightly. Let's focus on the objective that makes a difference: the net profit, or what's left after all the expenses are paid and the shop costs are covered.
The fine-tuning that this analysis and solution requires includes a close look at the costs and, of course, pricing. (I can hear some people thinking, “I can't raise prices, all my customers will quit calling.”) The solution involves more than a simple price increase. How you structure your prices, which today have to be flat rate schedules, makes all the difference. How your technicians share the prices with the customer and techniques to generate legitimate add-on business are a part of what works.
In fact, surprising as it may be, some businesses are not completely aware of their total costs of making a service call, compensating the technician and running the warehouse and back office. Knowing the real costs is an essential starting point. It's no wonder that some businesses are aiming at a target for more volume and overlooking the bottom line - the most important goal.
A specific example of this practice is focusing on data that emphasizes the number of calls a technician completes in a day. The underlying assumption of: “more calls, more business, so more profits” is a fallacy. The relationship between calls and profits is not necessarily positive.
Sometimes fewer calls can make the company more money. Here's how: Maximizing the revenue per call is a better goal. Companies that we assist in their management planning recognize that training technicians to do the job right and meet all the customers' needs will increase the sales volume per call, making better use of technicians' time and reducing pressure for more calls and the costs of more driving. That's just one example of fine-tuning a profit strategy for the business.
Issue No. 2: Where to advertise? Yellow Pages costs are high. Without tracking your return from every ad in every Yellow Pages book, businesses do not know if the advertising investment they are making is paying off. Feeling pressure to advertise to keep up with the competition can cause a lot of the revenue the business receives to be wasted in nonproductive ads.
Two bits of analysis can help here. First, track all ads and only invest advertising dollars in ads that produce. (You must have professionally designed ads that jump at the customer, so they call your business and ignore the other amateur-looking ads. Get expert help with this fundamental rule of advertising.)
Second, in addition to optimizing the return on your advertising budget, your company must use the momentum it has with current customers. A goal should include making it easy for the customer to call your business, without going to the phone book.
There are several ways to encourage the customer to do just that:
- Offer a strong incentive with service agreements (discounts for service agreement customers);
- Effectively use mailers and stickers on appliances to keep your name in front of them; and, the least costly
- Have your trained technicians serve the customer's needs while they are there.
Issue No. 3: How do I find better technicians? From your customer's point of view, the business is the technicians. How they do the job; when they arrive; what they look like; how they clean up; how they explain the pricing for the job; their expertise in diagnosing the job - all of these elements of accomplishing the job make a difference in what the customer thinks of the business. Meeting the highest standards for all these important aspects of the service call require training.
Do you know what else I have found? Some experienced technicians (technically experienced, anyway) are more difficult to train in the application of modern customer-service methods. Hiring individuals who have experience in dealing with people - after all, our technicians are essentially our sales force - tend to work well.
In other words, we can train a qualified “people person” to fix boilers easier than we can train an experienced “technical person” to sell our jobs, sell service agreements, sell add-on jobs and keep the customer happy. That strategy has been proven and it alone may contribute to the “shortage” of good technicians.
Remember, technicians need rewards, too. An incentive pay system can make a big difference in keeping good technicians and motivating those willing to work hard for a return on their efforts. A professional can assist you in setting up an incentive pay system that makes sense for your business and more dollars for your technicians.
Issue No. 4: Which truck should I invest in? Given at least a minimal size for your business, there are some good trucks available to meet your needs and budget. I like to use the term “moving warehouse” for most of the trucks we recommend. The reason is simple; the fewer trips to the warehouse or supply house, the more efficient the technician is going to be in completing the service call. Also, customers dislike it when a technician leaves for an extended period of time with systems in their home disassembled and inoperative.
We have implemented a system of truck organization that operates similar to the labeling and organization of a warehouse - all the common parts and equipment are located where they can easily be found and the truck is always stocked.
Other truck considerations - and our Maio Success team can help you with these aspects, too - include vehicles with economical engines, long-lasting components and durable construction. Cheap trucks don't seem so cheap when they break down frequently or don't do the job needed.
Closely related to truck purchasing decisions are the economical operation and maintenance of the trucks. Simply purchasing the right truck is not enough. Maintenance records and data recording systems have become very sophisticated but still easy to use - and they save money.
Keeping track of miles and expected replacement times for major components, such as brakes, tires, or other key systems or engine parts, can help schedule maintenance and avoid unexpected down time. GPS today is integrated into these software tools and can preserve and maximize the effectiveness of any fleet of trucks, large or small.
Issue No. 5: How do I motivate my office and field staff? The typical response to motivating individuals is a compensation discussion: what to offer and how much to offer and what will it take to get the people who work for you to perform at the level you would like them to perform. However, let's look at our real goal. Aren't we really trying to get them to: 1) do their job more effectively and more efficiently; and 2) stay with the company? Other issues seem to be related to those basic goals. Productivity is what we want.
Sometimes it is surprising, but is almost uniformly true, that employees need recognition to build and maintain their motivation. Negative motivation (verbal reprimand, condemnation, threats, etc.) rarely produce the desired results for very long, if at all. Positive motivation includes public commendations in front of fellow workers, awards, winners of competitions and many other (almost unlimited number) rewards for “a job well done.”
To arrive at this productive state for the majority of employees, managers and owners will need to equip the employees with the tools they need to be productive. And the task is easy.
First, employees need the training to be able to do the job. Not just technical or equipment operation training, but training to communicate effectively and apply their skills to the job they are doing. Next, employees need the tools to do the job. You would never send a technician out on a repair job without tools. The same thing is true for office personnel, too. Out-of-date software, poorly operating computers, archaic phone systems - actually, broken or worn-out tools of any kind - won't permit the people working for you to do their jobs.
Then, people need to feel like they are making a contribution, that they are important to the successful operation of the business, regardless of their specific responsibility, from the least-paid warehouse clean-up person to the office manager, dispatcher and all the others. Without any one of them, the business would not run as well. It's OK to mention that to them occasionally.
Finally, to excel, people need some goals and rewards that they can set their sights on. Any position can have a higher level of productivity and people can aim for not just the rewards for that higher level but a higher-level job, too. If they perform, they are worth providing additional training and responsibility. It's a great motivator for the people to perform and stay at the company, our fundamental goals.
If your finger hurts, see a doctor; if your business hurts, see a professional. Experts save money and increase our bottom-line profits. Increasing volume is not difficult, but remember, let's focus on the real goal: more profits. An improvement in only one area of company operations can produce dramatic changes in bottom-line profits.
Put this quote on your desk: “If you keep doing what you are doing, you will keep getting what you've been getting. Are you happy with what you've got?”