How many times have you uttered that all-too-familiar phrase?
I’ve heard it countless times. Just this week, I heard an owner say with great certainty, “There is nothing wrong with this company that a bunch more calls wouldn’t fix.” Well then, our work is done. Let’s just wait for the phone to ring - in 2010, if you are to believe the economists.
Now, I will be the first to admit, running a service business is a lot more fun when you have an abundance of calls. You can hold firm on and easily increase your pricing, charge dispatch and diagnostic fees to further qualify customers, hire inside staff to take some of the pressure off you in the day-to-day operations of the company. Yes, having an abundance of calls is a goal that every service company should have. It just makes life a lot more fun and profitable.
So, I generally agree with the statement. However, there is a dark side to this way of thinking. The damaging part is it tends to deflect personal responsibility for making the most of what you have right now.
Let me explain by way of an example. Several years ago, I was at a company that had a history of success. It was, generally speaking, a well-run organization although profitability had become stagnant in the past couple of years. Coincidentally, the company had a relatively new service manager.
The service manager firmly believed he was doing all he could to manage the service department properly. In his mind, the only thing standing between the company and double-digit profits was more calls - more new customers calling the company for service. He was adamant. If he had the calls, he just knew he could turn them to gold.
In other words, the key to his success as a service manager was completely out of his control.
This example gets worse. At the time, the company’s revenue had increased 28 percent year after year, but the department’s gross margin had declined from an already low 46 percent to 41 percent. The one statistic that a service manager truly has full control over is gross margin (sales – (direct labor + materials)). Turns out, his one area of complete control was out of control.
Manage Today's RealityThe above example is vivid in my mind as it occurred during one of my first consulting assignments. However, I have heard the same excuse for mediocre performance many, many times. In the past, when the economy was humming along, there was perhaps some reason for optimism that call counts would magically increase. Today, we should harbor no such illusions.
What we need to do today is assume that our call counts are not going to increase. In fact, it is probably safe to assume that they may get a little worse. Now, with that assumption in place, what do you have to do to get the company to a point of strong profitability today?
I’ve been in contact with a lot of companies recently who seem to be weathering the current economic climate relatively well. What is their secret? I hate to say it, but in most cases, it is rolling up their sleeves and getting back to basics. They are getting serious about training and absolutely holding all employees accountable for using that new information. They are making sure every inbound service call is tended to like it is the only call of the day.
It isn’t fancy or flashy, but successful companies have realized that, in order to serve today’s customer, they have to bring their A game every day. The owners are determined to ensure this is occurring every day with every call.
They are watching their conversion rate and average sale like a hawk, making sure that any slippage is immediately addressed and corrected. This, unlike call counts, is something they do have control over. They are not leaving anything to chance.
Another common thread with successful companies in today’s environment is they moved quickly to get their business sized right for the business they have today.
Here is what I mean: When revenues and call counts started to decline, they did not think about how hard it was to recruit and train their current group of employees. They did not think about how their life would change if they had to take on internal responsibilities they had gladly relinquished as new staff was hired during better times. If the business did not have the proper revenue to support the current internal staff, they moved quickly to right-size the business to today’s reality.
Here is what is happening in tougher times: The strong get stronger. Even successful companies have waste - poor processes that result in lost customers, time delays and cost overruns. Successful companies are weeding out their inefficiencies as we speak. They are getting their operations trimmed up and are training, training and training. They are developing a nucleus of highly productive employees that know how to run a successful operation.
While it may be tough right now, the bad times are positioning these companies for huge success when the economic climate improves. These leaner, smarter, more-efficient companies are getting the heavy lifting done now and are poised to capitalize on any opportunity.
You can, too, especially when the phone starts ringing again!