Manage Your Service Department
Manage Your Service Department
How You Look Makes a Difference
By Tom Grandy
There was a study done on a busy street corner in a large city. A middle-aged man was dressed like a homeless person and was sent to a busy intersection. When the light was red, the man dressed like a homeless person looked both ways and, when no traffic was coming, he walked across the street. No one else followed him.
The same man was then cleaned up and dressed in a suit and tie. Again, he was back to the same busy intersection and, again, waited until the light was red. He looked both ways and, when no traffic was coming, he walked across the street. However, this time, everyone else on the corner followed him. How you dress does make a difference!
Manage Your Service Department
Outdoor University: Teach your Techs to Soar
by Bill Kinnard
Every once in a while you come across a program that is a game-changer. Every time I hear our Basic Business Boot Camps described this way, it gives me a sense of thankfulness. It’s always our goal to help contractors with their businesses and, in the process, change lives. When it comes to your role in the leadership process of your company, it’s up to you to lay out the vision and instill it into your team. This can be tough.
Manage Your Service Department
Outstanding Techs Want You To Measure Their Performance
By Tom Grandy
It's a fact that dedicated technicians want you to measure their productivity, and they want to be rewarded for doing an outstanding job. That's why it's important to have a system that not only measures their actual productivity against a stated goal, but rewards them with a bonus if they do an excellent job. That is what the ProfitMaxx software is all about. From a simple time sheet that takes about five minutes a day per tech to enter into the software, the technician’s productivity is measured against 24 Key Performance Indicators (KPIs). It not only measures their productivity, but the information automatically flows into the Tech 500 Bonus system which allows you to pay bonuses based on accurately measured productivity and profitability.
Read more: Outstanding Techs Want You To Measure Their Performance
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Who is Really Setting Performance Standards in Your Service Department?
By Tom Grandy
You have a significantly sized service department with at least four service techs and a full-time service manager. The question is simple: who is really setting the performance standards within your service department?
The obvious answer is that your service manager is setting the standards. After all, that is what he or she is being paid to do, right?
In theory, that’s correct. However, the reality can be quite different. The one who is often setting tech performance standard is your oldest, and usually highest paid, technician. Let’s call him Bill.
Read more: Who is Really Setting Performance Standards in Your Service Department?
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Where You Park Makes a Difference
By Tom Grandy
I have a quick question for you: Does the customer really care where you park your vehicle? The answer is a resounding yes!
Here are just a few reasons why from the customer’s perspective and from your company’s perspective.
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You Determine Company Cash Flow
By Tom Grandy
There are two things that put most trades companies out of business.
The number one cause of failure is improper labor pricing. The bottom line is pretty easy to understand. The company is simply not charging enough per hour to cover its real costs of doing business. The perception of most service technicians is that the difference between what they are being paid, and what the customer is being charged, is all profit. The hourly rate does cover the technician’s hourly wage and matching taxes but it also must cover things like rent, utilities, gas, vehicle maintenance, the office and owner’s salary, insurances, Visa charges, bank charges, cell phones, loan payments and the list goes on. It is the rare company that can charge less than $100/hour and make money in service.
Manage Your Service Department
Don't Speak to Your Family for a Month
By Tom Grandy
Can you imagine what would happen if you didn’t speak to you wife or children for a month? You would have no idea what they were up to or what was going on in their lives. They, in turn, would feel ignored or, at the very least, like they were a long way from being a top priority on your list of important relationships. Without routine communication, important facts and events fall through the cracks and eventually the relationship is harmed or perhaps even lost all together.
It sounds silly to not talk to family members for a month, right? Well, guess what? That is exactly what many company owners are doing when it comes to their service techs. Some companies only have a meeting with their service techs every month or two, or perhaps not at all. Guess what happens to communication? You guessed it. Like our family members above, those techs are probably feeling pretty unimportant. I want to strongly suggest you have a weekly service meeting with your techs. The meeting needs to be no longer that 30 minutes, and it needs to be structured. Each meeting needs to cover the following items:
Manage Your Service Department
A New Way to 'Spiff' Your Techs
By Tom Grandy
Most reading this article pay their service technicians a “spiff” – or commission – for selling a maintenance agreement. The process helps create an incentive system for the techs to take a little extra time with the customer, and it rewards them if they make the sale. You have heard it before. Reward behavior you want repeated.
Manage Your Service Department
Do Your Techs Know the Rules?
By Tom Grandy
If you are a parent, you have disciplined your children, often for things you “told” them not to do. They knew the rules: be home for dinner by 5:00, clean your room, don’t talk back to your mother… The list goes on. Over and over again you told them what you expect, and over and over again they are punished for things they knew not to do. That is simply part of being a parent.
Manage Your Service Department
Inspect What You Expect
By Tom Grandy
Inspect what you expect. It’s a simple statement, and couldn’t be more true. If you tell your 10-year-old son to clean his room (after you have taught him how to do it and what your expectations are), what do you as a parent do? After a reasonable amount of time, you go to his room to see if he cleaned it according to your standards. If he did, you provide positive feedback and you might even reward him in some way. In fact, that’s another simple, but effective, principle. Reward behavior you want repeated!
A Little Customer Service Training Pays Huge Dividends
By Bill Kinnard
Bob Daniels started Copperfield Chimney Supply over 30 years ago. His company grew into a national organization that became the top provider of materials to the chimney sweep industry in the nation. Part of Bob’s success was to provide “bits and tips” of information to his customers that would help them grow and prosper. Below is one of his tips.
Sooty Bob’s Business Building Tip - #39
Read more: A Little Customer Service Training Pays Huge Dividends
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Please Measure My Performance!
We have worked with contractors across the country on the ProfitMaxx software. This program accurately measures the productivity and profitability of individual service technicians. Check out one quote that was posted by one of our ProfitMaxx users on Service Roundtable.
"We implemented the ‘Super Tech 500’ Bonus program in May. We are now two months into the program and we have already seen at least a 30% increase in production. The word has gotten out to other techs in our city and we are getting calls daily for interviews. Those techs that are not performing know exactly where they are not productive and they also know that we have a list of applicants ready to replace them with if they don’t improve.”
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When Techs Ask: "Why Do We Need to Charge So Much?"
It’s a silly question, but I am going to ask it anyway. Have your techs ever asked, “Why do we need to charge so much?” Rest assured if they have not actually asked, it’s been on their mind. The perception of most technicians is pretty much the same: they assume the difference between what they are being paid and what the company is charging the customer is all profit. The tech is thinking, “I’m working really hard all day just so the boss can get rich! If that’s not bad enough, now the boss wants me to work harder, faster, more efficiently and even encourages me to create more add-on sales!”
The tech is thinking, “Why should I work harder so the boss can make more money?”
Read more: When Techs Ask: "Why Do We Need to Charge So Much?"
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How to Find Out If Your Techs are Under-billing the Customer
If I told you your techs were under-billing your customer by $10-$30 per hour, you would probably not believe me. Well don’t trust me, check it out yourself. Let’s look at some very simple questions that will help you find out if your techs are under-billing the customer.
Read more: How to Find Out If Your Techs are Under-billing the Customer
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Flat Rate Pricing Drills are Critical!
You have heard it all your life: practice makes perfect. When it comes to flat rate pricing there is a lot of truth in that statement. Let’s face it, most flat rate systems produce some pretty large books. There is a good reason for that -- there are lots of possible repairs in the HVAC, plumbing and electrical industry! The more possible repairs, the bigger the book. The question is not how big the book is. The question is: How familiar are your techs are with the books?
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Offer Your Technicians a $750 Annual Bonus
I want to encourage you to offer your technicians an annual $750 bonus. Yes, I can hear your question, “For what Tom?” Notice I said “offer” them a $750 annual bonus, not “give” them a bonus. Here is the idea…
At the start of the year, tell your technicians they will receive a full $750 bonus at the end of the year as long as they have not cost the company anything. The idea is to make the technician more aware of their actions which will not only allow you to pay the bonus, but it will allow the company to save in excess of $750 per tech per year.
Let me explain. Have you ever had a technician accidentally damage a customer’s home? Perhaps they put their foot through the ceiling if they were working in the attic. When that happened, someone had to be hired to repair it. Perhaps the company had to pay someone $150 for the repair. The $150 comes off of their $750 annual bonus. Now they are down to $600. What’s next? Perhaps they have a minor accident, and the company has a $200 deductible; the $200 comes off of their bonus. Now they are down to $400. Have your techs ever lost a tool? Now if the tool is worn out or breaks, it would probably be the your responsibility as owner to replace it. But if the tech lost the tool, which will cost $35 to replace, the $35 comes off of their annual bonus. Now they are down to $365. I think you get the point.
Manage Your Service Department
What Do You See When You Look in the Mirror?
Have you looked in the mirror lately? Sure, you probably shave each morning (we hope!), but that is not the real question. Have you ever looked in the mirror before you leave the office on a service call? If not, you just might want to do that. I am aware of several companies that literally have a full-length mirror that technicians stand in front of before they leave the office. Some even have a sign on the mirror that says:
You would welcome this tech into your home?
or
Would you allow this person to work on your equipment?
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Do your techs believe in your hourly rate?
See if you can answer this quick question from your service tech's perspective. You are paying your service tech $20/hour, and you are charging your customer $85/hour. How much profit does the tech think the company is making? If you guessed $65/hour, you're right. The average technician has absolutely no idea what it costs to run a company. To them the math is simple. "Let’s see, we are charging the customer $85/hour, and you are paying me $20/per hour, so that means the company is making $65/hour profit for every hour I work."
Manage Your Service Department
Customer Response Cards allow customers to talk to you
To be successful in today’s marketplace, your company needs to know what your customers think about your company, your techs and the quality of work you do. When a job is completed, we often ask the customer what they thought of our work; most will smile and tell you what a great job you did. Step two is the "Happy Call," when someone from your company calls a few days later and again asks how things are going. The response is similar to the first, that everything was great.
However, when that simple little 4 x 6 Customer Response Card returns to your office, can you guess what’s on it? That’s right, the customer has written one or two little nit-picky things on that card that they will not tell you face-to-face. Things like “The tech stepped on my rose bush and broke it,” or “The technician’s truck leaked oil on my driveway.”
Read more: Customer Response Cards allow customers to talk to you
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Leadership makes a difference
Successful companies have strong leaders who set the tone for the organization. They give direction and make it perfectly clear. “This is the way we are going to go.” Many years ago, a friend of mine had a very successful independent real estate company. He spent months researching the transition to a franchise real-estate company, and none of his employees were aware of it. At long last, he made the decision that he was going to become a Century 21 franchisee.
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Measurement is Critical to Success
I just finished teaching a Service Managers University for a group of contractors and had some rather lively discussions. I love teaching when the entire group gets involved and is really interested. The topic was proper management of the service department and how to increase the productivity of your service technicians.
As we talked about this, it was evident that they had to be setting goals for their technicians and they had to measure the performance of each person. I asked the group how their techs would respond if they go back to the office and tell them that they now have goals they are expected to hit on a daily basis. Most agreed that many would chuckle, dismiss it, get defensive and go back to how they have always done the job. However, one service manager in the class – Bill – said he has several guys who would like that. They would probably work harder to hit the goals just to show that they are as good if not better than the lead service tech in his company. That’s when the discussion got lively.
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What are your techs saying to your customers?
Let’s say you are a senior in high school and you have just auditioned for a part in the school play. Congratulations, you got the part! You are now at your first rehearsal. Midway through the first act the director tells you to get on the stage and practice your part. You stand up on the stage, frightened totally unprepared. You are supposed to speak your lines, but you have no idea what to say. How can you possibility say your lines when you have not been given a script?
Manage Your Service Department
Do You Have Weekly Service Meetings?
Do you have monthly service meetings? Do you have weekly service meetings? Do you have service meeting at all? Weekly service meeting are absolutely critical. What is covered isn’t even the most important part. The foundation stone for weekly meetings is to have a forum where management and the service techs can communicate. Problems always arise, however, if you have a venue to express the problems they can easily be talked about, and solved, BEFORE they become major problems.
Manage Your Service Department
Talk to Your Techs About Maintenance Agreements
Have you ever been in a position where you were 100% sure you told your child/wife/technician/customer something, but the reality is that you never did? It happens all the time. We assume we passed on valuable information, but somehow it just didn’t happen.
We assume a lot when it comes to maintenance agreements. You as the owner know the benefits:
- Consistent cash flowYou schedule work (less non-billable)
- Guarantees service work during year
- Eventual replacement of equipment (sales and labor)
- Employee job security• Happier customers
- Tech who learns to sell M/A - can sell anything
- Ability to increase customer base
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It's Time to Create a Business Plan for your Service Department
Most service departments simply evolve. The customer calls, so you dispatch a tech. There is no real thought to it, it just happens. As a matter of fact, for many companies, service is treated like a stepchild. You deal with it because you have to, not because you want to. If that is your attitude, it time to wake up and take notice! Service should be the most profitable department within your company. A well-run service department should generate a 15-20% net profit, and if the company is on flat-rate pricing, that number can easily climb to 20-25%. Besides that, cash flow is great. Properly prepped customers pay when service is provided ,and that really helps cash flow!
Read more: It's Time to Create a Business Plan for your Service Department
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What kind of company do techs want to work for?
Your company just had a great year. The service department is making money and has grown to the point that it can easily support an additional technician. However, there is a major problem … there is a shortage of qualified technicians across this country, and the situation is getting worst, not better. If a company is going to grow, it has to be able to find, recruit and retain qualified technicians. Step one is to put ourselves in the position of a great technician.
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Techs are Competitive By Nature
Many people are competitive by nature. However, it seems service technicians, as a group, are more competitive than most. They take great pride in solving problems others can’t seem to solve. If two techs are trying to solve the same problem, the one that “gets it right – first” instantly has bragging rights. They are masters at fixing things, and they generate a lot of rightful pride when they find a problem and can fix it. The problem with most company owners and/or service managers is that we seldom tell the tech how much we appreciate the work they perform.
Manage Your Service Department
Manage Your Service Department