Improve Profitability - Train Your Service Manager

How much formal training has your service manager had?   He heads the department that generates most, if not all, of the profit in your dealership.  If he is poorly trained, your company could be losing both revenue and profit that would make a difference in your bottom line.

The Best Investment You Can Make

If you want your customers to be happier, your technicians to be more effective, and your service department to be more profitable, training your service manager is the place to start.

There are many subjects he needs to understand :

• How to be a leader that his team will follow and support
• How to motivate his team
• Why not everyone responds to the same motivation
• How to identify and hire the right people
• How to analyze service data to identify issues and resolve them
• What a service call really costs
• What is the most important metric and why
• Where the service department fits in the financial model

If your service...

At one time or another, every service manager has to deal with a technician wanting more money. The service manager is faced with a difficult situation when senior management resists. When I was a service manager in California, the dealer I worked for would let a technician leave when a $.10 per hour raise would have kept them with the company. As a service manager, it was very frustrating, and to combat that, I sat down and worked at computing what it costs to hire and train a technician. Every service manager should work through this exercise.

Cost of Hiring

Recruiting Cost

The first cost associated with hiring a replacement is the cost of recruiting. This would include the cost of advertising, using an outside recruiter, and the cost of the manager’s time to review resumes and interview applicants. Research shows that this cost can run from $2,000 to $5,000 dollars or more. To be conservative, we will use a cost of $2,500.

Onboarding Cost

After selecting a candidate, the...

Office Equipment Dealer Nirvana

Nirvana in Indian culture is described as a state of perfect quietude, freedom, and highest happiness.  We are not going to talk about it in the religious sense, but we will look at it in the business sense. 

If I were a betting man, I would bet that you would not describe your business using those adjectives.  You would probably discuss it in the sense of turmoil in the marketplace and in the challenges you face. This blog may help you move toward a more nirvana-like state in your business.    

Current Situation

Both within your business and with your dealings with customers there are issues causing challenges that impact your customer’s happiness.  

Challenges for Your Customers

There are several areas in dealing with your company that your customers find less than desirable, no matter how hard you try. Let's discuss four that are probably at the top of their list.

Meter readings. If you surveyed...

On my first day working for a new employer, my manager was outlining what he expected from me in my new position.  I was starting my career as a District Service Manager for a major copier manufacturer.

 The mangers goal was for me to spend two days when visiting each dealer.  I was okay with that until it was explained that my bonus was based on the cost of a dealer visit and the number of dealer visits.  Now I am reasonably quick with math, and this was pretty simple; more dealer visits and less cost per dealer visit was how I maximized my bonus.

I told him he was paying me for one-day visits, and he said he wanted two-day visits.  I suggested that he change the bonus structure, and he said no.  For the entire time I worked for him, I did one-day visits and sometimes two in a single day.  I did what he paid me to, not what he wanted.

I challenge you to think about your business. Do you pay people to do something different from what...

In our previous articles, we discussed the reasons why Mean Copies between Calls (MCBC) is the most important metric, and we looked at some of the issues that impact that value. In this article, we want to start trying to find ways to address the issues in the service department.

Start at the Top

The commitment to address the issue and change your philosophy has to start at the most senior levels in the company. In most cases, the goals, metrics, and practices will be significantly different than your current ones. If the owner/president is not behind these changes, it may be impossible to get the changes made.

The senior management team needs to understand that there may be bumps in the road as you move forward, but if you stay the course, the end result will be more profit, happier customers, and easier sales.

Articulate the New Philosophy to the Team

Once this decision is made, it is important that everyone involved understands the plan and why it will help them. You must...

When a copier dealer replaces a competitor’s machine they usually also pick up a supply of surplus toner that is stored at the customer’s site. These supplies in many cases get discarded or sold wholesale. While this is good for the dealer installing the new equipment, it is an unnecessary expense for the previous vendor.

When examining why service profitability is suffering, problems with supply expenses may not surface. This can result in pressure on technicians for more productivity and to reduce parts costs.

Why it Matters

Toner control affects two issues. One is the need for capital, and the other is dealer profitability. From the capital perspective, if the average toner costs the dealer $30, and they have 10,000 units in the field, and the average unit has two extra cartridges, that is tying up $600,000 of capital.

From a profitability standpoint, that same $600,000 has been written off and would show up as an unneeded expense. This could have an impact on a...

One of the most important factors in the success of a copier dealership is the commitment to training. In my time working with dealers, one common factor in each of the most successful dealers is their investment in training. The successful dealers make sure that each technician is trained on the products they service.

Benefits of Training

Training will benefit both the employee and the employer. In many cases, a dealer will say that it costs too much to send all the technicians to training. Dealers may decide to only send one technician to the factory school and hope he can train the other technicians.

This ignores the fact that an individual may only retain 30% of what they learned in class. If the technician comes back and remembers even 50% of what he learned, the technicians that he teaches will be down to 25% of what they need.

Training benefits both the employer and the employee and we will discuss these benefits.

Read the rest of the article in our free member's area, or on...

In the last article, I discussed the importance of Mean Copies between Calls (MCBC) this may also be referred to as Mean Calls between Visits (MCBV). Since that is the number one factor in the cost of a copy, every service manager needs to focus his attention on growing that number. In this article, we will look at several factors that affect that metric. These factors can be measured using First Call Effectiveness (FCE), and this is the easier metric to measure.

How to Define FCE

I will use the same definitions and formulas as used by BEI Services to determine the FCE. I chose this method because it more clearly identifies the performance factors involved, and it does not get diluted by including courtesy calls, installs or network calls. This is known as a results-based FCE.

Call back (CB) is: CB%= CB/ (Emergency (EM) + Scheduled Calls (SC))

Hold for Parts (HP) is: HP%=Hold for Parts (HP) + No Parts/ (NP + SC + CB)

FCE would be the balance of the CB% and HP%.

Defining the...