Pinpoint what you are leaving on the table on the service side of your dealership.
Given the generous margins on the sales side of the copier/printer dealership business model, it is easy to focus on sales. Still your dealership’s long-term profitability and value are also tied to a blend of routine maintenance or break-fix service calls. You also probably have customers who are on a first-name basis with your service tech but wouldn’t know your sales rep if they tripped over him or her in the waiting room. And while it is the sales rep who is cruising and schmoozing at the local chamber of commerce meet-and-greets, it is the service tech who gets invited to customers’ parties and barbecues. These relationships are a key part of making service critically important, let alone the significant portion of your dealership’s top-line revenue that comes from service.
I have some pesky questions about what may be critical weaknesses in how your dealership delivers service to customers. For instance, do you run a disciplined service and support operation? How well is your inventory of spare parts (including car stocks) managed? How much balance is there between service and sales in your management structure?
Then, points out Elise McFarlane, product portfolio marketing manager for the Field Service Division of ECi Software Solutions in Canada, there’s this: “Do you take advantage of all the tools and resources available that can help you overcome these weaknesses?”
Chances are, you don’t. And you’re not alone. More on that in a moment, but for now, back to those pesky questions.
- Is there a lack of discipline for technician development and accountability? Make sure you have a locked-down process for service tech training and how they do their jobs. This is not just how many calls they make, but how successful each one is. For example, going back three times to fix a problem is three calls, not one. What do those three calls say about your company? Chances are the customer is not seeing three visits as persistence.
- How good is your inventory management? This is operations, as well as service. Make sure there is a good reason for every part you have in stock, both in your warehouse and in a tech’s car. Having a $150 obsolete part on the shelf is not doing you any good. Chances are, no one in your market area owns the machine that needs that part.
- Is there insufficient parity between service and sales? Try getting along for two weeks without your service techs. Suddenly, their value will be more than obvious. Take good care of them. Good techs are just as critical to your success as the sales tigers.
Don’t Be That Guy!
“Many service issues tend to be ignored by dealership owners because they are often singularly focused on sales and revenue,” said Wes McArtor, president of NEXERA, a BEI Services company. “So, while they may know these problems exist, they rarely get involved in fixing them.”
As a result, many dealer principals don’t always know where the money is going—the real cost of service. “They don’t necessarily tie service performance back to the financials that drive the company,” explained Jerry Newberry, president of Pros Elite Group.
This does not work out to a trivial amount. Newberry said the average dealership may be running ten to 12 points below the service revenue benchmark of 55% of total revenue. “That’s in the upper six digits for most companies,” he noted. Ten points off sounds like some money being left on the table—or being lost.
McArtor agreed: “Many service issues tend to be ignored by dealership owners because they tend to be focused on equipment sales. They probably know service problems exist but rarely get involved in fixing them.”
This may be an “if it’s not broke, don’t fix it” approach, and it can become complex, but over time it can hurt a dealership and erode its value.
“How much a dealer pays attention to service also depends on the lifecycle of the dealership,” added McFarlane.
A younger, more aggressive owner, for instance, may be more inclined to address service issues and maximize revenue and profitability than, say, the owner of a long-established (and perhaps inherited) operation who is planning on cashing out and retiring. Upping one’s game in service requires a commitment of time, training, and resources that someone who is planning to cash out may not want to make. On the other hand, a dealer who is flush with sales revenue may feel comfortable keeping service issues on the back burner.
Furthermore, not all dealers recognize the value of service in terms of customer loyalty. To put a different lens on it, consider taking your car in for repair. You are probably more likely to go to a place where you trust the people, know the work will be done right the first time, and are not pressured to order unneeded work. The same is true for your service team. If a technician misdiagnoses a problem, gets a part from his car, but the problem arises again the next day and requires a third service call and a day-long wait for a part, the lapse reflects on your entire operation. I’ve seen companies where service shortcomings lost a dealer a high six-figure customer.
Pay Attention to Details
Trying to look ahead and even see around corners is important for any business owner. Although it can be hard given the day-to-day press of business, the slowdown associated with the coronavirus pandemic may provide an opportunity for identifying aspects of your operation that can be tightened up. These may be in sales, marketing, operations, or service, the latter being home to customer satisfaction and a driver of repeat business.
Right now, of course, customers who are still up and running really need you to be there for them. And this can be tough. None of us knows what the future holds, and we’ll hopefully all be okay, but one upside to the present pause is that you may be able to find opportunities to improve your business and emerge stronger when our world shifts to a higher gear. And it will.
So, in this quieter period, talk to your team and listen to their ideas. Not all their input will be practical, but the techs on the road may have a different sense of service issues than you do, and it’s at least worth listening to their input. If nothing else, you may hear ideas for making your business stronger and perhaps more attractive to prospective buyers down the road. Or, maybe you can make enough changes to leave competitors wondering how you raised the bar and came back stronger while they scramble to catch up.
McArtor suggests what could be a pre-emptive strike against coronavirus-related disruptions. Suppose companies find that the work-from-home scenario created by the quarantine actually works. Should that happen, the central-office A3 machine could be at risk, or at the very least would require reliable remote access for off-site workers. This may also offer opportunity. People working at home still need printing, copying, and possibly scanning capabilities. As a result, there may be opportunities for placing connected and intelligent MFPs in the home offices of workers who are not in an office every day. Your sales guys should be talking with customers to learn if these needs may exist, if for no other reason than to plant the seeds of how your company can support expanded print/copy/scan requirements.
Are OEMs in the Mix?
With service such an integral part of dealers’ operations, it is perfectly reasonable to ask what part the OEMs are playing in ensuring independent dealers are servicing equipment in the best possible ways. After all, the OEMs are big firms with people who know what wrenches, screwdrivers, and multimeters are for.
Despite the focus on moving boxes, “dealers listen to the OEMs” said McFarlane. “The OEMs know there is a tangible upside to service as part of the customer experience. Still, the service message can sometimes get lost in the day-to-day.”
“Dealers should always look to OEMs for help and support,” she added. “Be sure service techs are well-trained and know how to handle difficult clients. What techs do is a direct reflection on a dealer’s business, and they don’t always get enough credit for handling challenging situations.”
That brings up another point. The sales animals get all the glory, fame, and fortune, along with OEM-sponsored junkets to places like Cabo or Hawaii. But the service team is just as essential. It’s important to recognize and reward them for their efforts. Even though the recognition is only local and perhaps not quite as impressive, it still shows they are appreciated and valued as part of your organization. Bonuses, weekend getaways, dinners at upscale restaurants, and more are all incentives that can be aspired to by service techs. Team up and give an award recognizing your employee and send a press release to a local paper, noting the winning tech’s value to your organization. A little public praise can go a long way.
“There are lots of business analytics available to help dealers figure all these things out,” said Pros Elite Group’s Newberry. “Having metrics for the service techs is as important to optimizing the service organization as sales quotas and performance metrics are for the sales team. The most successful dealers pay close attention to both.”
In our digital age, dealers should work toward building a solid e-commerce platform to augment their direct sales efforts. This offers customers a different way to do business with your company, where you can sell the value of the sales and service advantage you offer—something not readily available if and/or when their equipment comes from Staples, Walmart, or Amazon.
“Service is a complicated business and most service managers are technicians that got promoted to that position,” said NEXERA’s McArtor. “Absent the proper education, support, or knowing how to help service techs raise the bar on the customer experience, they simply do the best they can. Dealers need to see that position every bit as important as the sales manager role—and invest accordingly.”