I saw statistics the other day that indicated the number of licensed electricians in NC over the age of 40 was 10X those that were younger than 40. Uh oh. If you thought the skilled labor shortage was already bad, it is going to get worse. So what can a service contractor do to avoid the pain from this scarcity? Migrate as much business as possible to a planned maintenance program.
When supply is tight, prices go up. When the prices go up, customers shop for alternatives and buy less of the expensive items. In economics, this is known as price elasticity of demand. In your business, it is known as a gross margin squeeze. For some trades, the alternative to the inevitable squeeze is to migrate as much work to planned maintenance cycles as possible to minimize expensive, reactive repair work. If you are going to pull off this trick over the next several years, you have to have a framework for selling customers on the plan and then executing the plan.
Get Your House in Order
The first order of business is actually being able to document and manage a plan in a scalable way. When you have systems that plan the scheduled work in a highly logical and visible way, you can maximize the utilization of your expensive technician workforce. You also need to be able to use those maintenance cycles to detect and demonstrate to the customer other potentially costly failures that should be handled in a planned way instead of waiting for an unplanned failure. Planned work is orderly and generally more satisfying for the technician and the customer than emergency repairs that generate chaos and uncertainty. It’s also funny how the chaos stacks up in one big pile that distracts the whole company. The random nature of reactive work makes it very difficult to deliver it without overtaxing resources.
Sell Examples Instead of Promises
The second order of business is having a sales cycle that promotes a premium, planned maintenance program to the customer. You should have in place demonstrations of the applications you use to deliver orderly and repeatable service. Share examples with the customer from their locations that you survey as part of your sales preparation. Show them how you will engage them online with accountable and visual record-keeping – online notifications, photos, video, and service links that demonstrate you are on top everything. For all the suggestions you find during planned service, show them how they can review and approve them online to maximize convenience and further lower costs and risk. When they see the examples in the sales cycle, it is easier to buy into that concrete example than an empty promise that “we’ll git er done, no excuses!”
Have a Dotted Line for them to Sign
Finally, have the order ready for them to sign. If you do not already have the following three items in your arsenal, you need to develop them:
Master Services Agreement – these are all of the legal terms and conditions of your partnership relating to term and termination, definitions, payment terms, warranty, indemnification, jurisdiction for disputes, etc. All the basics without the specifics.
Planned Maintenance Program – these are all of the services for each piece of equipment that they should expect during the term, complete with details of service intervals, parts delivered in service, expected durations, and related fees. If something later demonstrates it is far out of tolerance from these boundaries, both parties have a foundation for negotiating change.
Service Level Agreement – this will document the response to be expected for various types of non-planned repair scenarios, including response times, definitions of criticality, fee structures, and level of effort to be applied.
When you can quickly generate the unique Planned Maintenance Program from the systems you actually use to deliver the work and the Master Services Agreement and Service Level Agreement are standard boilerplate, you have earned the right to ask the customer to buy into your premium plan. Ask for them to pay upfront for the planned services to save both of you the time and hassle associated with all of the aggravation of invoicing. When they also begin feeling the pain of the skilled labor shortage due to vendors that are not performing, you might be surprised how much you mop up the market with your strategic and thoughtfully planned maintenance program.