Category: Business Management
Give Yourself a Raise – 5 Ways Service Contracting Software Puts More Money in Your Pocket
One of the consistent themes we hear from our service contractor customers is how expensive, slow, and cumbersome basic administrative tasks become when they attempt to scale their business with their on-premise PC server-based applications. Scheduling, inventory management, billing, payroll, customer service requests – all of these activities seem to get choked up with an administrative staff that always needs more capacity and ultimately holds the business hostage to the arcane knowledge that is trapped in their head regarding “how things work around here.” Progress and growth in the business grinds to a halt because the administrative burden becomes so complex. The mantra of the business becomes “don’t change anything because we can’t profitably manage what we have going already.” or “Grow? Grow! Are you kidding? Everytime we grow we lose money!”
The primary reason for this calcification of process and the resulting steady escalation of administration expense is the application structure – all communication and information MUST run through the office to be processed. Traffic cannot “flow” without being directed by a “traffic cop” sitting inside the office. Every car has to get attention when it hits the traffic circle, and all other cars must wait until the cars ahead are pushed through. Plus, batches of traffic show up at rush hour (in the morning and in the evening) and further clog up the highway, preventing progress until it is processed out. The key to breaking this miserable traffic jam in the office is to create a continuous flow of work that is not constantly interrupted by the need for “immediate” communication. Getting continuous flow means eliminating the daily phone rodeo and migrating from physical paper to digital data.
Stop the “Phone Call Rodeo”
The only calls you want burning up the phone lines in your office are either customers with an urgent need or happy customers calling to gush about the service they just received. All the other calls simply interrupt the workflow and prevent forward progress. If instead, all the information from the techs arrives in a queue where it is visible, actionable, and subject to prioritization, it will get handled with much higher efficiency. In the same manner that processing through an email queue is easier than taking an equivalent number of calls, processing through real time update information in ServiceTrade is easier than taking all those update calls. A phone ringing provides no information until you interrupt your work, accept the call, hear the situation, then triage your response. A dispatch board with visual cues on status (enroute and distance, arrived, photo memo, audio memo, problem found, etc) allows the work to flow without the interruptions and real time triage. Instead of one dispatch person for every 6 – 8 techs, you move toward best in class where one dispatcher can handle 15 – 18 techs.
Migrate to Digital Data
The biggest problem with paper is not the bad handwriting and lack of professionalism displayed to the customer (although these are issues which create other problems). The problem with paper is that it is slow and clogs up the office with administrative tasks that are cumbersome and batch oriented. When digital data arrives continuously through the day and it is organized in a manner that makes it actionable, you can close out more jobs faster and get the invoice to the customer faster (in the field if you like). Which means you get paid faster. When you stop being the payroll bank because you have effectively aligned your billing and collections with your service expenses, you can give yourself a raise from the enhanced cash flow.
The other “side” benefits of this streamlining and continuous flow include:
- Burning Less Fuel – when you can complete the job and invoice without dropping the paper at the office, you burn less fuel.
- Performing More Jobs – when your techs don’t have to call the office for updates and instructions, they deliver more jobs per month. When they know their activities and performance can be monitored in the office via digital data, they deliver more jobs per month.
- Spending Less on Paper and Postage – triplicate paper and stamps for invoices are expensive. When your job data is digital along with your invoices, you save money on these items.
All of these are simple changes that enable you to give yourself a raise. Isn’t it about time?!
From Vision to Execution: 8 Critical Business Questions for Service Contractors
“Vision without Execution is Hallucination.”
I wish I could take credit for the great quote above, but I cannot. Walt Brown, a friend of mine who helps companies implement Gino Wickman’s Entrepreneurial Operating System (EOS), used that phrase to describe companies who attempt strategic change before they have their daily operations under control. Affecting strategic change (i.e. implementing the vision) is not possible if you cannot even make tactical improvements. No point in planning a trip to the moon if you can’t even get to the corner grocery store.
The first necessary ingredient for implementing any change is visibility to the behavior and/or results that you desire to improve. Try catching a fly with your eyes closed, or try catching a fly by being told where it was just 2 minutes ago. Without visibility to the relevant data there is no accountability, and without accountability, there is no change. Also, when change yields improvements that are also invisible, you cannot apply the positive reinforcement to make certain they are sustained. Visions of the blind are simply hallucinations.
We got into this discussion because Walt is in the business of helping the same customers that ServiceTrade helps – privately held service contractors. However, he never begins with the strategic changes but instead with the tactical improvements and accountability metrics that build momentum toward strategic change. He references this approach as “Traction,” which also happens to be the name of the book upon which the method is based. ServiceTrade is all about traction because we give our customers visibility to both the data and the behaviors that drive outcomes – whether minute by minute or week by week or month by month.
The Service Contractor “Vision Test”
Can you see the answers to these questions every day in the metrics you review? Do these answers simply appear in a daily report, or does someone have to grind away for weeks to give you information that is irrelevant by the time you receive it?
- How much revenue did each technician deliver yesterday? last week? last month?
- How much repair work did you quote yesterday? last week? last month?
- How much in repair quotes does each dollar of maintenance work provide?
- How long do your technicians drive on average for a dollar of revenue?
- Which customers need to be notified right now because the tech is going to be late due to a prior appointment experiencing complications?
- What percentage of your quotes get approved versus the total of quotes delivered to the customer?
- How much revenue do you deliver per dispatcher/scheduler payroll dollar?
- How much revenue did you deliver relative to the total value of revenue available last month?
If answering these questions is difficult, expensive, or impossible, or if seeing the behavior that drives these metrics is difficult, expensive, or impossible, you are blind, and a vision of a better business is just a hallucination. To get traction, you need visibility. When you have visibility and traction, you can drive to better outcomes. When you get better outcomes, you get freedom.
The Tesla Lesson: 4 Takeaways for Service Contractors
I am a big believer in market signals. I think Tesla is one of those signals. As a breakthrough company with a skyrocketing stock value, Tesla is clearly doing many, many things correctly and making very few mistakes. I believe there are some lessons in the Tesla experience that service contractors should be learning.
As context for everyone that lives under a rock, Tesla is a manufacturer, distributor, and customer service company for electric vehicles. Specifically, these are are not your Aunt Minnie’s electric hybrid Prius, or Civic. These are high performing vehicles that have a style about them that does not signal “compromise.”
For those that do not watch the stock market, Tesla is a high flyer. For every $1 in car sales, Tesla (NASDAQ: TSLA) gets almost $10 in shareholder value in return. Contrast that with Ford (NYSE: F), a fine company with very good management, which gets approximately $.40 (yes, forty cents) in shareholder value for every $1 in car sales. The market believes Tesla is onto something special and that it will dramatically outpace all others in this segment – otherwise the share price would make no sense.
Here are the lessons that I believe service contractors can take from Tesla:
The market values products that dramatically lower fuel consumption.
The market is signaling that fuel prices are going to continue to spiral upward. If fuel was going to be $2/gallon or even $3/gallon in the future, Tesla would not even exist. As a service contractor, you better have a strategy to use less fuel per revenue dollar in the future or you will find yourself in a dramatic squeeze. What are you doing to pack more revenue into every mile driven by your techs? Raising fuel surcharges is not the answer. Something along the lines of “plan a better route and offer more value at each stop” is the right strategy. Increase your service revenue density per mile is a lesson from Tesla.
The market values products that require minimal maintenance.
Tesla’s vehicles require far less maintenance than conventional cars. Some of the maintenance is delivered over the air in the form of new firmware for the drive system. All customers want to buy a product that is maintenance free. How will you drive revenue growth for products that require ever decreasing levels of maintenance? Expand your service area? See above on revenue per mile – difficult to do with ever rising fuel prices? Expand your expertise offered to your existing customer base? Yes. Expanding your service density per customer location is another lesson from Tesla.
The market values predictive maintenance with a single point of accountability.
Tesla monitors the health of the cars and initiates service with the customer based upon the exact situation of their vehicle – not some vague timeline. Tesla shows up with a loaner and takes the customer vehicle to the shop based upon setting an appointment with the customer interactively using the Tesla interface in the car. Equipment will be increasingly connected to the Internet (see Internet of Things) and monitored for service requirements by the manufacturer. How will you be the source of knowledge and data for the customer when the customer is connected directly to the manufacturer via the Internet? Collect an extraordinary record of the customer’s service needs via mobile devices, aggregate data to discover opportunities for better outcomes, and use the Internet to connect to your customer is another lesson from Tesla.
The market values a direct connection with the manufacturer.
Tesla sells direct, with the customer doing most of their education and interaction via the Internet. Manufacturers will increasingly connect with customers via highly interactive, multi-media and multi-modal experiences regarding their product and its advantages. What will you do to be a part of that conversation and express to the customer all the things the manufacturer does not know and cannot know because you are the one with the experience on the ground? The answer is not “well I guess the technician will show ‘em some stuff while he is there, before he leaves behind a handwritten, tobacco- and coffee-stained invoice with a bunch of cryptic codes from my accounting system” Wrong answer. You better be thinking about how you express your expertise to your customers online, interactively, with “rich media” and “big data,” because I can promise you that the manufacturers that you currently represent are going to do it. Embrace technology that connects you directly to your customer with rich media and a data-driven approach to service management is another lesson from Tesla.
Fortunately, none of these lessons have to be scary lessons. Yes, manufacturers have big capital to do big things, but they move slowly and spelling “customer service” would be a challenge even if they read this blog post. And big capital is not a requirement for fantastic systems in a world with ubiquitous mobile platforms (smartphones and tablets) and cloud computing.
With just a little bit of cash flow, you can make investments in capability that will cement your relationship with your customer in a world where they value everything I described above that Tesla is delivering. You can increase service density per mile, increase service density per location, collect an extraordinary record to drive expert service, and connect to each customer in a manner that educates them regarding the value you provide. Or you can wait for the manufacturers and other third parties to insert themselves between you and the customer so that every time the phone rings it is a dispatch to “their” customer. You decide.
4 Ways Service Contractors Can Grow Sales Without Selling
Services businesses are “the gift that keeps on giving” in the revenue department…if managed effectively. Unfortunately, many are not very well managed and somehow lose their connection and relevance with customers. The success of Angie’s List and other similar customer advocate intermediaries is a direct result of service vendors inability to remain relevant and build long term value through their customer base. For the vendor that is paying attention and wants to avoid the fate of having every job delivered by a customer service web engine that siphons off valuable margin, here are some tips for growing that do not require massive investments in sales and marketing.
Never Miss a Service Call
When a customer calls, whether a new prospect or an existing customer, how effective is your company at responding? An effective response is directly proportional to the immediate visibility the customer service rep has to supply and demand.
Supply visibility is knowing the current status of all of the field technicians that might be able to respond. I crack up when I see PC-based dispatch boards that represent “what was supposed to happen” at the beginning of the day but immediately become irrelevant when the day begins. If your dispatch board is not updated by every action the technician takes in the field (or does not take), it is irrelevant by 8:05 AM for making customer service decisions. Putting the customer on hold, or heaven forbid, calling them back when you know what is possible, is the kiss of death. Review the board and make the decision NOW about which tech will make it happen and when. If the decision has to wait until you finish a game of “phone call rodeo”, the customer will not be amused, and you will lose the call.
Demand visibility is quickly reviewing the customer history and having an educated opinion on what might be causing the problem. Providing some instant advice based upon your location record as to how they might reduce the severity until your technician arrives will gain you hours of cushion to get to the location. For example, knowing that the water cutoff is in the broom closet 12 steps from the front door. If you have to traipse back to a filing room, or if your technician reports are limited to scans of terse, hard to read, hand-written reports relating the history, you have little opportunity to establish credibility with the customer and move toward a solution in the first 2 minutes of the interaction. If it is a long run for the nearest technician, you are losing valuable points with the customer that may result in a lost customer when the next service opportunity arrives.
Maximize Maintenance Revenue
If the month of May has 285 maintenance services due, how many do you deliver? If your answer is less than 95%, your organization is not best in class, and you are missing revenue. Maximizing maintenance revenue requires 2 key capabilities: visibility to the undelivered work and customer scheduling efficiency.
When you have visibility to what is committed but undelivered, you can drive your technicians to respond. When you do not know what is happening hour to hour and day to day, and you are waiting on a folder to come back to the office to understand the productivity of a week of work, you have no hope of maximizing maintenance revenue; you do not know who is productive and who is goofing off. You need to know the productivity of every technician every hour of every day. The money is out there just waiting to land in your pocket, but you need constant visibility to take it all.
Committing the customer to the work is also a requirement to maximize maintenance revenue. Ideally, committing the customer to the work does not involve 5 phone calls to each customer. Having visibility to the customer preferences for service (never Tuesday, always early, etc.) as well as a notification system that allows you to easily connect with the customer lowers the expense and aggravation of committing the customer to the schedule. This customer engagement model for scheduling is a challenging technical problem, and I expect some very interesting innovations to emerge in this area.
Deliver More with Less
Growing without selling also means having capacity to deliver without expensive and slow ramp up of new resources (techs, trucks, admins). When you can squeeze more out of the current resources and just say “yes” to the calls that are already arriving, that is the ideal situation. Additionally, the ability to seamlessly “source” work to trusted partners when you have absolutely exhausted your ability to fulfill it with your crew is critical.
Squeezing more out of the current resources means that you have the visibility to where a well-applied squeeze will be effective. Squeezing your most productive tech as hard as you squeeze the loafer because you cannot see the results is a recipe for some pretty low outcomes – the best guy leaves and the loafer stays. It also means that your office crew is not covered up with mindless additional administrative work when new opportunities arise. How effective is your process in the office at scaling to meet new demand? Is it a miserable paper chase with stacks of folders representing different status migrating from desk to desk? Or is it a well oiled machine with instantaneous status alerts online that hardly notices an additional 15% uptick in orders?
Delivering more with less also means that you can have the ability to subcontract work to trusted providers with a click of the mouse. If your subcontracting process is not a simple redirect of work in your management application, with your subcontractors using the same technology platform and processes that you use to hold your techs accountable, then you have the wrong application and it is time to call ServiceTrade.
Fix Everything
The best sales lead in the world goes something like this:
“Yesterday while I was at your location, my technician noticed a problem with Equipment A. He documented it with photos that I have attached to the quote that you can review online. We can fix it this week, and all you need to do is click ‘Approve’ in the upper right corner of the online quote.”
As long as you are incurring the expense to go to a customer’s location, whether for a maintenance call or a service call, or even a sales call, you might as well maximize your opportunity by noting everything that you could do for the customer. When I say “note,” I do not mean some chicken scratch on a piece of coffee- and tobacco-stained paper that rides around in the truck for another week. What I mean is an organized record of digital artifacts, including photos, audio memos, and perhaps even video, that is easy to redirect back to the customer online to demonstrate your organization’s thoughtful stewardship of their equipment. Online quotes with photos are more than three times as likely to be approved by the customer than flat paper quotes delivered via mail or email attachments.
If you are ready to grow, but you are not ready to suffer the ramp-up of expensive sales resources, consider how these tips might generate the growth you want. Connecting with customers in the digital age is an amazing new opportunity for service companies. The ones that figure it out will grow with an absolute minimum of marketing and sales expense.
It Pays to Know: How Service Contractors Get Paid For Expertise, Not Just Labor
The best service contracting business model is based upon customers paying a premium for expertise instead of simply paying a markup on parts and labor. When true expertise is offered, the customer perceives that in the long term they will have better outcomes for less money – no callbacks, fewer breakdowns, less energy consumption, higher equipment output. With expertise in play, the customer trusts the advice of the provider, the provider takes care of the equipment, and both parties are happy with the long term value from the relationship.
Without expertise, the payment is simply a markup on parts and labor plus the lingering suspicion that perhaps something was not done right. Without expertise, it is always a forced march to the lowest rate on labor or the first truck in the driveway. The customer becomes like the general contractor – a supposed expert, often with dubious management practices, and a sharp focus on the fees. Without expertise, you are simply getting paid to show up and execute the tasks according to the will of the task master.
But how can a service contractor transition from the labor markup model to the premium pricing model? What is required to get paid for what you know instead of payment for where you go? There are 2 steps in this transition – 1) know what you know, and 2) show what you know.
Know What You Know
You cannot get paid a premium for expertise until you know what you know. Most service contractors do a lousy job sharing expertise throughout their organization. Part of the problem is due to antiquated systems – PC based applications with short text fields, no photo reporting, no audio memos, and with access restricted to those sitting in the office. Most of the knowledge is with the techs in the field and is based upon the unique situation that exists at the customer premises. However, the only means techs have to report what they know is a paper form upon which they scribble notes for the office to decode and enter into a system that no one in the field can access. If it sounds ridiculous it is because it is ridiculous.
Knowing what you know means that it must be easy to collect what you know and also to distribute what you know. Humans learn visually (pictures and video) and from stories. Whenever I want to learn a new song on the guitar or if I want to fix or upgrade something on my boat or my F250, I turn to YouTube. First, no one would bother to write most of that stuff down because it is too tedious. Second, it is hard to learn without the visual cues of video and the context that is often delivered with story vignettes by the “teachers.”
Turn the techs into teachers – for the office and for the customer and for other techs – by turning them loose with photo and audio (and video once the data plans support it). You will be amazed at how much more effective everyone becomes at matching the customers needs with the right resources when you have better tools for knowing what you know. ServiceTrade builds photos and audio into the mobile applications so that the techs become the teachers. We enable them to share with others in a manner that is easy to use so that everyone benefits.
Show What You Know
The next step in getting paid for what you know is to be able to show what you know. How do you share your knowledge with the customer? Is it limited to when you show up on a service call? When they are stressed out because their equipment is broken? Or do they have a 24×7 digital love affair with your work? Oftentimes the techs on-site visit schedule is a darned inconvenient time for the customer. They have work to do also, and sitting around jawboning with the tech about how this breakdown could have been prevented or about the unique approach he took to fix it is not high on their list at the moment. However, after dinner or over the weekend when they are paying bills, they might indeed take the time to review in detail the situation that led to an equipment breakdown.
If those details are scribbled on a triplicate form with coffee and tobacco juice stains on it, chances are they are not going to dwell on the matter. Nor will they have a high opinion of the service contractor no matter how capable the technician might have been. However, give them a webpage to browse with useful links to insightful details of their situation, and you might discover an interested customer that appreciates learning. The best gift we can give another human being is to teach them something that they want to learn. How effective is your customer service approach at teaching customers about their equipment and how you take care of it?
With the low cost of smartphones, tablets, data plans, and software as a service applications like ServiceTrade, there is no excuse for not moving toward a better service contracting business model. “Getting paid for what you know instead of where you go” will be more profitable and more enjoyable for everyone.
The Labor Market is Speaking – Are You Listening?
In early 2001, I had just been appointed to be the Vice President of North America sales for Red Hat. Many of my early meetings with prospective customers were geared toward understanding what was going to drive buying behavior for large scale adoption of Linux technology. One meeting in particular sticks in my mind today as I ponder potential buying behavior for my prospective customers at ServiceTrade.
That meeting more than twelve years ago was with a technology executive at Merrill Lynch. When I asked him why the investment bank was considering Linux technology, and by proxy a relationship with Red Hat, he replied “The firm has determined that we will not be able to hire the best technology workers in the future if we are not using the technology that they want to use. We believe the best technology employees will want to use Linux.”
Today, as I travel about and meet with various service contractors that support over $500 billion in annual maintenance and repair commerce in the US, I hear many complaints about how hard it is to recruit and retain skilled workers. I also see lots of really archaic business infrastructure. Interestingly, I do not hear as many complaints about hiring from companies with more progressive infrastructure. Maybe there is a correlation. Maybe the problem is not a skilled labor shortage. Maybe the skilled labor has no tolerance for poor working conditions.
In the case of Merrill Lynch back in 2001, they made an investment in a new type of infrastructure in order to be able to recruit the best technology managers and developers. For service contractors, investments in infrastructure might lead to the same attractiveness for service technicians. It is easy to see how a comfortable new truck might be attractive, just like a nice office location for a Merrill Lynch technology developer. But the new truck does not necessarily make the technician productive just as a new building with new furniture does not make a technology developer more productive. Productivity, and corresponding job satisfaction, comes from delivering the most value to the customer with the least amount of company dysfunction.
Manual reporting, missing parts, poorly planned routes and jobs, lost paperwork, broken down vehicles, broken tools, call backs, disorganized dispatch, and “where you at” calls during the job all represent dysfunctional BS. Some amount of it will be tolerated as inevitable. Too much of it will send employees searching for a better opportunity – an opportunity where the ratio of dysfunction to productive work is lower.
It is self serving, but I believe the technology infrastructure service techs use in the future is going to be equally, if not more, important than the hand tools, trucks, and other equipment. The technology that connects the service tech to the office and the customer in a way that eliminates dysfunction and maximizes productive labor hours (and the corresponding paycheck) will be a key element of recruiting and retention. Technology that makes the service tech look knowledgeable, modern, and effective in the eyes of the customer will reinforce job satisfaction as well. Technology that looks and feels like the basic elements of their everyday life – iPhone, Android, Internet, iPad – will be expected as a tool of the trade at work.
Whether ServiceTrade or something else efficient, effective, and modern, an investment in technology as a means to recruit and retain skilled labor talent will probably yield a pretty good return. The alternative is to be satisfied with the business results and customer service that can be achieved with service techs that tolerate productivity sapping dysfunction. Listen to the market for labor. It is telling you what to do.
Ripe Bananas, Seat Miles, and Service Labor Hours
What do these things have in common? They all represent “perishable inventory.” Ripe bananas have a short shelf life – sell them or throw them out. A flight that takes off without being full means seat miles were available and not sold. A service labor hour without a corresponding service invoice is likewise “perishable inventory” that is lost forever.
In the case of both food distribution and airlines, the large companies that sell these products have spent lots of money for systems that help optimize revenue relative to each dollar spent on “perishable inventory.” Most services businesses are local, owner operator businesses without the capital means to consider huge investments in systems. However, I have seen some interesting and creative strategies during my time at ServiceTrade:
Tech Commissions – In many cases, service businesses turn a significant portion of technician pay into commissions. This strategy lowers inventory expense, and in theory it creates incentives for optimizing revenue. It likely works as well as the profile for the technicians you hire. If they are highly motivated by money, it can work. Generally speaking, however, the population of technicians that are highly motivated by money AND well organized to manage a schedule is probably pretty low. Highly organized folks that are motivated by money probably don’t often self select into a technician job. The best technicians I have met are not as motivated by money as they are motivated to do meaningful work for the customer. I see this trait in software developers as well. Doing good is more important than doing well. They are also likely not the most organized people in the world, so non-billable expense (i.e. travel time, administration, etc.) is likely to be high.
Subcontract Everything – In my former business, DunnWell, this strategy was very successful. The inventory cost in this case is zero – we used others’ inventory to service the customer. The total opportunity in the market, however, is lower as the only sales opportunities available are customer prospects with sprawling service locations where the complexity and scale of delivery is not manageable by a local firm. DunnWell grew rapidly because there were no capital constraints on growth once the company made the commitment to invest in ServiceNET, the service delivery and management platform that forms the basis of ServiceTrade today. DunnWell was never able to sell to regional customers because our costThe model could not match a local provider.
Aggregator Fill-In – The other side of the DunnWell coin for the local provider is taking in work from national firms that subcontract for delivery. If you can align the third party work with the routes for your current business, the lower margin on this work can be a great way to support an extra truck or two of incremental capacity. The challenge is knowing how to “blend” the work into the existing routes in a manner that makes it profitable. If you have to go out of your way at all, you just lost money. And the extra burden of the administrative requirements for some of these opportunities can be ridiculous.
All of these strategies for optimizing revenue relative to “perishable inventory” have some merit, but they also have their drawbacks. In my opinion, the best “mix” of these strategies looks something like the following:
Organize the Work – A commission or a very nice bonus plan will work well for some techs, but you will benefit most as the owner if you help the technician organize the work. Provide enough office support on scheduling and customer service to maximize the revenue opportunity and minimize travel time and administrative burden. It’s great when a tech is willing to work 12 hours, but when 5 of those hours are travel time burning your fuel, wearing out your tires, or doing job planning/organizing, no one wins. Organize the work and give the tech tools for maximizing billable hours during a set period of time and you will both win. The optimum outcome is for the tech to make more money while the owner also gets more profit.
Maximize Revenue Per Call – A really good field management system will track opportunities for your customer locations. Anytime you have an opportunity to send a technician out for any reason, you should offer the customer as many services as possible. You should also have the technician catalog any new opportunities while onsite – ideally with photos and other data-rich evidence. Optimize every trip to the customer site.
Say “Yes” to the Customer – Subcontracting everything is not the solution for most businesses, but you should have the capability to extend your scope and reach for good customers by subcontracting work. If your administrative and customer support systems do not seamlessly enable you to say “yes” to the customer and get trusted business partners involved in delivering the work, it is time to change systems. This capability is a key part of our value proposition at ServiceTrade, and it is critical to our service company customers.
Rightsize your Core – If you do not have a healthy profit at the end of each month, you probably have too many technicians. Get rid of some and get your core utilization up. Use subcontractors to grow strategically until you can support more technicians with your customer base (see say “Yes” to the customer above).
Accept Aggregator Business Carefully – There is nothing wrong with taking down national account business through service aggregators so long as it is deliverable within your core service area. It if feels like a stretch instead of a yawn to deliver, you are better off giving it back. Or charge significantly more for “out of the way” locations. Chances are if you have a hard time getting to it, so does everyone else.
Service businesses have more in common with airlines and grocery store chains that most folks see on the surface. What they do not have is the extraordinary capital for systems that optimize revenue relative to “perishable inventory.” The good news is that Software as a Service (SaaS) and low cost mobile computing (Android, iPhone) can help with all of the strategies above without huge outlays of capital. If ServiceTrade can help you enable any of these, I would love to hear from you.
Why Cloud Applications are Perfect for Small Service Companies
If the thought of new software for running your field service business brings on pain, remorse, indigestion, or any other unpleasant malady, this blog post is for you. Software that is well designed and delivered to you as an Internet application (or cloud based application) should not bring on any of these symptoms of distress. Using a software application to help run your business should not require any real information technology expertise. If you have PCs, Macs, laptops, tablets and/or smartphones connected to the Internet, you have everything you need. Let me explain how cloud applications provide an enormous benefit for small service businesses.
Cheap. First, a cloud application that is delivered to you over the Internet should be the least expensive solution you consider. These applications do not require you to buy equipment called servers that run the application. If you don’t buy the servers, that means that you don’t pay to maintain them either. A true cloud application also does not have “host it for you” charges. Buyer beware! All that means is that your servers running your instance of the application are on a lease plan, and you are still paying for them and paying the maintenance burden (along with a profit margin on top). A true cloud application is cheapest because you share the computing resources with all other users of the application. Just like LinkedIn, Facebook, eBay, Google, Amazon, etc. With this shared approach, your costs are the minimal costs, which is the way you want it.
Safe. Some folks read the above paragraph on costs and proclaim “I don’t want my data on a computer that is shared with anyone else because that is not safe.” Poppycock. I can’t recall ever logging into Gmail and seeing someone else’s mail. Can you? I don’t think I have ever shopped at Amazon and seen someone else’s merchandise in my shopping cart. How about you? I’ve never had ADP send me someone else’s deposit on payday. What about you? I don’t ever recall logging into Salesforce.com and seeing someone else’s sales leads. Do you? I didn’t think so. A modern and professionally managed implementation of an application that is shared among all of the users of the application is the safest way for small businesses to get software capability. The infrastructure and the professionals that manage it are going to be better at technology management than the ones you would hire to do the same. If someone really wants your data, it will be much easier for them to get it from computers you are managing than from the ones that my staff and the staff at Amazon Web Services (where we run our application) manage. I promise, it is safer.
Easy. If you don’t have to set up and manage the computers that run your application, you are already far down the road toward Easy Street. You know that you have actually arrived on Easy Street when it is only a few minutes between the time you sign up for the application and when you are actually using it productively. If you have lots of users and lots of historical data, it can take a few hours to get up and going, but it should not be more than that. If it is, you have a poorly designed application. If your application provider does not live on Easy Street, you should get a different one with a new address.
Fast. All applications should run fast enough that the user is not annoyed by waiting, but in this case I am talking about fast as in newer, better features. True cloud applications deliver new features to you weekly, or monthly at least, without you having to do anything. No upgrades required, just better software delivered for your enjoyment. You may think that all of the reasons listed above are enough to insist on a cloud application, but I actually think this one is the most important. If you pick wisely now and choose the most thoughtful application provider in your space, you will benefit from that choice over and over again without the pain of slow (or no) progress in the future.
So what are you going to do now? The more you move your business to the cloud the more you will enjoy its benefits and eliminate the pain associated with information technology management. Unlike building muscle or character where the idiom “no pain, no gain” applies, building a portfolio of cloud applications for running your small service business should just be “no pain, no pain.”
