Get a Demo

It Pays to Know: How Service Contractors Get Paid For Expertise, Not Just Labor

Billy Marshall
April 15, 2014

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.

Knowing is Half The BattleWithout 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.

Share this entry