Your Business Toolbox: Maximizing Resources in Service Part 1

Why Do Dealers Need to Maximize Their Service Resources?

Most dealers lose money in their service department. In the worst cases, dealers' service departments eat up all the money their installation department brings in. In today’s business climate—where workers are hard to find—dealers must be profitable in order to provide the wages and benefits necessary to recruit and retain workers. By stopping the bleeding in service and moving toward the goal of profitability, dealers can take a huge step toward a better future.

The first step to maximize your resources in service is to change your perspective. Instead of looking at service as a “necessary evil,” think about all of the benefits an efficient service department can provide:

► Additional Revenue
► Deeper Customer Relationships
► Consistent Work for Your Team
► Future Replacement Lead Opportunities

By changing your perspective, you can now look at what’s possible and start working toward that goal. Companies with well-run service departments can generate $30,000+ per month with a single service truck while consistently generating replacement leads. Now, that’s maximizing a resource! Today, dealers must leverage their limited service resources to Prime.

Leveraged to Prime: To make investments or improvements to maximize the performance of a resource and achieve superior results.

Ask yourself this question: Am I ready to change my perspective on service and focus on what’s possible if I leverage my service resources? 

Take a look at the first 2 steps you can take to leverage your service resources to Prime:


Maximizing Service Step 1: Utilize and Optimize Flat Rate Pricing

The single most important step to achieving profitability in your service department it is to utilize flat rate pricing.

Flat rate pricing is already standard in similar industries such as plumbing. Additionally, auto dealerships, dentists, and doctors have been using flat rate pricing for years. It should become the standard in our industry as well.

Flat rate pricing provides a wealth of benefits to dealers and consumers compared to traditional time and materials billing. 

Dealers get: 

► Pricing Consistency
► Higher Average Tickets
► Improved Profitability
► Improved Cash Flow

Consumers are happier because they know what the price will be before the work is done and no longer have to pay more for the on-the-job training of inexperienced technicians. 

To implement flat rate pricing, start by finding a proven flat rate program that works for you. Many cost-effective options with great features that can help streamline billing and processes are available. Consult with your distributor's territory manager for advice. 

Once you’ve selected your program, establish a flat rate that matches the value you currently provide. BDR recommends starting no lower than $150 per hour, but don’t sell your company short. If you provide great service, you’re worth just as much as a bigger company. 

Next, check your flat rate regularly and move it up as you add value in service. Have you added a dispatcher? Time to raise your flat rate.Have you added another truck to improve response time? Time to raise your flat rate.

Lastly, educate your team on why you’re making the move to flat rate, how to use it, and how to communicate the change to your customers. Implement flat rate pricing, update it regularly, and start reaping the benefits as you leverage your service resources to Prime.


Maximizing Service Step 2: Great Truck Stock

How does great truck stock help leverage your service resources to Prime? Well-stocked trucks help avoid the need for your technicians to return to the shop or visit the supply house, reducing unproductive time, limiting callbacks, and allowing your team to complete more calls. Let’s look at how to implement it:

Start by reviewing your past usage and trends. Work with your territory manager and see what you’ve used in the last six months and also in the last twelve months. Use this information to calculate your average monthly usage for each item for the company and then again for each truck.

Create a first draft of your stock list and share it with your technician team. Explain the process you have used to develop the list and share the end goal of how it will help them and the department. Ask for their input—have we missed anything? Be sure to include accessories. You can leverage your service resources by training your technicians to offer accessories while in the home. They can install them during the service call or on the next maintenance visit. With input from your technician team, you will be able to create the best possible stock list.

Next, set up your service warehouse stock. It should be able to cover two weeks of truck stock. Follow up by printing stock lists and creating restocking procedures. Set a long-term goal of converting all trucks to the same stock and the same layout. As you improve your truck stock and tighten up related processes, you’ll be well on your way to leveraging your service resources to Prime.


Leverage Your Service Resources to Prime

Today, dealers must be efficient and profitable in service. Maximize your service resources by:

1. Utilizing flat rate pricing
2. Having great service truck stock

Stay tuned for part 2, where we will discuss the final 2 steps to maximize your resources in service. 

Consider attending BDR’s 1-day Successful Service for HVAC course, which goes in depth on all the topics covered in this article.


About the Author: 
Scott Tinder is a BDR Trainer and Instructional Designer. He leads BDR’s Successful Sales for HVAC, Successful Service for HVAC, PreWall 1: 4 Steps to $1 Million in Revenue, and Wall 1: 6 Steps to $3 Million+ in Revenue courses.

 

About BDR:
BDR is a premier provider of business training and coaching services to HVAC contractors. BDR is an authorized training provider for International Comfort Products.

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