Don’t overlook this wonderful opportunity. Monday and Tuesday September 24th and 25th there will be a series of webinars for Management and Supervision and other interested people on the Service Department.
Inspections and the Work Order Process on the 24th
Service Pricing and the Service Organization on the 25th.
Join us for this rewarding and strong learning event. Check out www.rjslee.com under the Learning tab. The time is now.
Customers want certainty. They want to know the price of the job before they give you authorization to proceed. They want to know when you will be finished, a completion date before you start. They tell us this is every survey that I have seen in the capital goods industries. If they tell us what they want why don’t we deliver it?
No guts no glory used to be the saying in place for things like this. Today I say no systems and no structures no glory.
Then you can give a GUARANTEED completion date. I mean GUARANTEED. You will provide a reduction in price, a penalty, if you don’t meet your completion date. For instance you will credit the job with a day of labor for each day that you have missed the completion date. Are you ready to stand up and make a difference for your customer? Needs statements from the customer require that we deliver, not just talk. The time is now.
Telematics brings technology to our service business. For decades we have struggled with a declining market share of labor on construction, mining, forestry and light industrial equipment. In my experience this started accelerating in the early 1970’s. At the end of WWII most of the equipment manufacturers were specialists. There were tractor companies and loader companies, excavator companies and truck companies, etc… In the 1970’s several suppliers started offering more model families to customers to provide a one source option to them. This put incredible pressure on the dealers to keep up. They had to cope with new tooling requirements and personnel skills to name two major elements. They also had to deal with warranty failures.
The typical response from the dealers with this increase in warranty labor was to drop something of less importance. The first thing to go was maintenance. This thinking persists even today in the minds of many Service Managers. Maintenance is less important than a repair. Well a lot of customers believed in maintaining their equipment to manage equipment operating costs. They were right then and they continue to be right. So what did they do? They hired one of the mechanics from the equipment dealer to do their maintenance work. This then morphed into non-technical work as well. This took us down the slippery slope of ever declining market share in labor. This also led to .lower market share of parts as the customer mechanics didn’t have the same loyalty to the OEM brands.
Now arriving on the scene are telematics and computer diagnostics. We will know with either GPS connections of cellular signals where every machine is on the planet. AND we will know the condition of machines and components based on where the telematics are installed. We can determine if an air filter is plugged, or an engine is overheating, or if a machine is idling. This is significant. We can monitor the health of the machine for the customer form our “Telematics Technical Command Post.” This TTC will be like mission control for NASA. We can have alerts when predetermined conditions exist that would initiate a call to the customer. We will have the TTC manned by skilled technical personnel. We can sell this service to our customers as a tool to allow them to reduce their owning and operating costs and preserve their equipment residual values. Shouldn’t we get going on this now? After all those are two of the main reasons for our existence in this Industry; Reduce Owning and Operating Costs and Preserving the Residual Value. The time is now.
This a very interesting time isn’t it? Of course that is a Chinese Curse “may you live in interesting times.” I am not sure it is a curse. It is more than interesting this time we are in it is downright exciting.
Our inventory in the service business is man hours. The more we have the higher our market capture and service revenue. Yet I hear constantly that “we can’t find mechanics.” I agree with you with a twist. You can’t find “journeymen mechanics.” I agree with you so why don’t you grow your own? Hire apprentices, hire helpers, hire students from technical schools. Get on with it. Stop whining and get growing.
Our tools are no longer requiring that we have the strongest back as a mechanic. We have to have the strongest mind. Many people look down on a technical job or a mechanical job. What a shame. The technicians in your employ, in your dealership are some of the smartest people that you have on your payroll. Did you ever think about them that way? Most managers in an equipment dealership would wilt instantly if they had to be the service manager, even if only for a week.
Our tools are computer driven diagnostics with fault codes to assist in problem determination, to find the “Cause” of the customer “Complaint.” They are computer tablets and PDA’s and laptops with schematics and drag and drop shopping carts. They are scanning time clocks for labor collection they are voice recognition for service reports. There is a lot of technology involved today in the work of maintenance and repairs.
Then there is the telematics on the equipment. We will spend more time on that later. Let the interesting times roll. The time is now.
A number of years ago a dealer for whom I have a high degree of respect initiated a special service for their service customers. They called it “Rapid Wrench.”
This was a service that was aimed at the non-technical mechanical work needed by the customer. Changing batteries or bucket teeth, those jobs that required a laborer but not necessarily a technician. They qualified the work buy the amount of time it would take to complete. If it was four hours or less than it qualified as a Rapid Wrench job. This was also performed at a different labor rate, one that matched the degree of difficulty of the work to be done.
Most dealers, is discussed in earlier b logs, charge a “peanut butter “rate. They charge the same rate for highly skilled technicians and helpers, for diagnosticians and people removing and installing sheet metal. The same rate for these different functions and as would be expected the customer has chosen to give the easy work to someone other than the dealer at a lower price. This is partially what the Rapid Wrench service was aimed at proving to the customer, a good service from a qualified dealer employee at a fair price. I believe that this is a beginning of the solution of recapturing the service business from the competition. The time is now.
As you look into the market capture rates for an equipment dealership in the labor market you have to consider a wide array of items. First and foremost the various types of labor that needs to be performed on construction equipment; maintenance labor, minor repair labor, replacement of wear parts or broken parts, adjustments and tune ups, and major repair and warranty labor. Each of these labor types requires a different skill set to be performed properly. Replacement of wear parts or broken lights or batteries doesn’t require a skilled journeyman to do the work. Similarly scheduled maintenance doesn’t need a “repair” journeyman either. This is where the equipment dealership has gone astray.
The equipment dealer typically has one labor rate for all of the various repair categories – one rate that covers repairs and maintenance and replacement of wear parts. That is why many customers have their own mechanics. The replacement of a tip or cutting edge requires strength not technical skills and can be done by an individual with a considerably lower labor cost than the dealer labor rate. This is also true for maintenance work. Why has the equipment dealer stuck with this one labor rate, what I call peanut butter rate, when all signs point to a loss of the low skilled labor?
I submit to you it is because the equipment dealer service managers choose to operate with all journeymen qualified technicians. This makes their life easier in a whole range of ways but that is not the purpose of the job. You need to match the skills of the technician to the needs of the job. That will allow the dealership to position their services relative to the market prices more successfully.
The only reason that the customer has their own mechanics is that the dealer has either been too expensive or not responsive enough to meet the customer needs. . The time is now.
So having the complaint cause correction troika to deal with we must move to what the customer wants and needs a quotation. Last week we talked about the inspection programs necessary to determine what needs to be done to put a machine in proper working condition. We have obtained the complaint from the customer and determined the cause from the inspection. So on we go to a quotation. The customer wants to know how much it is going to cost before giving you any approval to go ahead with the repairs.
To create a quotation we first must “segment” the work that needs to be done. The segmentation approach needs to follow the structure of the job coding that you use in your business. The job code must address the component on which the work is to be done, the operation that is necessary to affect the repair and the sequence code which follows the steps to do the work. Have you got these job codes, (if you don’t then refer to the coding structure that is used by your supplier for warranty reimbursement)? That is a good starting point.
You will have the standard objections from your technicians. That time is no good. If that is the case in your dealership have the technicians involved in what the factors should be to apply to those times for your use. Once the system has been in use for a time then the times will be based on your actual work.
So we have job codes and standard job times. Now you can create a quotation for the customer. If there is work that the customer turns down, leave the details on the work order so that there is a record for you that you found a problem but the customer chose not to act on it. The quotation will be approved by the customer and then you can put the job into the job queue. The time is now.
This is the first of a weekly commentary on the operational, sales and customer service aspects of a service business in the equipment Industry.
The starting point for a service department is now, has been and will forever be an inspection. This is the most basic yet the most overlooked requirement for performing repairs and maintenance. How can you provide a quotation or even an estimate until you know what it is that needs to be done? Obviously you can’t.
Why don’t we perform inspections as a matter of course? I am sure by now I have heard most all of the reasons. We don’t have the time to do it – We don‘t have the space to do it – The customer won’t let me do it. I am sure you know the list of reasons as well as I do. But that doesn’t excuse our not performing inspections on most everything we do before we start the work. Imagine having your doctor, based on your diagnostics. go ahead and schedule for a bypass surgery without doing an inspection? Not going to happen.
If we perform inspections we can create quotations and time lines. These are two of the top four needs customers have from a service department according to surveys conducted by the AED – Price and Responsiveness. Yet also in those surveys customers say they want honesty from the service department. Doesn’t that tell you something?
On the inspections tthat I am discussed here there needs to be a specifically training inspector. This is not every mechanic. Not every mechanic has diagnostic skills. This is a one or two hour inspections that evaluates the machine not just the customer complaint. This will lead to a comprehensive quotation for the work to be done. This detail stays on the work order whether the customer gives you the go ahead to make the repair or not. That detail notes that the customer chose not to approve that segment of the work we found that should be done. It is inconvenient for the customer, in more ways than one, when that which we pointed out as needing to be repaired but they denied, actually failed or needed the work to be done.
How can anyone run a service department that deserves the customers’ loyalty that doesn’t do inspections? I know you agree with me on this so why not do it? The time is now.
Some of you will know I have been in Hawaii the past few weeks and Marlene and I are having a terrific time. Although we are three hours earlier than at home I am still getting up reasonable early and have had some time for reflection on the business and the Industry.
I have not been in a cocoon here I have been in contact with several people so I have not lost my complete sanity when I wrote the headline for this blog. I truly don’t believe that any dealer any where at any time will thrive without an ambitious and intelligent grooup of talented technicians. I know that I have felt this way for a long time and many of you have heard me make this point before. But it bears repeating now for a few fresh critical reasons.
The new fossil fuel interest. The shale oil developments, fracing techniques, deep well recoveries, natural gas abundance and other exciting things are happening in the oil and gas world. You might wonder what that is going to do to the technicians in our Industry. Well all you have to do is look to our Northern Neighbour, Canada, and you might get an idea. Ft McMurray in Alberta has been a boom town since the 1960’s as a result of the “OilSands” resource. They have wages in that area that will take your breath away. We are seeing similar results in North Dakota. Now the area from San Antonio to Corpus Christi is gaining serious interest. Check out Oklahoma for action. It is starting to be everywhere. Even the EPA can’t seem to stop this strong drive. Between Canada, the US and Mexico the US could satisfy All their oil and natural gas needs for well more than the next hundred years. Of course that is not politically correct these days. Our federal government wants wind and sun power and no more fossil fuels. It appears they are so serious they will kill job opportunities in the process. (Keystone – where for those of you not paying attention that additional oil from Canada is now being shipped by rail and truck which is much more risky than a pipeline) One other comment. The Exxon Valdez oil spill was caused due to us having to ship the Alaskan oil via tankers instead of the pipeline that the envirnmentalists killed at the time.
My point in all of this is that technicians are going to be in shorter supply than they are today in the very near future. The oil and gas industries will take a large number of these talented people and they will do it with higher wages. So I think the message is pretty clear.
Develop your own technicians with good training programs, apprenticeship programs and mentoring programs. Provide a career path that is meaningful and followed for each individual technician. Pay higher wages either with a straight wage or with a strong meaningful incentive program. Manage and supervise the techncians with adequate supervisory density and “good” direct supervision. Operate a “best practices” business unit in service with current and workable tooling and good technological support with tablets and PDA’s and laptops. You have to attract and retain these talented people or you will continue to struggle.
The headline is clear. You need technicians, you need very good technicians if you are going to thrive. The time is now.
One of the advantages you have is your data and your information. It is a shame not to use it. With a good VoIP and good data one of the first things I would show on the screen, as the phone rings, is the purchase history of the customer. What is the business volume this year, this year to date, last year, last year to date, transaction size this year, transaction size last year, number of contacts by you to the customer, number of contacts from the customer to you. Date of last sales transaction by category and date of last contact with you. Do you think you could do something if you had that type of information each and every time that either the customer called you or you called the customer? The time is now…
