CAC: Service Maintenance Programs

Everyone knows about the repair and rebuild business. That is where the excitement is for technical people. In the product support business, we have two major goals: reduce the owning and operating costs for the machine owner, and protect the residual value of the machine. The first step to understanding how to reduce owning and operating costs is to understand the importance of the maintenance service recommended by the OEM. Most customers view maintenance as the necessary evil of changing fluids and filters. There is much more to it than that. How to develop a maintenance program to reduce those operating costs is the theme in this program.

There is a fundamental conflict that has to be dealt with in the labor management group. Maintenance is boring, anyone can do it. In fact the OEM dealer has less than 6.5% of the maintenance market. Nearly 90% of the maintenance is done by a customer mechanic. Yet survey data indicates that nearly 90% of the customers would give the maintenance business to the dealership if their price was less than what the customer currently pays.

This program will discuss the methods and processes to follow in order to be able to meet that price and performance need.

CAC: Service What’s Your Why

It is of critical importance to be able to communicate effectively. In order to be able to communicate effectively means being clear. Clarity is all about understanding and acceptance of what it is that we do and the context within the Company. Many people can tell us what they do. Some people can even tell us how they do it. But people struggle with telling us why they do it.

The answer to the question “what do you do,” is not simply the same as describing your job function. It is much more than that. This also takes into consideration the culture of the business. Each of us has to be clear on the direction of the market, of your company within the market, and how each of us can impact that. This program explores how we can have more clarity in our communications with each other in the course of our day job.

The “What you do” question is the key point here. This class discusses the who we serve in our jobs, why we do it, and significantly what we create in performing our important work. What value do you bring to your work?

CAC: Service Making Money

With everything that goes on in a labor business it is easy to forget that we also have a responsibility to make money. We have to make money to be able to pay competitive wages to attract and retain talented employees. We have to make money to have available buildings and equipment that allows us to perform repairs and rebuilds and maintenance on the equipment we represent. We need to make money to be able to provide the most current tooling and training to provide effective and efficient labor.

This program provides you with the understanding of the costs of operating the service business. It exposes you to the means and methods of how to make money. From understanding how the labor prices are created and how those pricing systems work. How the prices are calculated and the variables that are in use. You will learn their effect on the gross profit. The approach used to derive the price points based on skill sets, job degree of difficulty and frequency, will be explained in detail.

When performing repairs and maintenance the employee needs to understand the impact that their work makes on the profitability of the department and in fact, on the dealership as a whole. This class provides all of that.

CAC: Service Best Practices

With standards of performance we dealt with what it looks like when it is right. With Best Practices we aim for performance excellence. What is it that the most successful dealers are doing to achieve excellence? This is discussed in detail in this program to allow dealers to see optional approaches to processes and systems. From using the standard times to shop floor scheduling turnover, from maintenance programs to labor efficiency, every aspect is discussed.

We will cover all aspects of the processes required in a labor business: from dealer business systems, to labor collections systems, to service pricing systems. People and system productivity and effectiveness are critical in any business today, but this is especially true within the equipment business where the gross margin on the prime products continues to erode. There are many aspects within a labor business that must be covered that can make a significant difference in either cost structures or market positioning and competitive situations.

Process manuals – electronic or paper – and procedures, as well as training methods to employ become critical to the consistent delivery of excellent customer service. How to measure your success in the area of customer satisfaction, as well as all operational processes becomes part of this program. Anyone interested in achieving the best possible level of performance within the labor business will gain insight from this program.

CAC: Service Coaching and Mentoring

One of the most important and significant activities in which we can be involved, in our professional lives, is helping in the development of the younger less experienced employees. Whether it is a direct coaching job or we mentor the younger less experienced workers we have a responsibility to transfer our knowledge to them. In older times each new employee was assigned to a “mentor” with whom they spent time. They would take breaks together, have lunch together, and this new employee worked as if they were helpers for the experienced employees.

The dilemma with this is that not everyone is good at transferring their knowledge and some employees will just not do it. Selecting the proper people to assign this responsibility is critical. Starting through all of the job functions, from the beginning to the end. Communicated in a different manner from the time the employee arrives at work until they leave at the end of the day. Everything and anything that pertains to the work.

This is part of developing a strong corporate culture. Culture is aimed at your heart. In this style of “onboarding” new employees, each person will feel part of the team. This is an extremely important function and this class will help you avoid the difficulties in performing this function.

CAC: Service Customer Loyalty

The ultimate measure of your service to customers is the loyalty that they give you with the business. That can be measured by customer retention. During the 1980’s Harvard Business School did the definitive research on this subject. That work was published in a book called the “Service profit Chain.” This is one of the foundations that is used in this class to show students the “how to” measure customer loyalty.

There is a direct correlation between employee satisfaction and loyalty and customer satisfaction and loyalty. This correlation is explored and explained in this program. Various surveys are exposed to measure employee satisfaction. This information provides recommendations for action.

The Construction Equipment Industry has conducted customer surveys every five years that asks customers about their buying habits. These surveys provided guidance to the dealers on what the percentage of defections would be in the Industry. This class provides a direct linkage that can be used on profitability related to customer retention by the parts business and the service business.

This Customer Loyalty class starts to address the retention measures to use when a customer is assigned to a specific employee. A customer assigned to a Product Support Salesmen has a retention goal, a customer loyalty goal, of 100%. The tools to perform this calculation are provided in this class.

CAC: Service Territory Potential

One of the true challenges in the parts and service business is to determine the successful penetration of the market: the market capture rates. This is another term used to represent your “market share.” How well you are looking after the needs of the customer is the real question at this point.

With this class, we develop a “market potential” model which can be used to determine the purchase potential of each machine. With this tool, an overall potential can be developed for each customer. This is a tool that can be used by management and the sales force to develop strategies to improve performance. We deal with the creation of the model and all the variables within in this comprehensive program.

It all starts with the machine population. That is the list of equipment owned by each customer, and the work application and hours worked each year. With this and the statistics available from the OEM’s and their mean time between failure facts, a reasonable degree of precision can be developed. The major components can be managed in this manner: engines, transmissions, and hydraulic systems.  The wear rates of ground engaging tools and undercarriage can assist in the life of these wear parts. Finally, we have maintenance as the last element. Don’t miss this market potential class.

CAC: Shop Floor Scheduling

Our customers all want predictable, consistent, high quality service work. But, equally important to them is a completion date for the work you are doing for them. You need to be able to provide a completion date, and you need to meet that date. To do that requires very specific activities and deliveries. Parts, labor, supplies, and outside purchases all are involved. This program will help you learn how to establish and manage shop schedules. To date, in most surveys on customer attitudes, customers indicate that they want “honesty” in the top five. That should tell us that completion dates, which are rarely met, is an area that needs a lot of attention.

This program leads to the items that are required in developing a schedule that can be met for all customers and internal departments. The typical rationales used to explain away why completion dates are rarely met are exposed and dealt with in a manner that allows acceptance of the need to change approach.

Each day, each technician needs to be given eight hours of labor, but no more than eight hours of labor. This requires that each job have work elements that are never more than eight hours in length, so that the answer to the question “will you complete everything I gave you to do today?” will be either yes or no. If yes, then the schedule is intact. If the answer is no – that will be dealt with in this program.

CAC: Service Absorption

A properly managed Service Department is critical to the financial health of your company. Customer loyalty is crucial when it comes to your success in your business. In the midst of managing the service business for the highest levels of customer loyalty, we often overlook the many ways in which profitability itself impacts the business.

The profits provided by the service business goes to cover the expenses and costs of operating the business. This is the contribution of profit to the business. This is all very straightforward, of course. But where we all clearly understand the contribution of profit to the business, absorption is something that is less clear.

In the 1950s, the model of Absorption was developed as a way of managing profits and expenses in the service business. This important class offers clarity in the financial aspects of a fiscally healthy service business, and how it positively impacts the overall strength of the dealership.

CAC: Service Basic Finance

Before we can be of any value to anyone else we have to be of value to ourselves. That is an old adage, but it still rings true. Ignorance is not knowing what to do. How can we know what to do if we don’t understand basic finance? This is especially true within the labor business, where the technicians look at their hourly wage and compare it to the labor rate charged to the customer.

We will expose and explain all aspects of the operating statement, the balance sheet and the cash flow forecast. These are the three major documents in the world of finance. We will define and describe all of the terms the accountants use. There will be no mystery to basic finance when we are finished. We will explain cost of sales and what it consists of, as well as all of the various expense elements. Personnel Expenses, Operating Expenses, and Fixed Expenses are discussed so that everyone will be able to understand and accept how and why money is spent and how we make it.

The fundamentals of basic finance have been a mystery for too many people for far too long, especially in the labor business. This program gets past that so that the employees in a parts business will understand the effect of each of their decisions.