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Efficiency Is the Essence of Success for Servicing Dealers

Written by Mark Pollitz

March 5, 2024

What makes you successful? There are many ways to gauge success, but one common denominator of all success is efficiency.

All profitability in any business model is dependent upon efficiency. Efficiency is based upon the effort, time, personnel, technology and other elements that a business owner invests in. It could be argued that efficiency is a profit center of its own. If your business is not efficient, the costs to operate become higher, and profitability is minimized. Conversely, if your business is efficient, your costs become lower, and profitability is maximized. It’s different for each company.

Let’s narrow the focus to your repair service. Whatever the repair service is, appliances, electronics, furniture, HVAC, plumbing, electrical, it’s all the same when it comes to managing the many areas of a service organization’s structure. Whether you’re an army of one or 100, managing and monitoring efficient practices is all the same. The methods used will differ between companies, but, ultimately, the results are the same.

Efficiency is the critical part of operating your service business no matter where the revenue stream comes from, be it cash on delivery, warranty or extended warranty rates. I’ve always said, “You can increase your profitability without raising your prices.” Operating a service business is not for the faint of heart. It’s the more complex piece of your business compared to sales or delivery and installation.

Let’s focus on a few areas and look at some resources that can help you manage, monitor and improve efficiencies.

WHAT IS YOUR COST OF DOING BUSINESS?

Cost of Doing Business (CODB) is absolutely the most important factor to know. If you don’t know your CODB, you may very well be undercharging customers and under negotiating your warranty rates. CODB also identifies areas of overspending, underspending, lack of productivity and failure to cover all the costs involved in staffing and running service calls, to name a few.

Service Leaders Network (SLN) understands the importance of CODB, and we provide access to a number of resources, including a COBD calculator and workshop developed by our trade partners at Service Success Group, and additional educational programming through our partners at Service Company Solutions. Visit the SLN MemberNet community for more information.

KEY PERFORMANCE INDICATORS (KPIs)

What are these and who uses them? KPIs can help you focus on different business and technical facets and measure the performance of each. They help identify areas of strength and areas of needed improvement. Manufacturers use 30+ KPIs to measure your performance on warranty repair calls. Your negotiated warranty rates are based heavily on these KPIs. Manufacturers can share them with you, which will help you improve in areas that are weak. Any improvement in any KPI is going to have a positive effect, not just on warranty performance, but also on your CODB and extended warranty performance, which ultimately influence those rates as well.

We offer a training session titled “How to Negotiate Manufacturer Warranty Rates,” in which I actually lean on my experience as a manufacturer Field Service Manager and as the warranty rate negotiator who sat across the table from you to offer you advice in this area. This session is also posted on the SLN community in MemberNet.

TECHNOLOGY TOOLS — HOW DO YOU MANAGE ALL THIS DATA?

Managing and monitoring various aspects of your service organization without having a strong Business Management Software (BMS) is nearly impossible. Nationwide has several Point of Sale and BMS partners that have a strong service business module. Many owners look at this as a cost instead of an investment. But technology creates efficiency, which creates productivity, which creates effectiveness, which creates profitability.

Several of our trade partners have API-based software add—ons that monitor and manage numerous components of your service operations. Additionally, several of our appliance parts distributors have their inventory and pricing data that can be integrated via APIs with some of our partners.

Another technology tool developed by SLN is the Service Rate Comparison Platform. This tool is a first in the industry, as no other organization, trade association or buying group has this technology. The purpose of this platform is to give appliance servicing Members the capability to compare their repair rates to a collective national average so you can determine if your rates are above, the same as or below the collective national average. All information is anonymous, and Member information is only viewable by the Member. This platform compares rates for manufacturer warranty, extended or product protection plans, and CODB. This technology platform is only available on the SLN webpage in MemberNet.

Remember, efficiency is a profit center on its own. Efficiency is what you create to maximize profitability. Equity is the value you provide to those using your service. Compensation is what you are paid based on the value of the equity you provide.

To learn more about all the services, resources and programs SLN offers, reach out to SLN Director Mark Pollitz at mark.pollitz@nationwidegroup.org.

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