One of the things I’ve written a lot about is how dealerships will have to change in the future. We’ve covered some of the things service departments need to do to adapt, but the one issue we haven’t tackled so far is how measuring metrics in the service department will need to change.
Copiers and Printers
This has been most dealerships’ bread and butter for a long time, and is the easiest part to deal with first. Copier and printer service contracts in the future will probably fall into two categories: metered and non-metered.
Metered
I believe this type of billing will start to diminish fairly quickly. But while dealers can still sell these types of programs, our back-office software and existing metrics are still valid.
We’ll need to focus on copies between visits, appropriate parts cost and the other metrics that matter to you as a service manager.
Non-Metered
This is the newest offering in the copier and printer space. There are a lot of acronyms for this type of billing, including Seat Based Billing (SBB) and Imaging Devices as a Service (IDaas). The premise is that the client pays a flat monthly rate covering the total output. As long as the devices still have meters and the technicians collect them, the existing metrics still apply.
The real issue is what happens if management decides not to bother with the meters, since they won’t use them for billing. Then, everything we’ve used disappears. At a financial level, you would still be able to determine profitability, but as far as measuring technician performance, you’ll be in the dark. Without recorded meters, it becomes a guessing game as to who is doing well and who isn’t.
One potential solution is to measure the profitability of a technician’s territory, but this can be confusing. How do you deal with other technicians being sent in to help?
Applications and Networking
This is an issue already affecting many service departments. They have dual-use technicians who do some networking and some break/fix service. It becomes very difficult to evaluate their service performance because at least part of the time, they are not dispatched to a machine. And if they are dispatched, they are performing network tasks which don’t fit any of the existing models.
Other Forms of Equipment
In addition to copiers and printers, dealers are expanding into a variety of other product lines. I’ve seen them handle mailing equipment, water systems and telephony, as well as managed network services. Most—if not all—need support, and in many cases there are service contracts in place. The question it raises concerns what to measure.
One obvious choice is profitability. It’s important for the business, but it doesn’t help the service manager, who faces a difficult problem because everything in these services is non-metered, so any metric is subjective.
The one metric that could still be measured is calls per day. But experience has taught us that calls per day isn’t really a reliable metric. If technicians start managing to that number, they usually short change the equipment and the client.
A manager could start looking at the average time on a call and manage to that, but does that provide any usable information?
Financial Models Will Change
For decades, our industry has used what is often called the Global Model, but it predates Global Imaging by many years. In that model, the service department is supposed to generate 52% profit on parts and labor. That is based on how the service contract is allocated.
As the product mix broadens out and more non-traditional equipment and services get mixed in, that model will no longer be viable. This complicates buying and selling a business, and it complicates the process of management.
What we’re left with is using the company’s gross profit as the bellwether for all of the activity. We then lose the clarity that we’re used to with our existing model.
Productivity Measurements will Change
What we need in service is a non-subjective measure of productivity. How much quality work did a technician complete during any given period? How does that technician compare to fellow peers? How does our department compare to other departments with similar circumstances?
The one metric that seems to be helpful and easily measured is revenue per technician. If you assign equipment to each technician and they are the primary person to work on it, adding the revenue for all of the assigned equipment would give you revenue per technician. You could also analyze for the profitability on a per-technician basis, and those seem to have value as metrics.
No Definitive Answers Yet
If you were expecting me to have answers, I don’t—all I have is lots of questions. And I know that this is an issue that will make the next few years in our industry a challenge. So I continue talking with as many industry leaders as I can to try to piece together answers, and will revisit this subject when I can provide more clarity.
I would love to hear your ideas about how we will measure service in the future. What I do know is that everything is going to be different. You can reach me at Ken@kedmonds.biz.
