At Tom Vignali CPA, Inc., we recently had the opportunity to deal with a company that sold and serviced office equipment. The company’s service contracts included calls when a piece of equipment stopped working properly – downed equipment – and periodic preventative maintenance service calls (PMs). When a piece of equipment was “down,” the customers looked for immediate service, especially due to their dependency on printers, copiers, and fax machines. The office equipment provider indicated that their sales were declining because they were spending an inordinate amount of time answering service calls for “downed equipment,” and this was preventing them from attending to the other aspects of their business.
The scheduling and expense of traveling across a vast customer service region to respond to service calls was seriously restricting the time available for the company to engage in sales work as well as PMs. In fact, due to scheduling issues, they had ceased providing any PMs to their customer base. They indicated that there just wasn’t enough time.
We reviewed this issue in detail, identifying issues and devising strategies and tactics. Following is a description of our recommendations and the ensuing results.
Increase efficiency, decrease downtime
PMs can be scheduled in a coordinated fashion to best use critical staff time. Scheduling can be arranged in a specific geographical area to avoid crisscrossing the market area in a non-profitable manner just to answer service calls. In order to reverse the current process, we recommended that when a technician was in a specific area to deal with a service call, every effort be made to provide PMs to other customers in that area. This was an attempt to address preventable “down times,” thereby potentially reducing immediate-response service calls, which couldn’t be scheduled in a coordinated fashion.
After implementation of this tactic, the company almost immediately noticed that they were able to prevent impending equipment problems due to customer misuse or worn equipment parts. This allowed them to alleviate potential problems and address service issues in a more scheduled, coordinated fashion. It must be noted that when a piece of vital office equipment is down, the customer wants it operational immediately! Down time means the customer’s employees can’t do their jobs.
Identify sales opportunities
As this process continued over a month or so, more customers were able to receive PMs, and the service calls for downed equipment appeared to be declining significantly. Additionally, the service technicians were receiving requests for additional supplies, equipment upgrades, and in a few instances, requests for additional equipment and newer replacement equipment. The revised attention to PMs was resulting in increased sales even though no sales efforts had been engaged. The initial intent had merely been to reduce the amount of avoidable service calls. But now, the company engaged all of their service technicians in basic sales training programs to provide them with the product knowledge and skills necessary to identify potential customer needs and enable them to sell/up-sell while on a PM or service call. Technicians were now providing the sales staff with qualified sales leads for products and equipment.
As down time service calls decreased, a full-fledged PM program and schedule was created. Service technicians became duly authorized sales lead generators, and sales increased. As down time service calls decreased, travel time became more coordinated, and a significant reduction in overtime was also realized. Needless to say, due to the increased sales and operational profitability, the company was able to increase compensation for some individuals and provide additional bonus incentives for other employees.
PMs pay off in multiple ways
In conclusion, PMs are more than just preventative maintenance! They are a source of reduced operational expenses, increased qualified sales leads, and increased revenues.
If you would like to further discuss this issue or any other accounting issues, don’t hesitate to contact us at: Tom Vignali CPA, Inc.
Contact Us:
Thomas W. Vignali CPA Inc.
118 Point Judith Road
Narragansett, RI 02882
T: (401) 415-0798
tom@tomvignalicpa.com
www.tomvignalicpa.com
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