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First Call Effectiveness: The Key to Increased Profitability

29 Aug, 2005 By: Wes McArtor imageSource

First Call Effectiveness: The Key to Increased Profitability

How necessary is it for your
service people to effectively execute a service call the first time around?

Let me answer that for you: it’s extremely important to the bottom line of your
dealership! Maybe putting some dollar figures on this will help you understand

Currently, my company monitors the performance of 1.5 million installed imaging
devices. If you took the total maintenance time and travel time associated with
callbacks— the calls that occur shortly after customers have had their machines
fixed—my customers (dealers) alone have spent:

• $70 million in labor in just the last six months

• Another $30 million-plus for hold for part calls

• More than $100 million dollars every six months simply because technicians
were ineffective and inventory was not handled properly.

The national average for first call effectiveness for our customer base is 32
percent. I think, however, dealers should shoot much higher. For my clients, I
have set the benchmark near 60 percent. We have customers that routinely have a
20-25 percent callback rate using the set criteria and an 8-12 percent rate on
hold for parts.

Do the Math

The first issue that must be tackled when addressing callbacks is the yardstick
used to measure what is or isn’t a callback. For callbacks, we use criteria that
are based on how a model performs at a national level. This system uses a copies
and/or day-to-day measurement, meaning the machine needs to produce a specified
number of copies or work for a specified number of days.

So, if a product is introduced that does not perform as expected, the callback
criteria must reflect this poor performance. Conversely, if a product’s
performance improves over time due to modifications or fixes, the criteria must
reflect that improvement. To set the callback standards any other way is not
going to allow you to accurately determine which calls should or shouldn’t be

With the variety of products running the gamut from reliable Segment One units,
which average 183 days between calls, high-end color units that average five or
six days between calls, and digital duplicators that will go thousands of copies
between calls, it should be easy to see that there is no one criteria that would
allow for meaningful callback statistics.

In addition, it is necessary to define the calculation used to determine the
callback percentage. If a customers calls in, for example, for light copies,
this will be an EM or emergency call. If they have to call back, for whatever
reason, within the callback parameters set for their model, this call is a CB or

In this case, what is the callback percentage? My company views it as 100
percent because if the machine was fixed correctly there would have only been
one call. Most, however, would say the percentage is 50 percent because there
were two total calls, one of which was a callback.

As trivial as this may appear, many dealers have lulled themselves into a false
sense of callback nirvana because they are counting no part calls, courtesy
calls and shop calls among the total calls, then dividing the totals by the
callbacks when in reality it is the customer generated EM calls that should be
the reference point. After all, isn’t the goal to have the customer call you as
few times as possible?

Reducing Callbacks

The key component to reducing callbacks is to be sure the techs are compensated
in a way that encourages them to make the machines run well, NOT simply to
reduce the number of callbacks.

Time and time again I see dealers set up the acceptable callback performance
levels only to have their techs manipulate their systems to meet the number
instead of actually reducing the number of callbacks.

This kind of numbers game cannot be tolerated. The best way to handle this
problem is to pay the technician a per page commission for every copy produced
after their call is complete. If a callback occurs, they simply lose those

By taking the emphasis off the number of callbacks that occur and changing the
tech’s focus to the benefits of doing a quality job, you can get the needed
results. This method also changes the punishment and reward.

Most dealer systems “punish” the technician for having a callback rate that
exceeds their pre-determined standards. This is done in an effort to encourage
the technician to reduce the total number of customer calls that could be
defined as callbacks.

A stronger method, however, is not to rely too heavily on direct penalties for
callbacks. In our program, the few copies we are taking away impact their bottom
line very little. What is impacted is the technician’s ability to manage a large
volume of copies. Techs with high callback rates cannot manage as many copies as
someone with a lower rate. Thus, they are limiting their income as a result of
not doing a quality call.

Using this program, an average tech will lose about $15-$25 per month because of
callbacks, but eliminating those callbacks would net the average tech over $100
per month. Knowing this, how do you think your techs would respond?

Another View Point

Mean Copies between Visits (MCBV) is another effective way of emphasizing the
importance of tracking first call effectiveness. Technicians who have a high
first call effectiveness percentage, will, by default, have a higher MCBV.

If a machine has a better MCBV, this means the customer will have to call less
for service, thus reducing your cost. In a typical customer, the difference in
MCBV, best tech to worst, is generally 60 percent or more—meaning the best tech
generates 60 percent fewer service calls than the worst.

Imagine all of your service people performing at the best tech’s level. You
would be seeing 60 percent fewer service calls than you do today. Can every tech
perform at this level? Definitely not, but if you’re not actively identifying
where every tech has an opportunity to perform better you’re losing money for no

For example, the top technician for a Ricoh dealer is getting over 80,000 copies
between visits with a first call effectiveness of 69 percent, while the bottom
tech is getting 26,000 copies between visits with a first call effectiveness of
6 percent. The very worst tech did 65 service calls; if he could have done what
the best tech did, there would have been only 16 calls.

The lesson is this, by improving first call effectiveness you get better MCBV
and fewer calls, which increases copies per tech. It’s critical to understand
how all these elements work together. In today’s competitive marketplace, you
have to find ways to reduce your service costs to stay in the game.

Hold for Parts

These are the calls required when the technician does not have the needed parts
to complete the original call. This typically is the result of poor restocking
procedures or a comp plan that, in essence, encourages techs to incomplete calls
to reduce the callback percentage since hold for part calls are an element of
the total calls.

The moral of the story is: if you are looking for better profit margins in
service, the best area to look is first call effectiveness. Our customers see an
average of a 20 percent reduction in repeat calls if the techs are compensated
correctly and realistic expectations are set for callback parameters.

With proper training, focus and compensation you can drastically reduce the
number of times your customers call for service, which will allow you to install
more new equipment and generate more revenue with the same number of

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