Impacting Low Service Margins26 Nov, 2007 By: Jerry Newberry imageSource
Impacting Low Service Margins
I often hear service managers stating that they are comfortable with margins
in the 35-45% range in service. Partly because they don’t want to disrupt
employees and customers by implementing the needed changes to drive margins up,
or they have bought into misinformation (that some have spread in the industry)
that margins are tightening and a 52%+ margin isn’t attainable. Let’s clear up a
couple of myths!
First, if you think implementing procedures within field service to
strengthen your margins will cause employee moral issues or concerns at the
customer level…you are very mistaken!
Margins today are as achievable as ever. It is also a fact that addressing
the issues that are causing the lower margins will IMPROVE the moral of your
employees, and substantially improve your customers’ satisfaction with the
products and services you provide.
Time and time again I walk into companies that are experiencing a
substantially higher amount of incoming call activity than they should.
A 50% reduction of calls on the board at the end of the day is achievable
once several issues that are common within this industry are addressed. Here are
several questions to ask and review with the service management group:
Are you reviewing all call activity currently on the board? Open calls, EM’s,
incompletes, etc. Are there calls sitting there aged above 20 hours old? WHY?
- Is there a “sense of urgency” within the management team and dispatch to
review this regularly, but more importantly, react to the aged calls? Respond
quickly and get these off the board. You need to create a sense of urgency!
- Are you in the correct field structure to increase customer hours and
reduce travel? This is a common issue within field service. Are your
technicians in defined territories and are you running the organization in
product specialized teams? Territories not developed correctly will create
mass confusion in dispatch and in the field. Ask your dispatcher how often
he/she is pulling techs out of their territory to assist others due to call
activity being heavy. This is a sign of uneven workload distribution and is a
- Are you daily monitoring the field activity reports to identify
opportunities within field service? What are the roles and responsibilities of
the field supervisor positions?
- Are there inspection processes in place to ensure the base is being
- Are your managers and supervisors managing service as a real profit
- Are you monitoring yields on all high mortality parts being used? There’s
a major amount of premature failure and replacement occurring if you’re not!
Capture these dollars!
- Are compensation programs for managers, dispatch and technicians driving
the desired results?
- Are your employees accounting for 7.5-8 hours worked per day between
customer hours and travel? If not, why? Are they coming into the office on a
consistent basis? Fix that! Are they arriving late or pulling out early? Fix
that! Do they need to pick parts up at the office too frequently? Fix that!
- If you were to call all technicians at 8:15 am, would they be at their
accounts? Most companies lose at minimum a call per day, per tech, due to
In closing, by addressing just a few of these areas you will be in a position
to substantially increase the amount of workload per tech, improve response
time, reduce the incoming calls into dispatch and in each territory .
A major focus on quality of call versus quantity will drive product
reliability, which in turn reduces further the incoming calls and creates
These areas will help drive profitability within your company.
For more information contact Jerry Newberry at