MPS - What is the Response Time?13 Jul, 2011 By: Ken Staubitz, Strategy Development imageSource
MPS - What is the Response Time?
Your organization just took over a new MPS account; expectations are high and everyone is excited about this additional opportunity. It is critical for your organization to put its best foot forward and exceed the new client’s expectations. Are the client’s expectations for Service and Service Response clear? Is the service department made aware of these expectations? If there is a response time expectation, then how were these expectations discovered? Or, was it assumed that the client expects your typical four hours response? You might be surprised to learn that the client expects you to show up sometime that same day or the next, or the client expects the response time to be even better than before. Yet there is not a clearly defined expectation.
For the traditional copier dealer, service response time benchmarks have been etched into the brain since the beginning of time. Setting response time levels based on products or segment class has been a best practice for years. The response time for production print equipment is typically less than 2 hours, while most segment 2-5 machines have a targeted response of 4 hours for many dealers; leaving the desired response for segment 1 and faxes at greater than 6 hours.
In the copier/MFD space one typically has to offer a 4 hour average response to remain competitive. Why is response time such a focal point to the traditional copier dealer? The reason is very simple. In the past this equipment broke down more frequently and required longer call duration to repair the device. Also the technician and client relationship was extremely important because the tech often had to rely on this relationship to get him/her through difficult times associated with the equipment’s lack of reliability. The client knew the equipment was unreliable and they expected it to break; moreover, they wanted to be assured service would respond quickly when there was an equipment failure.
Such expectations are not always the case in the MPS world. Printers have higher mean time between failures and have shorter call duration; therefore, they are more reliable and when service is required it generally takes the tech less time to fix it. Also, a majority of the time a company’s printer fleet is supported by their current IT staff, whose main focus is keeping their organization’s IT infrastructure functioning properly. Printer support is often not a top priority of concern, and many times internal staff is left waiting days at a time before IT finds the time to fix the unit.
Client Response Time Expectations
Therefore it is critical to uncover the client’s response time expectations up front when taking over an existing fleet. Ask clarifying questions to determine these expectations. You might be pleasantly surprised to find that your client expects an 8 hour or even a next day response. Should you find that your dealership has to service a major account printer fleet in your area for a manufacturer, familiarize your team with the service level agreement (SLA) for response time. You might be surprised to find that the expectation is set for a day, or sometimes a two day, response time.
The service response time your company commits to will have a dramatic effect on your staffing. There will be times when your organizations will have to provide a 4 hour response, however it is important to understand this expectation might not be the norm in your market. Delivering a 4 hours response versus an 8 hour response for printer service will increase your labor cost by 12-14%. As an example, to deliver an average 4 hour response time, you have available (approximately) 125 productive hours (travel + repair) per technician. Conversely, to deliver an 8 hours response the adjusted available hours jumps to 142 productive hours. This difference in available productive time translates to a labor cost difference that many dealers do not take into consideration. Just be aware that there is a cost difference depending on your response time commitment and it will impact your bottom line gross profit.
Call Avoidance Help Desk
Also consider a call avoidance help desk in order to provide a quicker response. If your service team uses a customer facing help desk to avoid sending a tech on site, then your client might actually experience a lower response time and have their issues resolved quicker. This call avoidance method could be a differentiator from your competition and could allow your service team to further exceed any initial response time expectations. Not to mention, this method is extremely effective in reducing your labor cost.
The bottom line, when assuming printer fleet service you need to consider the following regarding response time:
Establish response time requirements / expectations up-front.
Comprehend the labor and cost impact of response time commitments.
Practice service call-avoidance at some level; i.e., tech call-ahead, service call triage, customer facing help-desk, etc.
It’s critical to learn the client’s response time expectations when taking over an existing fleet.
Ken Staubitz is a service consultant with Strategy Development, with 14+ years experience in all levels of service operations and MPS service structure. Formerly with Modern Office Methods (MOM)in various service and operational roles; was MOM;s Director of Client Services where he oversaw all service operations and managed a staff of 60+ field service personnel. Ken served on the Lanier Dealer Advisory Council and was an E-Automate Service Committee member. Reach him at www.Strategydevelopment.com.
CENTRAL POINTS OF SUPPORT CONTACT
Many organizations have implemented a central point of contact for handling Customers, Users and others with inquiries and/or issues. The Service Desk types are based on the skill level and resolution rates for service calls. The different service desk types can include:
Help Desk - an information and assistance resource that troubleshoots problems for office machines, IT systems, or related programs and products. Dealers and Corporations often provide help desk support to their customers via a toll-free number, website and/or e-mail.
Call Center - a centralized office used for the purpose of receiving and transmitting a large volume of requests by telephone. A call center is operated by a company to administer incoming product support or information inquiries, typically from consumers.
Contact Center - also known as customer interaction center is a central point of any organization from which all customer contacts are managed. Through contact centers, valuable information about a company are routed to appropriate people, contacts to be tracked and data to be gathered.
MARGINS & MAINTENANCE AGREEMENTS
Service benchmarks are the most measurable way to gauge your level of performance. Companies and consultants know that to exceed customer expectations and maintain high profit margins, you will need to adhere to a proven service business model in order to effectively succeed. There are various opinions, opportunities and so forth, but a general consensus in service is recognizing the business model calling for 52% gross profit.
Do you know what your true operating cost per page is on all the models that you service, both for service and supply? Achieving the lowest possible operating cost per copy is the first critical element to your overall success. Once you know what your costs are and they’re competitive within the industry, you must have a strategy for establishing maintenance pricing to achieve your goal - typically 52% gross profit (GP) in service.
With a business model calling for 52 percent gross profit in service, agreements must be priced accordingly. Example: If agreements are at a 40 percent margin, it’s almost impossible to hit 52 percent. Therefore, you could consider establishing a mid point of the volume band for the equipment and price that mid point at a 50 percent margin. If you drop below that mid point you’ll need to increase the margin proportionately to 55 or more in order to sell the higher volumes at, say, 45 percent.
Without proper pricing, no amount of cost cutting will get you to a goal of 52 percent, if you are to maintain quality service.
Bottom line? In order to sell some of your service contracts at, say, a 45% margin, then you must also sell others at a higher than 52% margin to achieve your ultimate goal.