The Happiest Service Department in America: Thermocopy10 Jul, 2002 By: Francis McClintock imageSource
The Happiest Service Department in America: Thermocopy
service manager, John, is the nicest guy I have ever worked for!" "I love my job
and couldn't ask for a better company to work for." "Steve our owner is an
incredible boss and a great entrepreneur." Is this what your service
technicians' say about you and your company?
can you achieve these types of comments from your technical field staff?
Thermocopy, a diversified Ricoh office product sales and service provider
headquartered in Knoxville, Tennessee, re-invented their service department's
compensation package. Ultimately the technician's morale, productivity, and
profitability changed for the betterment of all concerned.
digital era has affected the benchmarking standards of technical proficiency and
customer expectations. These external changes require competitive dealers to
continually evolve the way they approach the internal practices of their
business. Sustained profitability requires each provider to offer greater value
at increasingly competitive (lesser) rates. Dealers must aggressively seek out
new and better methods to capture the ever-changing market.
Thermocopy had a high level of customer satisfaction, they were losing profits
by cutting prices for their customers. Customer loyalty was being achieved, but
the ledger sheet's bottom line and tech morale were declining. Management wisely
focused their attention on the business process as well as the end-user's
information tracking system was a deterrent to their profitability. Business
performance data was difficult to process, often inaccurate and took days to
decipher. Even worse, the old system was designed to recognize and reward
outdated analog benchmarks, as outlined in the following three snap shots of
specific problem areas.
OF PROBLEM AREAS
One of the obvious problem areas was the cost of parts as a percentage of
revenue. John Goan, Thermocopy's V.P. of Service, instituted a field technician
incentive program to reward for lower parts usage. During the initial stages of
this parts usage reduction program, profits increased. The money saved on parts
was soon eclipsed by the additional labor expense required by increased
callbacks and a lowering of the clicks between calls. Additional technical staff
actually had to be hired to maintain required response time. By the time the
required parts were actually replaced, the over all cost per print had
increased. The technical management team had to re-establish the cost
relationship between the appropriate replacing of parts versus the cost of labor
hours. It was difficult for the in office management to monitor and direct the
appropriate ratio between parts cost, labor expenses, and customer satisfaction.
Appropriate Use Of On-Site Time
Another well-intentioned incentive program was established to maximize the
actual time technicians spent working on equipment in a customer's location. The
techs quickly learned to manipulate this program. Drive time, lunch periods, and
in shop time, were inaccurately reported as time being spent in the customer's
office. Computer generated reports were of little use in helping to identify
areas that needed to be targeted in order to increase service profitability.
Next, the Thermocopy service team focused on lowering response time.
Unfortunately, first call response time had little to do with overall
profitability or customer satisfaction. Showing up quickly without the
appropriate parts, knowledge, or time available for a complete repair was
realized Service Programs were launched with high expectations, enthusiasm and
the expectation of success. Ultimately, each new program became
counterproductive. Technician morale was down, customer satisfaction was neutral
and expenses were up.
FUEL TO THE FIRE
hardware sales marketing programs continued to place more equipment in the
field. Rather than improving the bottom line, service department profits
dwindled as Thermocopy's machine population increased.
closer inspection, efficiencies created by management incentive programs were
diluting the service department's profitability. It seemed the harder they
tried, the more revenue they required to effectively service the ever growing
Goan was acutely aware of the need to reexamine the management tools and
philosophies being used. The changing market place required a new architecture
for service profitability. Benchmarking criteria of the analog era was no longer
appropriate. The status quo was no longer a viable option for customer loyalty,
profitability, and employee motivation or employee compensation.
John was not alone in his realization of the need for change. Service Managers
everywhere were dealing with the new management realities. Customers required
more for less. Old service guidelines and tech compensation plans were not
enabling an optimization of return on investment.
time had come. Not only must profitable service departments think out of the
box, the old box had to be thrown away.
time, parts usage, labor allocation, travel time, call backs, total calls
completed, customer performance reviews, management pouring over spreadsheets,
ever changing compensation packages... these were tools of the past."
WITH THE OLD
The majority of their customers are on a cost per copy program. Service
ultimately receives a small amount of revenue each time a copy is made. The most
copies made, with the fewest service calls, provide the most revenue.
not give the field tech a bonus based on the same criteria as the dealer is
being paid? Tie the tech compensation program to the amount of clicks between
service calls. Allow the tech to determine what parts and how much time will
optimize efficiency. Empower the tech to make the appropriate decisions that
ultimately benefit the customer, the company, and their paycheck.
new program received high praise from the field techs. Finally, they were in
control of their own destiny. No longer was their job performance regulated by
the need to manipulate an incentive program, which took little regard for real
world situations. The new program rewarded "thinking techs," who emphasized the
need to maximize the number of clicks between service calls and parts
replacement. Technical training, customer knowledge, real world experience, and
instincts - enabled the tech to work in a creative atmosphere, which maximized
their unique ability to create value.
entire tracking of this new service satisfaction and technician reward program
was easily accomplished using Business Equipment Information (BEI) Services. BEI
(http://www.beiservices.com), provides a computer based information tracking
system which allows dealerships to monitor, benchmark and appraise the
performance of individual techs, machines, and models as well as the
effectiveness of the entire service department.
the Business Equipment Information Service database tracks the performance of
over 750,000 copiers around the globe as well as monitoring the service results
from nearly 3000 technicians. In addition, BEI enables dealers to compare their
service performance rates to those of other dealers. These up to date, national
benchmark numbers enable management to see an instant snapshot of national
performance levels, parts usage, cost factors, and specific machine reliability
averages. Individual machine and technician profitability is easily calculated
and appraised. Subjective technical compensation plans can be established to
actually pay for performance. Technicians have a vested interest in identifying
equipment that needs to be replaced.
Technicians become more interactive in the sales process. Sales leads and
aggressive follow-ups are natural extensions of the BEI process. Improperly
placed hardware and software are quickly identified. The technical staff will
work hand in hand with the sales department to assure cost effective placements,
proper training, timely supply delivery, overall customer satisfaction, and
maximum clicks between calls.
President, Steve Sumner, expressed his feelings on the direction service had
taken. "With today's pace of business, I don't have time to grapple with 20
different reports to evaluate my service department's performance every day. Now
I have my information on the fly and always have a snapshot of where my numbers
Goan offered these comments after Thermocopy implemented the BEI service
performance tracking system, "A small change in strategy can produce huge
returns; we have seen a 38% reduction in overall service costs. We can now offer
even better service to our customers with more money to re-invest in service.
Our philosophy has always been to pour profits back into the company so our
customers are the real winners in the end."
that we are fully implementing BEI's new program, Thermocopy is assured that the
data is accurate, the exceptions have been taken care of, and now it only takes
less than 10 minutes to have the technician's bonuses ready for payroll."
WHAT DOES IT ALL MEAN?"
Technicians are now compensated to achieve goals that work parallel to the
companies overall objectives. Sales sell copies. Service ensures the equipment
produces as many prints as possible and as inexpensively as possible.
have become the driving force to get the sales department to upgrade older, more
costly machines and they closely interact with sales to ensure that the
appropriate equipment is sold. Equipment up time is optimized. Dealer profits
are increased. Fewer technicians can adequately care for a greater number of
added bonus: Thermocopy's technician turnover has been reduced. With the average
cost of hiring, training and maintaining a copier tech in excess of $100,000 per
hire, BEI has ultimately enabled Thermocopy to greatly enhance overall
profitability. It is no wonder why John Goan believes he has, "The Happiest
Service Department in America."