Measure What Matters

Prior to Columbus, people firmly believed that the world was flat; they had been taught that all of their lives. In the copier service business, we have our own version of the flat world theory. People are constantly repeating the notion that 4.5 calls per day and some fixed parts cost per call are metrics that a service manager should try to achieve. Those numbers have no value and are in fact dangerous to the profitability of a dealership.

To prove that point, consider two technicians that manage the exact same fleet of equipment, and generate the exact same revenue. One technician does two calls per day, and his parts cost is $75 per call, and the other technician does six calls per day, and his parts cost is $28 per call. The technician that does the six calls per day is spending $168 per day on parts compared to $150 for the other technician. The six-call tech is also driving more, and that is an additional cost. The six-call technician will also have significantly less satisfied customers.

Several major copier companies that used those metrics to measure technician performance and as management goals no longer exist. Measuring the wrong metrics most probably was a significant factor in their demise.

When a technician is evaluated on calls per day and on parts cost, it creates behavior that adversely affects the company. Technicians become reluctant to put parts in equipment and so they try to stretch the part life. They also try to complete service calls as quickly as possible. The combined effect is a significant increase in the number of repeat visits to solve an initial issue. This causes additional service calls, increased response time and lowered customer satisfaction.

Another danger is the concept of trying to manage parts cost as a percentage of revenue. If you measure parts as a percentage of revenue and compare year over year, you have no way of knowing why it changed. If copy volume goes up at a greater rate than service revenue, parts cost as a percentage of revenue will go up as well. How so? If the normal rate is .01 for a click, and the cost of the parts per click is .0014, that would yield a 14% parts cost. If you discount the service rate to .008 and the cost of the parts doesn’t change, parts cost as a percentage of revenue would be 17.5%.

Read more in the free member's area, or at the following link:

https://www.enxmag.com/twii/service-management/2015/12/measure-what-matters/