The final article in the series compiled by Jim Rathbone of Rathbone Results designed to help you grow your installation business
Measure Your Service Business is the last in this seven-part series offering advise on how you can grow your service business and recurring income. So far, we have looked at these critical success factors:
- Develop the service business mindset. It is vital to develop a service business and growth mindset when the installation activity can be so time consuming.
- Set service goals. Goals keep us energised and focused on what we are trying to achieve.
- Increase sales from customers. Your customers are the easiest, most profitable group through whom you can increase your service sales.
- Retain service contracts. Service contracts can be retained for many years, if the customer sees he/she is getting value for money, continues to have a good experience and feels valued as a customer.
- Generate leads for new accounts. To accelerate growth in service sales you need to develop, test and measure new lead generation methods for winning new customers.
- Increase profit through pricing. Clear pricing policies and effective pricing management will positively impact your profits.
Measuring your service business is a cornerstone of growing your service business. Every service business is full of detail. The most important should be measured across the three dimensions of service growth, service quality and service efficiency. Goals and improvement activities can then be developed for the area(s) you wish to focus on. This will enable you to better manage the growth, customer experience and cost efficiency.
You may need to develop or enhance your service business reporting and dashboard. Let us consider some of the measurements and KPIs you might track under the three dimensions:
- Service Growth – factors to track include:
- Value of maintenance contract base
- Recurring income as % of total sales (e.g. Maintaining, testing, inspecting, monitoring, certifying and remedial service income)
- New maintenance contracts quoted and sold
- Value of maintenance contracts cancelled
- Service works (sometimes called small works or remedials)
- Number of leads
- Number of leads generated by engineers
- Number of quotes
- Conversion rate % quote to order
- Average order value
- Service Quality – factors to track include:
- Annual maintenance contract attrition %
- Cancelled contract value
- Call out 1st time fix rate %
- Number of repeat corrective call-out visits
- Number of outstanding preventative maintenance visits
- Number of goodwill call-outs
- Number of complaints/issues
- Cost Efficiency – factors to track include:
- No of engineer visits per day
- Average revenue per engineer per annum / per day
- Service gross profit %
- Service direct labour %
- Engineer utilisation % on fee earning work
- Number of free of charge (goodwill) corrective call outs
- Number of warranty calls
- Average corrective call out value
In the light of the above, I would encourage you to review your service operations dashboard and reporting system and see which of the above KPIs you should introduce. Check that you have targets in place for each of the service KPIs. Confirm that there is clear ownership and accountability for delivering the targets. Where the actual result is below target, confirm improvement actions are in place and they are sufficient to deliver the target.
I hope you have found this series on Growing Your Service Business from Rathbone Results helpful and it has given you some practical ideas and tips on how grow your recurring income and improve the profitability and performance of your service business.
