Retaining Technicians
In the ever-evolving world of business, the importance of staying proactive cannot be overstated. A recent call for advice from a dealer in the Northwest reminded me of an article I penned last year, delving into the profound implications of inaction within your service operation. This issue, explored in depth in “Inaction—YourSource News," illustrates the high price that can be paid when a business neglects to take the necessary steps to optimize its operations.
The case involved a reputable dealer grappling with a significant loss. A local independent service company seduced away a productive technician with two years of invaluable experience under his belt. The bait was an enticing promise of an annual commission pay exceeding $100,000, with no upper limit. The dealer had invested heavily in training this promising technician, only to see him slip through his fingers into the waiting arms of a competitor. Sadly, this tale of technician churn is not an isolated incident but rather a recurring theme in the industry, and it continues to haunt the dealer community.
Upon closer examination, it becomes clear that this technician's defection could have been averted with proper attention to the intricacies of the dealer's service operation. A fundamental oversight lay at the heart of the issue—the dealer's service call fee, which had remained stagnant at $89.00 for an extended period. In stark contrast, the local independent service company charged $129 for core brand services and a whopping $229 for luxury brand service calls. The BrandSource dealer, it seemed, had failed to recalibrate his pricing strategy, leaving substantial revenue potential untapped.
The remedy to this problem was straightforward, albeit somewhat elusive to the dealer initially. I suggested that he leverage a cost-of-truck-roll template to understand the cost of dispatching technicians. Armed with these insights, he could adjust his service rates to cover these costs and provide competitive wages to his technicians. I encouraged him to revisit my 2022 article, "The Cost of a Truck Roll Is More Than You Think - YourSource News," which offered valuable guidance on making these calculations. Additionally, I pointed him to my article, "Professional Pricing for Professional Service - YourSource News," which outlined the principles of setting service labor rates based on the actual cost of running a business.
With these essential calculations in place, the dealer could have matched the job offer presented by his competitor, retaining his talented technician and fostering a win-win scenario. The strategy was clear—raise the service rates and transition his technicians (all three of them) to a straight commission remuneration package. Under a commission-based pay structure, technicians only stand to earn more as the company's revenues increase, creating a powerful incentive for both parties involved. I emphasized the effectiveness of this approach, drawing from my own experiences implementing it in my companies and witnessing its success in numerous other businesses. I elaborated on this in another article, "Do More, Make More with Commissioned Technicians - YourSource News," driving home the point that straight commission compensation plans indeed work, and they work exceptionally well.
However, it's crucial to acknowledge that making informed pricing decisions requires a deep understanding of costs and financials. Effective decision-making becomes an uphill battle without a firm grasp of these key metrics. It's a universal truth in business that you can't manage what you can't measure. For those who may not be ready to transition to separate department financials, a more modest approach involves classifying every expense meticulously into either sales or service categories. This way, at the very least, you can gain some semblance of control over your financial landscape.
In conclusion, the cautionary tale of the North West dealer serves as a vivid reminder that inaction within your service operation can lead to dire consequences. But the remedy lies within reach—comprehensive cost analysis, prudent pricing strategies, and commission-based compensation can be the keys to a thriving and resilient business. As you navigate the ever-changing industry landscape, remember that proactive measures can be your best defense against the cost of inaction.
