Establish a Primary Service Area (PSPSA)
Originally published: 02.01.07 by Jackie Rainwater
How to minimize costly drive time and maximize productivity and profits.
Have you taken the important steps necessary to determine an effective primary service area (PSA) for your business? Does everyone in your organization clearly understand and operate within your PSA when advertising, dispatching, servicing, selling, and installing? If you can’t answer these questions in the affirmative, then I have some bad news as well as some good news for you! Let’s start with the bad news: You are wasting beaucoup bucks! Now the good news: It’s easy enough to fix the problem!
Why a designated PSA?
Let’s assume you are paying a service tech $20 an hour, with benefits and taxes adding another 30% to his hourly payroll cost. According to recent reports, the cost for owning and operating a typical service van is around 62 cents per mile, not including the cost of supplies and parts stocked on a service truck. Now, let’s analyze the cost to the company for dispatching a service tech to a call, say, 25 miles away from his starting point driving on a combination of highways and streets in moderate traffic, at an average speed of 45 miles per hour. In this example, the cost of getting the tech to that job is almost $30, or about $1.20 for each mile driven! Also, the tech “enjoyed” around 33 minutes of “windshield time,” time much better spent on jobs producing service revenues, generating sales leads, and capturing new customers.
At Peachtree Heating and Air Conditioning in Atlanta (the company I operated from 1990 until 2002), we established and operated within a defined PSA, which enabled us to minimize costly drive time and maximize productivity and profits. We did this while growing a residential customer base of over 68,000 customers (over 18,500 of them were enrolled in our maintenance agreement program), which accounted for over 15% of the detached single-family homes in our entire PSA.
How to analyze and establish your PSA
When analyzing your marketplace, use maps that include things such as city, county, and Zip Code boundaries, neighborhoods, major streets, highways, and rivers. Look at all of these factors relative to the location of your business to determine your ideal PSA. Be sure you incorporate your local knowledge (locations of older “high-end” neighbor hoods, areas of severe traffic congestion, locations of your service technicians residences, etc.) as well as involving others in your organization (operations manager, service manager, dispatchers, etc.) when making this determination. Ideally, you would like to include as many 10-year or older upscale neighborhoods as possible to “pick the low-hanging fruit!” Limit your PSA to as small a radius as practical. Then, working with a direct mail house and/or marketing firm and using the PSA you have tentatively selected (they will want a list of the Zip Codes involved) as well as your criteria for “target” homes (i.e., owner occupied detached single-family dwellings of a given age and household income level) determine the number of “target” homes in the PSA. It will take several “passes” to make your final PSA determination.
The next step is to prepare maps of your PSA and meet with everyone in your organization for your PSA “rollout.” From that point forward, your advertising, marketing, sales, installation, and service activities should be confined to your PSA. You should, of course, continue to service previously established customers as well as honor any warranty obligations for any residential new construction jobs located outside of your PSA. Now, here’s where it takes real discipline to make this work for you. Non-customers located outside of your PSA requesting service should be handled along the lines of “Thank you for calling, however I am sorry to have to tell you that you are located outside of our service area.” Any exceptions to your PSA policy should require the approval of specifically designated people within your company.
Jackie Rainwater is a 46-year veteran and former owner of Peachtree Heating and Air-Conditioning in Atlanta. He built his businesses on service agreements.