Increase Your Service Technician Revenue
Originally published: 06.01.18 by James Leichter
Raising revenue isn’t so much about selling as it is doing what is best for your customer.
There are a number of ways to increase technician productivity and revenue, but you should first be aware of a few key performance indicators used to judge service technician output.
Residential service technicians should produce at least $250,000 in annual sales with a 63 percent or higher gross profit margin. A better way to measure technician output is by annual gross profit dollars.
That number is $157,500 annually, or $630 gross profit dollars per ma each day. Technicians should run an average of four service calls per day with an average retail invoice amount of $250 each.
When technicians are allowed to sell equipment change-outs, those numbers need to be adjusted to consider the potential reduction in repair revenue and the increased revenue from the replacement sale.
It gets a bit tricky to assess the performance of a technician who does both service work and installation work.
Installers should produce $825 gross profit dollars per day. A two-person crew should produce $1,400 gross profit dollars per day.
You will need to consider both types of work independently when assessing their performance.
Now that you have a benchmark, here are some of the most significant ways to increase technician revenue.
One of the fastest ways to increase sales and improve customer satisfaction is to detect additional legitimate service work.
This is done through high-level diagnostics.
Implement a weekly training program to teach technicians the finer points of diagnostics and pre-emptive failure detection. Technicians should think and work like aircraft mechanics. These highly trained and regulated technicians replace parts before they fail, and the public should agree with that philosophy. After all, no one wants an aircraft mechanic to wait until an aircraft part fails before they replace it.
Your technicians should have sophisticated instruments such as megohmmeter, combustion analyzers, anemometers, digital manifold gauges and more.
These tools should be thought of as an investment. They will pay for themselves over and over again. Of course, training will be necessary to assure that they are being used properly.
Reduce Unbillable Time
Unbillable time includes labor hours paid to the technicians but not billed to a customer. You should keep unbillable time under 25 percent. Reduce efficiency crushing trips to suppliers by creating and maintaining a customized inventory list for each technician.
Consider performance-based compensation that pays technicians far more per hour for billable time than unbillable time.
Improve service call management by implementing an integrated business management software system that includes a strong mobile software app and GPS tracking.
Callbacks reduce billable time and kill profitability. They also hurt your customer satisfaction scores.
A callback can be defined as the following: “Any repeat service call that is unbillable, for any reason, within 30 days of the original call.”
Callbacks should be less than 5 percent (1 percent is considered best in class). Sometimes technicians simply don’t have the correct tools for the job. Create a Required Tool List for each job function and train your technicians on how to use the lists.
Sometimes a callback isn’t really a callback, but you have no choice but to work for free. Often it is simply due to the fact that the technician did not properly document what they may have very well told the customer. Thorough documentation will help reduce callbacks. Mobile apps can make this process easier through a database of prewritten repair descriptions and voice recognition.
Give Technicians Time
This might require a change in culture. Technicians need to take their time. They should be able to run three to five service calls a day. Anything more than that might mean that they are hurrying through their work or that they need additional training.
It is better to charge a customer $600 for a single service call than it is to charge them $300 each, for two separate service calls. When you need two service calls to repair a system, your customer will always wonder which service call wasn’t necessary and they will resent paying for it.
Families want cleaner, healthier and more comfortable living conditions, but they rarely realize they have so many options. Technicians should sell one accessory for every 12 service calls they run.
Accessories might include whole house dehumidification systems, air filtrations systems and water treatment systems. They can also include UV air treatments and Wi-Fi thermostats.
Service agreements should be considered accessories too. Technicians should be able to sell one service agreement for every six service calls where there is no service agreement coverage.
Generating Sales Leads
You may not wish to have every service technician sell replacements, but all service technicians should be working to create solid sales leads. Technicians should be able to produce one good sales lead for every 12 demand (non-maintenance) service calls they run. Obviously, this depends on your customer base and average age and condition of their equipment.
Technicians should be educated on the various signs that a system may need to be replaced. A Replacement Decision Worksheet can be a useful tool in helping the technician assess the pros and cons of repair versus replacement. This worksheet should be filled out in the customer’s home and a copy should be printed or emailed for future consideration.
A replacement lead may not count towards annual technician revenue, but it should factor into your annual assessment of their production.
Service technicians are in a unique position to sell equipment upgrades and replacements. Customers see them as experts and are often less defensive than they might be with a salesperson.
Think about it like this. Would you rather talk to an auto mechanic about the need and cost of replacing your truck’s transmission or with a salesperson? Sir, you are going to need a transmission replacement. Wait here while I get our transmission salesperson to speak to you.
Technicians will need product training, basic sales skills and complete cookbook pricing for all common replacement scenarios.
Let service technicians sell if you believe they have the skills required to do so; otherwise, they can help the team by creating quality sales opportunities for someone else.
Encourage Technicians to Sell
Technicians should certainly sell equipment replacements, because selling is a natural part of being a service technician.
As long as they have the desire and the ability, service technicians should be allowed and encouraged to sell equipment change-outs. Often, technicians don’t believe it’s proper for them to sell equipment. Many believe it’s a conflict of interest for a service technician to sell replacements.
But, you wouldn’t take your children to a doctor who refused to sell X-rays, physical therapy, an MRI or other medical services. You’d expect the doctor to recommend whatever was proper and necessary for the wellbeing of the patient. The same is true when it comes to HVACR service. Technicians will become more comfortable with selling once they have been introduced to some basic selling tools and techniques.
The word “selling” has something to do with the apprehension that some feel when talking about system replacements. Again, go back to the doctor-patient metaphor. Reiterate that it isn’t so much about selling as it is doing what is best for your customer. You’re simply asking them to give customers options and recommend what they believe is best.
Many technicians are proud of their ability to “fix anything.” That’s noble, but it may not be in the customer’s best interest. Training is the key here. You’ll need to provide your service technicians with high quality training and ongoing encouragement.
Show them how to calculate energy savings based on EER and AFUE increases. Teach them concepts such as cost of ownership, return on investment, the cost of future breakdowns, enhanced comfort, the value of peace of mind and so forth. Remind your technicians that they are a customer, but they are not their customer. Just because they have certain feelings and opinions does not mean that they should impose them on their customers.
One final point to make with your service technicians is this: you never know if someone can or cannot afford to properly repair or replace their system. Many poor people may look rich and many rich people may look poor.
You cannot always tell someone’s economic state by the clothes they wear, the car they drive, or the house they live in. Do what’s right. Passionately explain your recommendations and let customers decide for themselves.
Visit egia.org/university, or to learn more about service technician communication and selling — and download a FREE resource and training package complete with powerful tools, templates and educational videos, please visit egia.org/hvacr-techselling.