Two weeks ago I hosted a webinar with my friends Ray Stasieczko and Milton Bartley to discuss outsourced services. You can catch it here. After the call, we had some additional sobering details of just how tough a state the industry is in. Since Covid started, almost 30% of all field service techs have left the industry. Those that remain are doing almost one-third less calls each. That’s almost 50% less calls being made industry-wide. Part of this is bad news, but it's not all bad.
What’s even tougher to digest though is that there has always been overcapacity. On average, service teams were running at about 50% of their peak efficiency.
What does that mean?
Even now, there are likely 50% too many technicians.
Is this strictly a page volume effect? The page drop is the biggest contributor, but even that doesn’t explain it all. Do you measure the average number of service calls per 100,000 pages?You should.
If the average device in your fleet is printing 2,000 pages per month, then this equates to roughly 50 printers. Some old rules would suggest that having 1,000 devices managed would equate to one service technician. That benchmark would have made sense when devices were averaging around 4,000 PPM, but those days are over.
Lower volumes have massive implications for service. Most providers have not right-sized service to accommodate them.
Here are a few steps that can reduce your service call volume by 50%:
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Target Remote Remediation at 50%
Idle techs WANT to go on calls. You WANT them busy; but a service call avoided is much cheaper than any call executed. With remote desktop support, many issues today are software related and do not require a physical presence. You need to track this statistic and drive it down toward 50%.
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Stop Fixing 10+ Year Old Devices
Explain it to your customers. Fixing really old hardware benefits no one. Customers should replace devices you deem too old. Turn a service call that costs you money into a sale that makes you money. A newer fleet generates fewer calls overall so keeping old devices is bad all around. Bad for customer productivity, bad for customer satisfaction, bad for your bottom line.
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Get Better at Rightsizing Fleets
A large A3 device needs volume. The correlation between page volume and service is not linear. When you over spec equipment, you increase the need for field service, and increase your costs. Much of this gets back to the A4/A3 question. Consider this: many mid-grade A4 devices have maintenance kits that are user replaceable and are rated for 200,000 pages. If they print 2,000 pages per month, that’s 100 months or 8.5 years. These devices may never even need field service!
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Explore OEM Care Packs and Extended Service Plans (ESPs)
In many cases, A4s that break down are not even serviceable. ESPs are nothing more than insurance. People like ESPs. 30% of Apple buyers report taking AppleCare with their purchase. Bonus: you can often add OEM ESPs into your lease agreements. Get paid for service up front that may or may not ever get used. Why not?
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Outsource It
I hear two things when I talk to dealers about outsourcing service: it's expensive and not as good as their service. On the cost side, I’ve never had a dealer honestly account for their true internal cost. Wages, benefits, vehicles, training, sick days, holidays, management overhead. You might pay a technician $30/hour, but it's likely closer to $60-$80 when it's all said and done. Then you assume they are servicing 100% of their time? No way. Consider lowering your headcount and outsourcing the overflow on busy days.
Are the service techs as good as in-house techs? Well, you can choose them based on experience and even specializations. In most cases, if they don't fix the issue, you don't pay. Your employees get paid no matter the outcome.
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Set Your Employees Free!
Your service technicians are handy folks. I bet they can service much more than just printers. Why not retire them, but then use them as outsource technicians? You can help them become independent contractors, and guarantee some business going to them over time to help them get their service business up and running.
You need to be ruthless when it comes to reducing your service costs. Pages aren’t going up. You may plan on growing by taking market share and getting more devices to rightsize your team, but recognize that all of your competitors have the exact same strategy. Haven’t you had that same strategy since you opened your doors (get more business!). I’m not sure why it will work now?
In a mature market, there is always pressure to increase sales. So prices are going to decrease. Manufacturers will lower hardware costs and supply costs. Competitors will in turn slash prices to take market share away from each other. It is going to get ugly. These are not going to be easy decisions. That being said, I believe in a bright future ahead for those dealerships that embrace change, leverage their long standing customer relationships, and strategically build out other lines of business. You know how much I believe in e-commerce as one part of the plan, but moving quickly toward outsourced service is just as important.
Contact us if you're ready to start building a new strategy.
