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Stop Service Contract Revenue Leakage

Posted by Andy Bagner on 9/13/16 3:50 PM
Andy Bagner



As a HVAC service technician on Long Island, I always dreaded the awkward moment with the customer when I was trying to figure out if the labor rate, dispatch fee, or parts were covered by the service contract.  Without readily available contract information, I was stuck, leadin to unnecessary customer frustration. Time and time again, our service department was leaking revenue, and before our service department could drive new service revenues, it needed to stop the bleeding. There are a variety of causes and effects of service contract revenue leakage, which generally reside in operational processes and technology issues. The first step in fixing the revenue leakage is understanding how and why it happens.


Why Does Service Contract Revenue Leakage Occur In Service Departments?

The biggest cause of service contract revenue leakage in service departments is the lack of service level agreement clarity and automation. Many service companies lack comprehensive and easily accessible data about contracts, warranties, and other customer entitlements because many service managers still use pen and paper. Many times the data is there; it’s just difficult to access because the back-office administrative staff cannot pinpoint it or the service manager is not available to assist the service technician in telling them what is, and isn't covered.  When I was a service tech, if I couldn't speak to my service manager or dispatch manager to see  if labor or the part was covered, it became a free of charge service call because the customer became irritated about not having an answer about what was covered.

My actions to keep customers satisified caused two things:

1. It lost my company revenue and profit.  If I give a free of charge service call three times a month, it hurt profit, but didn't cripple the company. However, my HVAC company had 25 service techs.  So, if all service technicians were giving three free of charge service calls a month, the costs of those free calls become a major drag on my company's top-line and bottom-line performance.

2. Also, every time I was confronted by a customer about what was covered by a service contract and I didn't know the reason, I felt stupid. I hated to be confronted by a customer because I couldn't get a hold of the dispatcher or my service manager.  When the customers were unhappy due to a misunderstanding with a service contract, I took the brunt of their frustration, which eventually took a toll on my morale and productivity.  

Eliminate Service Contract Revenue Leakage

Service companies who continue to employ paper and pen to manage service contracts will always have service contract revenue leakage. If you cannot measure service contract revenue leakage, you cannot track and control it. Mobile technology can help measure and track this service contract revenue leakage.  Mobile technology will take the guesswork away from the service tech because it can quickly and efficiently tell the tech what is billable and non-billable under the service contract.  Mobile technology will also change how the back-office administrative workers communicate service contracts to the service technicians.  

Mobile technology will ensure that customers get what they pay for and that the service business does not under deliver or over deliver what their client paid for and expects. I know if I was using mobile technology during my time as a HVAC service tech, I would have been more productive, as well as made more profit for the company.

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