One of the fastest ways to grow in sales and profit is through the maintenance and service department.
By Miguel Villegas*
For many, maintenance is a department of the company that must be simply because, by obligation of customers or manufacturers, and usually becomes a necessary evil. It is managed in permanent crisis, it becomes a source of stress for the company, even its facilities are located in the last corner of the winery.
When asking several entrepreneurs in the industry about their maintenance and technical service department, they make gestures of anguish, anger or resignation. Some of the comments: "It is a headache - they generate many problems, stress - they have made me lose important projects and clients - we have it only because it is an obligation, that is not business and very little is billed".
In reality, maintenance and service departments are the most profitable of the companies, obtaining exit margins of 40% to 50% on average. These companies have managed to differentiate their service and invest adequately in equipment, people, consultancies, systems, certifications, advertising.
Some of the largest companies in the region report that their service departments contribute 25% to 30% of their total profit; The service can be very cost-effective because the greatest weight of the cost is obtained from technical labor. Large inventories are not required, give advances to manufacturers, in short, make risky financial bets.
One of the fastest ways to grow in sales and profit is through the maintenance department and technical services, but how to do it? The first thing is to understand your natural market, then the potential market, after understanding the opportunities that exist, it is necessary to design an operational commercial strategy that can be sustained over time, that can become an elastic offer so as not to have unnecessary sunk costs, establish controls, KPIS that allow measuring month by month the fulfillment of the strategy.
For example, your company specializes in chilled water installations, first analyzes your market namely how large the overall installed base is, what size your own installed base is, which brands are predominant, who your main competitors are, what are the underserved services and how you can differentiate yourself and add value. These are the key words. It is identified that there is no integrated offer in the market, which includes water treatment, mechanical maintenance, thermography, water balance (TAB), 24/7 attention and breakdowns, spare parts stock, among others.
In the operational commercial strategy, a work plan and a budget must be made to obtain commercial partners that offer these services, acquire appropriate tools, such as thermal imaging cameras, train staff to provide services, seek certifications, negotiate with staff their availability, provide means of transportation, A structure of the department is defined to be able to execute the PAN, the profiles for the hires are generated, etc.
A key factor in technical departments is to be able to have an elastic offer, especially at the beginning of growth, because demand will also be elastic, so it is recommended to have subcontractors that allow us to cover demand peaks and that in the valleys we do not have personnel without doing much.
Of course, the issue of contractors is something that always concerns quality, that customers are left at the end, etc. For this, there are moral and legal mechanisms as well as operational ones that lower the risk.
The differentiation allows that there are few competitors and that the services are more specialized, so they should also be more profitable, in addition these become a barrier of exit from the contract for the client, because when he goes to compare when he has an offer from the competition it is difficult to leave the services received and the value provided by his company.
In our cultures it is very common that we do not sustain the efforts and that we lose the course initially established, in addition to the fact that the follow-up is of low level. This makes indicators, controls, KPIS, periodic meetings ultra necessary.
A necessary and vital factor that makes the difference in a very powerful way is the inclusion of an exclusive (relational) sales force for the department.
Some of the important points to evaluate in the maintenance and technical service departments are the following:
• HR (Sales vs Approvals)
• Contract retention
• Double calls or guarantees
• Sales of new services
• Distribution of hours (Repairs, maintenance, breakdowns, etc.)
• Efficiency (Paid hours vs hours charged)
The recommended control meetings are weekly by operating units, general of the department monthly where it is possible to see the progress of the plans and results, as well as the modifications and adjustments.
One of the biggest and most common mistakes I have seen in different companies is to leave the entire operation very technical, including sales and administrative and organizational operation, coordinators, etc.
I recommend that there should be an important balance with administrators, purely commercial personnel and the engineering, technical team, each in its field and that important checks and balances be exercised between them.
In summary, the maintenance and technical service department does not have to be a necessary evil but rather a profitable business that allows us to retain customers and financial health as well as the necessary cash flow.
So I encourage you to sit down and self-evaluate, get out of the "Box" and think differently. If you have already done it and get excellent results, keep what you have and look for innovation.
Thanks a lot!
*Miguel Villegas Ugalde, Costa Rica, Licensed Marketer, 21 years of experience in the HVAC market. [email protected]