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Wednesday, January 22, 2014

Five Hidden (And Not-So-Hidden) Expenses

Some Expenses Are Money Down The Drain
January can leave a lot to be desired. The weather is cold. The roads can be treacherous. The holiday season is over and its almost 6 months until the next big 3 day weekend national holiday. To make matters worse, the bills from holiday credit spending come due. W.L. May understands. We get credit cards bills too. In an effort to help keep some of your costs in line, we offer this list of hidden expenses that could be costing you money.

1. Second Trips
Problem: Not enough calls get completed on the first visit to the customer. There is the obvious lost time, not to mention gasoline expense involved in making a second trip. There also can be the not as obvious expense to your reputation with the consumer, and ultimately within the community when they talk their friends.
Solution: Take the time to try and diagnose the problem over the phone. Arrive prepared with likely needed parts.  Consumers are more time sensitive than ever. They expect a completed job on the first visit. They don't expect to wait a few days for you to order the parts and make a return trip. Make sure you have adequate inventory on hand even if it means you have to stock some more costly parts to do so.

2. Missed calls
Problem: Every call could be a customer ready to hire you to solve their problems, yet many smaller companies let every call go to voice mail. A certain percentage of those calls won't leave a message. They will try someone else. On the other side of the equation, when messages are left, calls are not returned promptly if at all.
Solution: Lets face it. A lot of technicians hate using the phone. Appliance repair is a mechanical field and a lot of techs would rather have their head in an appliance than having a phone pressed against it. It may be worth hiring a person to help take phone calls during the busier times of day. Some companies that have done so found more time for servicing appliances when they freed their techs up to be techs. However you answer inbound calls, there will likely be a time when a message is left for you. Make sure you are returning those calls promptly. It is a consumer expectation and not doing so can be damaging to your reputation.

3. Missed opportunities
Problem: Every day there are opportunities that arise that don't get acted on due to time constraints, initial cost, lack or recognition or old fashioned laziness.
Solution: This will vary from person to person. Every service call is an opportunity for promotion. Is your vehicle clean, and marked with attractive signage? If so, you have taken advantage of a great opportunity for advertising. After all, you are basically in a rolling billboard. Do you leave behind stickers or refrigerator magnets with your contact information? There's another opportunity. Do you take advantage of training when available? Another opportunity. The fact is, every day we are given opportunities. Recognizing them and acting on them will contribute greatly to your long term success and likely even your short term cash flow.

4. Returns

Problem: What seems like a way to reduce inventory and save on overhead cost some companies more than they are saving.
Solution: It is possible to over stock and have too many items on hand. If that happens the temptation is just to send it all back to your supplier for credit. Sometimes that is the right answer, but before you do that, there a few points to consider. How much will it cost to process the return? Freight, boxing materials, your time in packaging, shipping and accounting. It all adds up. Consider if this is a part you will likely be reordering. If so, does it make sense to send it back? Sometimes a discount to the consumer on a part price can leave you farther ahead than a return for full credit. 

5. Mistaken assumptions

Problem: Assumptions that are made about customers and the marketplace can end up costing you a lot of income.
Solution: Avoid assuming how much a customer is willing to spend. Over the years, due to a variety of factors, some things are more expensive than they used to be. As professional servicers, occasionally a change in price will induce a little bit of sticker shock to those of whose are quoting prices. When this happens, it is important to remember that your client probably does not have a personal memory of what that item "used to cost". If you offer your quote apologizing for the high price, you are introducing a doubt into the negotiation that could end up costing you the job. Let the customer object BEFORE you apologize for the price. Remember, Howard Hughes was often known to dress like a bum, Bill Gates looks like a college student, and not everyone that LOOKS like they have money to spend actually do. Avoid those assumptions.

This short list covers a lot of the hidden (an not-so-hidden) expencess I see every day as I am helping technicians get through their day. I am sure there are a many more expenses that come up every day as well. Let us know in the comments what expenses you have found and how you have reduced them.

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