Hello friends. David Boyle here again. Your Client Success Manager for ESI and Airtime. If you tuned into my recent Coach’s Corners, you know I have mentioned summer harvest season. We talked the how you’re awfully busy. You’re focused on running leads and making cash. That doesn’t mean you should ignore your numbers. One number we often encounter members struggling with is their gross margin… for service and repair the KPI’s are:
| For AirTime it should be: | 68% |
| For PSI: | 66% |
| For ESI: | 67% |
| And for RSI: | 66% |
As a quick reminder, your gross margin is what’s left over after costs associated directly with the sale of your service—like materials and direct labor—are paid for. Now, I realize most of you know that, but what many struggle with is how to FIX that number. So, if you’re stuck in that situation—where your gross margin isn’t quite right—Here are some “Steps to Repairing Your Gross Margin”:
- Make sure you’re priced properly.
- Review your pricing formula. You may need to increase them.
- Assess your labor.
- You may have too many callbacks or warranty calls. Your techs may need some technical training.
- Maybe you’re paying your techs too much. Or maybe better stated, your techs may not be earning what you are paying them. You should consider utilizing performance based pay.
- Make sure you’re dispatching properly, and make sure your trucks are stocked properly so that your techs aren’t spending too much time running to the supply house.
- Evaluate how much you’re spending on equipment and materials.
- Contact your suppliers and see if they have any available discounts! Even better, shop your business on a regular basis! Don’t get too comfortable with any one supplier.
- Examine your POs to make sure you’re not buying too much or for items you do not need.
- Return unused materials before they are damaged or lost.
- Process warranties as quickly as possible and track the payments.
- File for rebates in a timely manner.
- Improve your average invoice—this is a big one.
- Be sure your pricing and closing ratio are where they need to be.
- Review your dispatching and implement a call priority system. Make sure you are sending the tech with the best chance of succeeding to each opportunity.
- Emphasize to your techs the importance of building relationships and providing complete service.
- Have someone riding along with your techs periodically to keep them accountable and help them improve.
- And if you’re not offering financing, start!
- Examine your inventory control.
- In addition to examining your POs, which I mentioned earlier, examine truck restocking procedures. Both overstocked or understocked trucks can be a problem.
- Increase the level of security in your warehouse
- And advantage of any vendor incentive programs available.
- We mentioned this earlier, but REDUCE CALL BACKS & WARRANTY CALLS!
- Analyze your techs’ call back percentage and see if you need more training.
- Develop a quality checklist that must be completed by your techs on every call.
- On warranty calls, see if you’re having reoccurring issues with a particular piece of equipment or material…
- And if a problem persists, switch to another brand.
- Assess your returns and allowances.
- Review how much you’re giving in the form of advertised discounts and financing discounts.
- And examine your call backs situation and minimize them by following the steps I listed earlier.
Ensuring you’re operating at a proper gross margin is hugely critical to your success. If you’re gross margin is off, so is your profit margin. And if your profit margin is off, you’re not making as much money or growing. If you need help addressing any or all of these points in repairing your gross margin, never hesitate to give us a call.
Have a great day.