For Amherst Alarm of Amherst, N.Y., some of the issues surrounding billing were solved by looking inward. “Sometimes, people can be afraid of asking for money,” says Amherst CEO Tim Creenan. “The solution was focusing on internal training and preparation before the service or installation call to get both the technician and the customer ready for the transaction.”
Strategies to Sell More Service Contracts
The service technician is the best salesperson for a maintenance contract. Who is the customer most likely to trust when it comes to the service contract? The person performing the service is a good candidate, as they can explain to the customer that if they had a service contract today’s service call would have no charge — exactly at the time they have to provide payment. They can also offer incentives such as, “If you sign the contract now, I can back-date it so today’s call is free.” Any alarm company that wants recurring revenue should have their service technicians minimally trained in how to sell service contracts.
Another good candidate is a well-informed representative. Tim Creenan of Amherst Alarm notes that the company has a dedicated customer service person who calls customers at the end of their warranty period to give them the options for the different service contracts the company offers.
“We’re very unique in our industry in the length of the warranty we provide to customers but it’s turned into a very valuable asset to our company to be able to do that,” he says. “It’s a five-year warranty for parts and labor residentially. It gives people assurance that they’re getting a high-quality product. After five years of using it, they come to depend on it and want to make sure everything is doing what it should.”
Many people don’t choose to have an extended warranty but there are plenty that do. “Even for people who are still under warranty, we sell a test-and-inspection program,” Creenan adds. This is an opt-in program customers can subscribe to for an additional fee where Amherst performs either quarterly or annual inspections and tests of a system.
The key is to have someone who can explain a specific value proposition to the customer.
Outside “when to bill?” hesitation, the leading cause of billing issues stems from lost or incorrect paperwork. After a technician has finished a job, leaves the premises and moves on to the next job, paperwork still needs to be completed and submitted to the office. This is not only a slow process, but there is a strong relationship between the time it takes that paperwork to make it to the office and the likelihood of it getting lost or filled incorrectly. If one or several parts used are left out of the paperwork, a customer doesn’t get billed for them. The company then loses an opportunity for revenue and incurs an additional cost for the part. Double whammy.
Safe Systems’ techs store information and collect payment from the customer on their tablets at the end of every installation or service call. This way, every ticket is closed on the day the call is done and sent to the office electronically.
Control Inventory to Control Costs
Inventory and parts usage is probably one of the top two or three biggest expenses for a security company. “We track everything so the installers have to sign out the parts they’re taking for a job and fill out a return slip for parts they bring back and note why they were unused,” says Creenan. “If parts need to be added to the system after the initial parts are pulled when they’re on the job for whatever reason, then they have a change order slip to fill out. It takes dedicated effort and many times it takes a lot of coaching to keep the inventory as accurate as possible.”
Custom Alarm manages its inventory by pulling inventory sheets out of its management software and creating reports to track those parts based on events and part cost. The company also does regular spot checks on trucks for inventory balancing.
Part of having a good inventory solution today is tracking every piece of equipment that’s ever been installed for any system. When going to do service, dealers need to know what kind of hardware is in that particular system. Not having the stock to solve a problem right away is terrible news for both the dealer and the customer. Going back a second time, you can’t charge again and so that translates into lost time for the installer, additional gas and mileage costs, and very possibly an annoyed customer.
“Our project managers review the jobs two days before they’re scheduled to start to make sure all the parts are in-house and any special tools required are available for that crew to use,” Creenan says. Wrzesinski adds, “Each one of our vehicles is a rolling warehouse.” And with the help of GPS, Safe Systems can direct technicians to grab parts for a nearby vehicle. “The challenges become human in making sure parts are added or taken off jobs when used or not used.”
Unfortunately, many installers do work on the side and they’re not going to their friendly neighborhood distributor to buy their parts. Managing shrinkage and usage of equipment is necessary. The big retailer model of compensating for shrinkage by raising prices on sold products is outdated and completely unsustainable in this highly competitive security industry.
Keeping up a reasonable level of inventory at all times takes careful planning as well. Well managed firms use experience and reports to determine minimum and maximum numbers to keep on the shelves.
Tracking Key for Project Management
Managing a project is about being efficient doing that installation, getting it completed on time and containing the cost. Successful dealers track every task that must be done including milestone dates, responsibilities, notifying the customer of progress and making sure it’s all done on time. What smart dealers are not doing is waiting for the customer to let them know there is an issue, regardless of whether it’s a small residential or large integrated system.
“It used to be you could look at a job and not instantly know if it was losing or making money,” Wrzesinski says. “Technology changed the efficiency of the job and simplified the process for acquiring information. Now we’re able to get a manager involved sooner, sales involved sooner, learn from the issue and even correct it on that same job.”
In tune with that is job-costing — measuring actual profitability of a job versus its projected profitability at the time of the sale. The variances between what was estimated as incoming expenses and what was actually spent on any one project can be a big lesson to a company. Truly understanding any one company’s creation multiple makes up the difference between making and losing money, and it will also help manage cash flow and identify the types of jobs at which that company is best.
“For installations, people are assigned a certain number of hours based on how the salesperson has composed the job. Sometimes they go under and sometimes they go over,” says Creenan. “We run reports that show us job-costing and part of that is looking at the hours expended in a particular job versus the hours that were quoted. We look for variances and determine why and try to improve. If there are things we could avoid the next time, then we want to learn from that and make sure they are not repeated.”
A decade ago, these procedures may have been too labor-intensive and costly to be viable. But today, dealers are putting technology and automation capabilities to work to improve customer relations and increase profitability.
Rebecca Hall is Director of Business Development for SedonaOffice.
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