If I Only had More Calls

How many times have you uttered that all too familiar phrase; “if I only had more calls?” I have heard it countless times. Just this week, I heard an owner say with great certainty, “there is nothing wrong with this company that a bunch more calls wouldn’t fix.” Well then, our work is done—let’s just wait for the phone to ring—in 2013—if you are to believe the economists.

Now, I will be the first to admit, running a service business is a lot more fun when you have an abundance of calls. You can hold firm on pricing, charge dispatch and diagnostic fees to further qualify customers; even increase your pricing. Lots of calls means you can justify the hiring of inside staff to take the pressure off you in the day-to-day operations of the company. Yes, having an abundance of calls is a goal every service company should have. It just makes life a lot more fun…and profitable!

So, I generally agree with the statement “there is nothing wrong with this company that a bunch more calls wouldn’t fix.” That statement is true for every struggling company. When revenues are accelerating quickly it tends to cover up all kinds of inefficiencies in a company. The problem is, dramatically increasing call counts is really tough to pull off over a short period of time!

Ignoring problems and inefficiencies during the good times can kill a company when lean times come—and they will come. The most damage comes when company management deflects personal responsibility for making the most of what you have—right now. Let me explain by way of an example. Several years ago, I called on a company that had a history of success. It was, generally speaking, a well run organization; although profitability had become stagnant in the past couple of years. Coincidentally, when I arrived, the company had a relatively new service manager.

In my conversations with the service manager, he was firm in his mind that he was doing all he could to manage the service department properly. The only trouble spot standing between the company and double-digit profits, he thought, was more calls — more new customers calling the company for service. He was adamant. If he had the calls he would convert them to money, baby! In other words, the key to his success as a service manager was completely out of his control! He did not have control of marketing. Even if he did, there was no silver bullet to magically increase call counts by 25-30{938cd9e8dae860e800efc538277d4f7684e6f6981618ba70d1c34357a53c2e1f}.

This example gets worse. At the time he made this fateful statement, the company’s revenue had INCREASED 28{938cd9e8dae860e800efc538277d4f7684e6f6981618ba70d1c34357a53c2e1f} over the prior year. But the department’s gross margin had declined from an already low 46{938cd9e8dae860e800efc538277d4f7684e6f6981618ba70d1c34357a53c2e1f} to 41{938cd9e8dae860e800efc538277d4f7684e6f6981618ba70d1c34357a53c2e1f}! The one statistic a service manager truly does have full control over is gross margin (Sales – {Direct Labor + Materials}). His one area of complete control was, well — there is no other way to put it — out of control. Even with a 28{938cd9e8dae860e800efc538277d4f7684e6f6981618ba70d1c34357a53c2e1f} revenue increase, the service manager was still pinning the blame for declining profits on lack of calls.

This guy had convinced his boss (the owner) the department’s mediocre performance was all they could ever expect, until the owner figured out how to dramatically increase call counts. As Frank Blau would say; “this is stinking thinking.” The service manager’s thinking never got any better. He is off on a different career path now, by the way.

Manage To Today’s Reality

The above example is vivid in my mind as it occurred during one of my first conversations with a Nexstar member. However, I have heard the same excuse for mediocre performance many, many times. In the past, when the economy was humming along, there was perhaps some reason for optimism that call counts would magically increase. Today, we should harbor no such illusions.

What we need to do today is assume our call counts are not going to increase. In fact, they may get worse. Now with that assumption in place, what do you have to do to get your company to a point of strong profitability — TODAY — assuming this new reality?

Forget about new “yet-to-be-conceived” marketing campaigns filling the board with service customers. Forget about the economy magically turning around with customers once again flooding your phones for service and replacement needs. Say to yourself, “It is what it is.” Now, what do you do about it?

Work Twice As Hard, For The Same Result

I have been in contact with many companies recently who are weathering this economic climate relatively well. What is their secret? What magic do they have? In most cases, it is simply a matter of getting back to basics. They are serious about training—absolutely holding all employees accountable for using the information that they were trained for. Every one of their inbound service calls is tended to like it is the only call of the day. These companies take great pains to get to every call with urgency, before the customer ever thinks of calling someone else. Superior customer service and sales skills are used to convert a service inquiry to an invoice.

It isn’t fancy or flashy. Successful companies realize to serve today’s customer they have to play their “A” game every day. Owners are determined to insure this is occurring every day, with every call.

They are watching their conversion rate and average sale like a hawk, making sure any slippage is immediately addressed and corrected. This, unlike call counts, is something they do have control over. They do not leave anything to chance.

Right Size, RIGHT NOW!

Another common thread with successful companies is they react quickly to trim their business for the work they have today. If the business does not have the proper revenue to support the current internal staff, they moved quickly to size the business right for today’s reality. They do not wait for the Salad Days to return. Remember, “It is what it is.” So they act accordingly.

Here is what is happening in tougher times—the strong get stronger. Even successful companies have waste. Poor processes result in lost customers, time delays and cost overruns. Successful companies weed out their inefficiencies—continually. They get their operations trimmed up. These companies train, train and train. They develop a nucleus of highly productive employees who know how to run a successful operation. While it may be tough right now, successful companies are improving their operations and will have huge successes when economic climates recover. These leaner, smarter more efficient companies are getting the heavy lifting done now and are poised to capitalize on any opportunity. You can too.

Jack Tester is President and CEO of Nexstar Network. Jack can be contacted by calling (901) 861-1988.

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