One last comment, if the tech is doing his or her job, they’re also going to make the customer aware there’s a substantial discount for that repair if they were an annual maintenance agreement customer. Showing our customer the discounted price of $228 just might have caused the sale of a maintenance agreement right on the spot. Maintenance agreements, in conjunction with flat rate pricing, is a subject all by itself.
It’s one that we’ll have to cover at a later time. But suffice it to say, the maintenance agreements are literally the foundation stone for profitable growth. Now, if you couple maintenance agreements with flat rate pricing, you will have a real winner.
Now let’s get back to our customer that was given the firm price of $278 to do the repair. Now let’s move our customer from simply being satisfied to the level of what we call a customer cheerleader. What could you add to what you are doing in order to dramatically exceed, yes, exceed the customer’s expectations? One thing you’ve probably already noticed is that the diagnostic fee and the trip charge of $50 was rolled right into the price, making this fee a non-issue.
All customers love techs with outstanding customer relations skills. Let’s start by providing annual training in the area of customer relations. The cost to attend a class once a year would be maybe 500 bucks per tech.
Security is also a major issue in today’s world. Again, from the customer’s perspective, they’re thinking to themselves, who’s this person on my front porch? Let’s answer that question before it’s asked. Our next step is straightforward.
Let’s also supply calling cards for each and every technician with their picture on it. The technician then can hand the card to the customer upon arrival. The cost of 1,000 full-color cards won’t exceed 100 bucks.
What else? Let’s leave a little thank you gift with each call at, say, a cost of $10. Now, in case you’re not aware of it, most customers, especially women, see a direct relationship between the quality of work done and how neat and clean the technician is. Cleanup is very important.
Let me say that again. Cleanup is very important. Why not provide each service tech with a small vacuum and require they vacuum up after themselves? That will, yes, it will, that will impress the customer.
However, it’s also gonna take the tech maybe 10 more minutes on each call. Now, let your mind run wild for a few minutes. What else could you provide that no one else provides? Kinda like that $75 gift certificate to the spa in Hawaii.
Let’s assume that extra something costs the company, well, let’s say another $18 per call. Now, assuming the tech bills 50% of his or her time per year, that means the average service technician bills out roughly 1,000 billed hours per year. The additional cost of the above items amounts to this.
Customer training, customer service training, $500 divided by 1,000 hours a year, that’s 50 cents an hour. The full color cards, 100 bucks divided by 1,000 hours, that’s another 10 cents an hour. And that thank you gift, we allowed $10 for each call.
The call averages an hour and a half, so that’s another $6.66 per hour. We’re gonna purchase a vacuum for each technician. Let’s say the cost is 200 bucks, we have to spend that every year, divided by 1,000 billed hours, that’s another 20 cents an hour.
And then the time to vacuum, we’re gonna pay the tech, say, 20 bucks an hour, it’s gonna take him 10 minutes to do that, so that’s another $3.33 per hour we need to add in. And then there’s that extra something we were gonna provide at a cost of $18 per call. And again, our average call is an hour and a half, so that’s another $12 an hour we need to add in.
So we need to increase our total hourly rate by $22.79 per hour. The payer still takes the tech an hour and a half, so the cost of the flat rate goes up $34.18. Since we’re exceeding the customer’s expectations, we’re also going to throw in an additional $25 profit, so the entire cost of the call goes from $278 to $337.18. Now the tech finishes the job, the customer is dazzled by his customer relations, the offering of the business card, he’s taking time to vacuum up after himself, and the thank you gift and the extra gift you provided for $18 per call. Is a customer happy? Absolutely.
Are they a customer cheerleader for your company? You bet. Was the cost of $337.18 a problem? Absolutely not. Did the company profit go up? It sure did.
You remember that we threw in an extra $25 for every hour and a half call, or an extra $16.67 per hour. At 1,000 build hours a year, that one tech just generated an additional, an additional $16,670 profit for the company. Wow, I love flat rate pricing.
A few weeks ago, I had yet another company in our bootcamp that charged close to $300 an hour on flat rate. Now they were not gouging the customer, that’s what it actually cost them to operate, to provide outstanding customer service, and to throw in all the extras. I’ve had at least 10 companies attend the bootcamp whose service rates exceed $300 per hour, and they all have several things in common.
Number one, all of those companies charging $300 per hour on flat rate pricing have happy customers whose expectations are routinely exceeded. Secondly, the techs were earning outstanding wages and benefits. Number three, they all had service sales in excess of $2 million a year, and they were all growing.
Lastly, the company earned a fair and consistent profit. Take a few hours out of your busy day and consider how you could dazzle your service customers. Next, calculate the cost to create those customer cheerleaders, at which point you will know what your new hourly rate needs to be.
In most cases, you’ll find out that your new required hourly rate will easily exceed $100 an hour. That’s not a problem. Yes, you heard me right.
Exceeding $100 an hour for service is not a problem if you’re on flat rate pricing. Simply move as quickly as possible to flat rate pricing and increase your internal hourly rate if you already are on flat rate pricing. You have heard it before, and I’m gonna say it again.
Flat rate pricing is good for you, it’s good for your techs, and it’s good for your customers. It’s a funny thing. I’ve been providing business training to the industry for well over 20 years, and guess what? Without exception, the companies in my classes that are the most profitable are always, yes, always on flat rate pricing.
If you want happy customers, well-paid techs, and increased profit, then I would strongly suggest you consider going to flat rate pricing. One last thing. I know many of you are thinking, is Tom gonna share this CD with a hotel in Maui? The answer is yes. They get the very first copy at no charge.