Why doesn’t the office technology channel’s owners and leaders pay sales reps $250,000 salaries with no accountability or quotas?
Why do dealerships have millions in obsolete parts, spend millions on repairs and supplies, have a First Call Effectiveness (FCE) rate of less than 72 percent spend thousands doing callbacks, spend thousands more on technical staff with very little owner or senior level executive oversite? Hmm, read along and let me know your thoughts.
Let’s talk about the sales rep who wants a $250,000 salary and insists they have NO quota. OK, that would be a short conversation. The sales rep asked and then you showed them the door, maybe said good luck.
So, now let’s talk about the hundreds of thousands of dollars in parts you have written off in the past, and will more than likely write off more by year’s end. Maybe you already know how many dollars it will be this year. A different conversation, the reason is simple. The first conversation you had control over, you knew paying $250,000 to a sales rep with no accountability would be insane and prevented it from ever happening.
The question regarding part write-offs and the components of your service departments? The answer is not so easy. You gave control away, and those you gave control to either weren’t properly trained or lacked the same concern as you about throwing a big chunk of your EBITA in the trash. Many are spending large amounts of unnecessary operating dollars to perform average or below.
All owners love EBITA, so whatever that number is now it will be minus the dollar amount of the parts that will be written off at year’s end and thrown in the trash. Or maybe the boxes they came in were marked with the letters N/I (non-inventory) and then stacked in the section of the warehouse I call the “EBITA Thief Section.” I would say if you’re writing off 1-2 percent of service revenue, not total revenue in parts and supplies annually, it is a cost of doing business. However, if you’re writing off more, it might be called not paying attention to business, and most would admit that’s a costly mistake most leaders avoid.
“In business, only the profits from good intentions can control the runaway cost of emotions.”
The leaders in the office technology channel, for the most part, have an absolute understanding of all the components of the sales engine. Sales leaders continue to get creative in changing and doing the necessary things to ensure that quotas and sales expectations are achieved, and we all know the result of missing expectations. Dealers rank their sales teams, monitor their sales team’s activity, provide their reps with protective territories, and they most always have one-on-ones with their managers.
Dealership owners love to cheer on their sales teams; many dealerships have sales boards where they write with green markers how much they sold and how much they made. Owners always know what’s going on in the sales department, they get the results every month and understand how to manage the areas which need improvement.
Accountability in sales is an absolute. Owners can walk down the hall and gasp as they stare at a blank sales board; they quickly scream for reports. The sales leader is quickly summoned to the office at the end of the hallway. Once inside, they would get the message from the questions spoken loudly and passionately. “Where’s the sales, was the 30-day hotlist just made up? Or is it a 90-day hotlist? Why are the sales reps not closing? Why don’t we call their forecast a hopecast? Why are sales reps not utilizing the CRM software the company paid thousands of dollars for?” Those reading this who lead or led sales teams will know what the last question asked was as you were dismissed. It went something like this: “Can you get this team on track and get results I can take to the bank or do I need to look for someone else who can?” A dealership’s sales numbers, or lack thereof, stares everyone in the face constantly. Am I right?
Yes, sales are managed, monitored and continuously driven to get results. There are no secrets in sales, every month is a new beginning and the previous month’s dysfunctions always show up in the math.
What about service? Why should sales have all the accountability fun? The office technology channel is a 50/50 split on the revenue of their deliverable half from sales of hardware and the other half from service annuity, which by the way contributes nearly all the company’s profits—this is an undisputed fact. The EBITA is in the service, and the revenue dollars from hardware will never transition to EBITA. The office technology channel is not a retail platform, it is a service annuity platform. The healthier the service platform, the healthier the EBITA.
Too many dealer organizations still do not take the same measures in managing service departments and their service personnel as they do in managing sales departments and sales personnel. There are enormous potential increases to a dealer’s EBITA inside their service departments. This potential EBITA increase will only come from leadership taking charge of driving the best practices. It’s time for dealer owners to inject themselves and their business acumen into the other 50 percent of their business, their service departments. This is more important than ever in the office technology channel’s history. Here’s why and a solution to help.
“Current circumstances can postpone the good intentions of change if you fall victim to the delusion of how good things currently appear to be.”
There are solutions to hold the service department accountable the same way we do with the sales department. BEI Services, for one, has information and metrics gathered on millions of printers and thousands of technicians. It has tools that help manage parts and inventories to eliminate uncontrolled write-offs, divest obsolete or overstocked parts and help lower costs on inventory purchases. It offers software to define technicians’ territories based on skills and real-life service metrics territory mapping, among other critical metrics and information that can impact a dealer’s customer experience and bottom line.
Dealership owners, it is 2017, you know how to run your sales department, and now it’s time to hold service accountable in the ways you have always held sales accountable. The time for having total control over your future is now.
“When an industry is experiencing declines, it becomes an absolute necessity to extract as much cash from current circumstances while possible and reallocate it to diversity and transition.”
To those dealers who are considering managed IT services as an additional deliverable, I would say this. Managed IT services is not in any way a sales silo and service silo business model. No successful IT services company would ever sell anything in which they were not clear on the absolute profitability of the hardware; they understand the cost and the margin required to manage and maintain the integrity of the SLA their customer buys. IT Services is an all-encompassing deliverable. Managed IT services is delivering services which may include hardware. IT service providers must understand total cost from birth to death of all customer engagements. The office technology channel was built on selling products, then servicing those products. This is the opposite of the IT service deliverable; the channel must adopt a service-first strategy to transition toward managed IT services. Understanding the whole story is the path toward respectable improvement to not only your customers’ experience, but your EBITA as well.
Without the tools of data, and leadership to oversee their use businesses are crippled by a disease, I call EBITA–erosis.