All service providers pride themselves on their service department’s FCE (First-Call Effectiveness). However, many don’t know their FCE percentage and others aren’t sure how to calculate their FCE properly, or worse they are informed by consultants who lower the standards of measurement by including things like courtesy calls, which creates the perception of doing well above average.
In explaining the cost impact of your FCE, I will first define a service call as an activity where a technician is dispatched to a customer location to fix a problem. Virtually any other service call that happens is created by the dealer or technician. If it’s a callback (tech), hold for part (dealer), courtesy calls are dealer created, etc. So, ask yourself this question, if you took your car in for service, you expect it to be fixed the first time, correct? If you had to take it back two or three more times to resolve the original complaint, how would that make you feel about the service organization, how would you describe your customer experience, or how eager would you be to refer this service provider?
Dealers who include dealer-generated courtesy calls where no parts are used are padding their numbers, which deceives their good intentions towards constant FCE management and improvement. Proper FCE is the percentage of time the customer called, and the device was fixed the first time.
Today, service providers cannot operate on what I call DFCE or Delusional First-Call Effectiveness. I hope you all agree.
Here’s why your FCE is important. First, I will say this. A service provider’s FCE percentage is a critical component to how their customer’s experience is valued. The highest cost of a poor FCE or DFCE is a lost customer. Improving the customer experience of your deliverable is a constant process. In this fast-innovative world of ever-changing technologies, service providers must not take customer relationships for granted.
“You can be the vendor with the greatest relationships, and quickly lose to the new unknown competitor who provides a better experience.”
So, we all agree that customers appreciate quick solutions to problems, and we should also agree that customers value their service providers by the experiences they provide them. Even above the relationships they have with them, and we should all agree that doing things right the first time is a centuries-old concept which is more important than ever today.
“Today’s customers do not have time for products, processes or people who do not provide the experience they desire.”
Now let’s talk about the dollar cost to your organization of a poor FCE percentage rating. It’s simple, it’s all about the numbers—your payroll dollars. The service provider’s largest cost is parts and people. Each employee has an hourly cost. Assuming your burden is $60 an hour, and your average service call takes an hour plus travel time of 30 minutes, your cost is $90 in labor per call. So, if your organization is running a 50 percent FCE, that means 50 percent of your calls require a callback. Here are the numbers.
Let’s look at an organization with five technicians who average four calls a day. This organization would have 20 total calls a day. Ten require a callback or 50 percent FCE rating. In dollars, this would be ten calls times your 1.5-hour average call time, including on-site and travel, or $90 per call, which equals $900 per day. Accounting for a 20-day work month, our total equals an $18,000 FCE cost.
That is a large amount of wasted spend for a dealership with only four technicians. Most would agree that no service organization could reach a 100 percent FCE rating, but we must also agree that a 50 percent FCE is unacceptable, and the dealer with an 80 or 90 percent FCE based on inaccurate benchmarking is deceiving.
So, let’s do the math on a 72 percent FCE rating. A dealer performs 20 total calls a day with a 72 percent FCE rating, meaning 14.4 calls were completed on the first call, leaving only 5.6 callbacks. The cost of 5.6 callbacks times our $90 per hour burden rate, with an average call on-site repair time of one hour, equals $504 a day or $10,080 per month.
The result. If an organization with five technicians dispatched to four calls a day increased its FCE percentage from 50 to 72, it would lower the cost in service hours by $7,920 a month or $95,040 a year in savings, not hype or fantasy but real bottom-line dollars. It’s the math, it’s the numbers.
Think about this…in this sample organization with five technicians, its customer base would produce around 30 million pages a year. If the dealer decided not to increase its FCE percentage from 50 to 72, it’s giving up $95,000 in potential yearly savings. This overspend would translate to .00316 additional per copy cost for every copy this organization’s customers produce; $95,000 divided by 30 million pages equals .00316. Now add the toner, parts and the W-2 on all of your technicians. It would be hard for this sample organization to raise all its customers’ per copy charge by .003 per copy or lower all their technicians pay by that $95,000 in overspend. However, it just takes the discipline of leadership looking at and acting on the best data to get the same financial result.
An accurate FCE measurement is imperative to understand the hidden cost of service. All leaders who understand their numbers embrace them. These leaders understand the value in knowing their numbers. They realize very quickly that numbers don’t lie and the numbers are unemotional. Dealer owners most definitely understand it’s in the numbers where their success or failure is determined.
So, what if this example was a dealer who had 30, 40 or even 100 techs? Knowing the facts and then managing the disciplines to accomplish one’s goals of success takes leadership and data.
The FCE is just one of many cost factors involved in truly understanding your service cost, and increasing the value of your end-users experience. There are many components to the service deliverable, and understanding how all these components impact each other is a must for the office technology dealer channel.