The other day I got sent a list of rates for the repair of products by a call handling service for a variety of clients and, as I read the first few lines of the spreadsheet I actually, physically, started to laugh out loud.
I did as the first set I saw were starting at £45 for a completed call but down to £40 for a BER (write-off) and all seem to have a BER, which is odd but more about that later.
This sort of a rate in 2024 is comical. In fact, it’s more insulting in some respects.
I have no idea what repairers are working for these paltry sums but, they shouldn’t be in my opinion and I strongly suspect that they are losing money.
In all of this there are a bunch of interconnected threads all woven into one another and understanding each is no easy task let alone figuring out the interplay between them. Whilst this is long and goes into some detail it is not exhaustive by any means and other factors can and do play into the points discussed here.
Calculate Costs
One of the things I ended up doing, later than I should have, because of work we were doing for D&G (DAG) for De Dietrich was to figure out how much it cost to knock on a door because I reckoned that this work wasn’t worth doing and was costing me money. I didn’t like the idea of that and it started me down a very enlightening path.
Bear in mind, this was 20 some years ago but I took the costs we had at the time of the staff, vans, fuel, insurances and all the rest of it, added them all up and divided those by the number of calls we recieved. Simple, yeah?
What that did was get me a fairly accurate cost per call for two techs and one office staff of about £33 per call. In 2001 or so.
If that tracked with inflation, it’s about £68 now. It’s not that high in reality, I expect, but you take the point.
We’ll split the difference and say you’re about £40 or so per call in costs now.
So to ring someone’s doorbell it costs you £40 or thereabouts to do that.
That is not a repeat visit, not a spares order, not a recall that is purely what it costs you to get a body on a customer’s doorstep, every time you get one on a customer’s doorstep.
If you do this right there’s a bit of slack in that but not mountains of it for sure, some. However you can’t account for illness, weather and all that sorta stuff so you need a bit in it just in case.
Back To De Dietrich
The reason that I did this was that, at the time, De Dietrich was an upmarket product that was quite technical and, glitchy. Spares were a nightmare as there was little to no commonality in them, a lot of electronics and they often took time to diagnose and then get parts for to repair.
So we were having to make two or more visits on way over 60% of the calls, not good.
This for, again at the time, DAG’s standard rate which was okay, not great but okay for run of the mill stuff, it sure as shit wasn’t for De Dietrich even before you factored in that De Dietrich buyers, who’d paid fortunes for fancy gear, were shall we say, demanding.
I had to demonstrate that the work wasn’t worth doing to DAG.
The Contract Calculator was born.
This was a spreadsheet I made that you could input your costs and the details of any contract into to get an idea of what you were or, in this case, we're not making on a single contract.
What I learned shocked me, not to mention anyone else. It turned out we were losing big time doing this work.
From memory we were being paid about £45 a call then and it cost £33 a visit with a roughly 70% second visit or recall rate, only 30% first time complete calls just due to the nature of the product and customers.
A little tapping on a calculator later and I figured that every De Dietrich call was costing us over £53 to do yet we were being paid £45. With the volume we were doing, which wasn’t huge but still, we were losing about £400 or more a quarter on the work.
Needless to say DAG got told we would not be continuing to do that work for them.
My attitude was that, if some other sucker wants to lose money bailing them out, then that’s their problem and not mine.
Information Is Power
That was not the most valuable lesson that this exercise taught me though, oh no, it was the value of information and of knowing what you’re doing that was way more profound.
If I hadn’t dug into the costs as I think a lot of the troops won’t, I’d have been none the wiser other than thinking that the De Dietrich work was a crock of shit and bitching about it. So I’d just have been one of those grumpy engineers talked about last week.
The fact that I could go back to DAG with call volumes, figures, costs and more I think kinda took them aback a bit as I had solid, fact based hard evidence that this contract didn’t and couldn’t be made profitable just by its very nature. At the agreed rates at least.
The requirements for servicing these products for these customers meant a rate of almost double what was on offer was needed.
This paid of a few years later when I refused work for a large retailer that was good volume but, not worth it as the margins were non-existent as I could demonstrate. On that contract to claw back the cost of the stock alone required to do the work would take at least three years and, it was a shaky contract with a three month termination.
Work for free for three years with no guarantee you’d even get that investment back, thanks but, no thanks.
Others lost on this work thinking that it was great volume and they’d make out it but I knew I wouldn’t with the representative of the company trying to persude me to do the work for hours with the usual “but it’s great volume” stuff with me only reminding him that, “more volume of work you’re losing money on is only a way to lose money faster.”
To know that and save yourself a lot of heartache as a repairer you need to analyse your work, figure out what’s worth doing and what isn’t and to keep a track of it as, it’s dead easy to lose sight of what is and isn’t good work. And yes, that does mean on ocasion you have to be a bit selective will we say.
All this in apart, gave rise to to me designing Rapport (shameless plug in a way) the call handling system that was designed to do most of the heavy lifting on this stuff and a lot more for you.
If you are a repairer you need to analyse your costs and your work. It’s not optional unless you want to be a busy fool.
Avoid A Work Trap
I say this as, especially if you employ other techs, it’s real easy to fall into what I call the work trap. You’ve got loads of work but, something’s not right.
What happens is that you get it into your head that you have to have the techs full, they have to have work or they’re not making anything or have enough to do so you take on work that you might even know isn’t great just to fill their days.
This is a downward spiral and at some point, like many before you, you’ll eventually reach a point where you realise that you are slogging your guts out every day, for little to no reward just to keep people in a job.
You then begin to question why you’re doing what you do and a lot of the guys have mourned that they made more working by themselves than having employed techs.
Fast Forward
Getting back to these rates I got sent.
You can perhaps understand why I found these funny, but not in a good way. I can’t, for the life of me, understand why anyone would work for these rates or even entertain them.
Yet more so with the product spread as it’s literally anything, no consistancy at all, it’s all insurance work and you’ve no clue of the age, condition or anything in advance so the first fix rate will be abysmal.
Poor first-fix rate = no profits. Simple.
Or, you need a rate that reflects what you’re being asked to do and covers you.
And that’s at a decent rate, not what I saw here that were rates I’d have scoffed at a decade ago let alone now.
If you’re working for these kinds of rates I’d suggest you take a good hard look at your numbers as I think you’ll find you’re not doing well out of this at all. In fact, you are very, very liable to be losing money on it.
Amica Example
Around 2010 we got involved in running national service for Amica, that ended in 2015/6 but the rate for a standard call even back then was £60 a call.
That’s getting on for 25% more in 2010 than this crew are paying today, fourteen years later!
Again I have to ask, why are so many doing this work and supporting these muppets, essentially subsidising their business/es at a cost to the repairers?
It makes absolutely no sense to me why repairers would support this and work for peanuts.
If enough of the repairers tell these people to bugger off they will have no option but to either pay more or destroy your competition over time as, if they’re losing money they won’t be around for too long.
Or is it just a race to the bottom on prices?
When we did the Amica thing it wasn’t the cheapest or, didn’t appear to be but we saved on calls through avoidance techniques, saved boatloads on exchanges and dealers would push Amica as they liked the service, they didn’t get grief from it as they did with others.
But then, I don’t look at service in the same way as most people controlling these contracts.
BER Rates
This is more complex than it first may appear.
To begin I would like you to ask yourself a question, why is a repairer’s service worth less if they report that a machine is Beyond Economical Repair (BER)?
I’m not going to go into huge detail here but the above question is one that repairers should be asking as they stil have to call to the customer’s home, diagnose the problem and then report back which, at times, can be a right bloody hassle!
Why is it then that they’re paid less to do this and, why do the repairers accept this?
I see this a lot with contracts for third parties, like where a call handling service is distributing calls etc for a bunch of smaller clients and though I’ve no evidence I can produce, I suspect that the call handling sservice is pocketing the difference as several people I’ve spoken with over the years are blissfully unaware that this is happening, on their work. The end client pays the same rates regardless of it being BER or not.
I get we all have to make a buck but, surely we don’t have to be dishonest to do it.
Dishonesty
Speaking of being dishonest, what would you think that all these low rates and income suppression things make a number of repairers do?
Yep, that’s right, they start to set their own rates through cheating the systems so that they can just survive as, they suss they aren’t making enough but often don’t know why.
They don’t see this as a crime, technically it’s fraud, pure and simple, but they view it as a victimless thing and a necessity. Very much, as sad as that is.
Catching fraudulent claims is something I’ve done a lot of and spotting them is often not too complex, proving them can be at times but the hardest part of it is, what to do about it.
For clients they have to ask themselves why are repairers having to do this as if they are making money on the work, why do they put that at risk bumping you for more?
After all, I can assure you that virtually all repairers (there are always the odd exceptions) do not want to be dishonest. Generally, they are the most honest people you’ll meet.
Bad Jobs Done Badly
Flick back to the work trap thing, keep that in your head.
When you run employed techs and, this happens with large national service as well you get into a rut where the only thing that matters is numbers. You have completed calls per day, week etc, KPIs or targets, bonuses based on performance and all that crap.
What gets lost in all this nonsense is what’s important, customer service.
Many a time what you’ll see is, especially managers, focussing on getting whatever result it is that they have as a target. Customer satisfaction is invariably not one of those as, you can’t measure that on a spreadsheet.
That trickles down.
You have all these techs running about under pressure, often with too many calls, on too much of a spread of product covering too large an area with all they have as an objective is to complete calls to meet targets.
So what are they to do?
If they come across anything that’s too hard they bodyswerve it. Too much hassle, BER it. Don’t know what it is, BER it. And so on, you get the idea and part of the reason for reduced BER rates.
Loading them up with work can often be counter-productive and mean that the people that matter in all this, the end customer, gets a shit service just because some brainiac came up with insane targets and quotas that completely ignore why they are doing what they are doing.
The wrong things get measured and you end up with bad jobs, done badly by disenfranchised staff.
What people employing the repairers have to consider is this, who’s name is it that’s being slagged off by the actual customer?
Sales Extension
A friend/collegue (unsurprisingly) from outside the appliance industry that came to work in it handed out this pearl of wisdom one day and it’s stayed with me for years:
“Most businesses see service as an extension of sales, good service leads to tomorrow’s sales but not the appliance industry, they often only do it as they must”
Yeah, I know it’s a bit “fortune cookie” for my liking but it’s true, if you want to retian customers you better make sure your service and support is up to snuff or that customer is off elsewhere.
It’s well-accepted that keeping customers you have is way easier than getting new ones.
It used to be that people would buy (in the UK) Hotpoint, Hoover, Zanussi and so on as discussed before, not because they were the greatest machines but because they could get them fixed fast, cheap and easily. People went back and bought again and again, recommended the machines to friends and family etc.
Now, who cares?
Folk just buy the cheapest or flashiest not giving a single thought about aftersales. That is unless they go looking for reviews and see some of the horror stories that you can get online. Which can be skewed, I know.
In the modern internet information age, bad service can not only harm ongoing sales through customer retention but also actively be harmful through people being able to communicate their bad experiences to thousands of potential buyers.
Having decent service that actually does what it’s intended to do I would argue has never been of greater importance.
Hence, I do not understand why the pay is so crap, the conditions so awful and serivce so neglected. It makes no sense to me at all.
Chicken Meet Egg
This is where things in appliance service get really weird, from an analytical perspective at least.
You have a bunch of repairers not being paid enough to deliver the service that is required by clients and customers but, they’re forced to do what they can, duck and dive to survive and clients/customers who can’t afford or refuse to pay for the service that they really want.
At some point that cycle has to be broken and there are a number of ways that could happen but what I can’t tell you for certrain is, the likes of the rates that set this article off are unsustainable in the modern age and should not be entertained by the repairers.
There is no way, none at all, that a quality service could be delivered on those prices, anywhere in the UK.