Four Principles for Overcoming the Biggest Challenge in Your Business

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We recently conducted a market survey among 250 service managers and executives on critical trends facing the Field Service industry. As part of this research effort, we asked respondents to indicate which issues where the most challenging to their company. Reducing the cost of service delivery was at the top of this list. Over two-thirds of the survey population indicated that this issue was either somewhat (40%) or very (29%) challenging for their organizations.

The truth is that taking a disciplined approach to reducing costs is critical to a business’ long term growth and sustainability.   One way to ensure high profits, year after year, is to consistently find ways to reduce cost by at least 10% per year. They are not simply cutting expenses haphazardly by laying-off people, taking short cuts, asking vendors for price concessions, or making do with less. Those tactics have negative consequences on morale, productivity, and quality which ultimately hurt rather than help a business.

Instead, world class companies take a strategic approach to cost – cutting. They pursue an approach that leads to long term growth, improved market share, and an enhanced reputation among customers and employees.   In other words, an approach that makes them the type of company that makes people want to do business with, work for, or invest in.

Here are a couple of key principles to keep in mind when  applying a cost cutting strategy to your service operations:

  1. It never ends – Just because you were able to find a 10% savings today doesn’t mean that costs will remain the same next year. Your operating expenses will always find a way to creep up on you. There will always be a learning curve associated with rolling out new technologies and launching new services. Even when it comes to delivering existing products and services, waste and inefficiencies will multiply if left unchecked
  2. Know your numbers – There are two old adages that you need to remember when managing a service business – 1) quality is not free and 2) you can’t improve anything that you can’t measure. That’s why it is important to keep an eye on key performance indicators that impact both quality and cost such as First Time Fix Rate, Utilization Rates, Repeat Visits/Repairs for the same problem, No Fault Found, and Dead on Arrival. Continually find ways to improve your performance in these areas and cost savings will follow.
  3. Pursue process and systems improvements – It goes without saying that cost savings can be achieved by streamlining processes and deploying technology to automate manual processes.   For example, a company can achieve a 25% or more improvement in operating efficiency by implementing a disciplined approach to call management, remote resolution, and technician dispatch through reliance on advanced technology such as knowledge management tools, mobile communications, and dynamic scheduling solutions.
  4. Seek alternative delivery models Outsourcing has traditionally been viewed as an effective alternative for reducing costs without jeopardizing quality. However, new advances in crowdsourcing platforms and sharing economy business models offer another alternative for companies to gain economies of scale, improve operating efficiency, and maintain high levels of service quality by contracting directly with independent contractors. In effect, take out the middle man and enable a self-service model. Check out Essintial Enterprise Solutions, an independent services organization (ISO) who uses a Freelancer Management System (FMS) developed by Field Nation to make this type of business model possible.

 

These four principles focus on the internal operations of your business. Follow them consistently and deliberately and you are guaranteed to reap rewards. There are of course market focus strategies that you can pursue to control or reduce the cost of service which we will explore then in our next blog post. In the meantime, schedule a free consultation with me today if want more ideas on where to find cost saving in your service business.