by Michael Marks, Co-Founder, Perennial Software

According to a survey conducted by Michael Barnes of Barnes Associates at the SedonaOffice Annual Users Conference, our dealers grew an average rate of 12 percent during a one-year period and 9.9 percent over the previous three years. During the past six years, these outstanding installing and monitoring companies grew recurring monthly revenue at almost twice the rate of the industry on average.

These companies have succeeded because they excel at leveraging tools available to them. This is evident in their management of the two departments that often present the biggest cash-flow problems for security companies: installations and service.

Read this article, for a discussion on some of the companies’ top challenges and strategies to optimize and best coordinate processes and practices in these departments.

#1 Managing Techs in the Field

For a lot of successful companies, giving technicians the ability to manage themselves is becoming a powerful thing. More and more companies are equipping technicians with tablets, laptops and smartphones. And these devices are quickly becoming indispensable tools because of how efficiently they allow an entire organization to leverage the technician’s time with the customer.

“We took a couple of years to really think about whether all of technicians needed smart devices,” Wrzesinski says. “And the reduction in price was a big factor in our implementation. Now, our technicians have smartphones and iPads and work off of electronic time sheets as of last year.” Safe System’s service and installation departments went paperless four years ago. Technicians now check in and check out of jobs electronically.

The use of these devices also allows technicians to work off of live schedules, bill customers on-site, reliably communicate notes and so much more.

Melissa Brinkman, chief operating officer at Custom Alarm of Rochester, Minn., says, “With our technicians we use various aspects of the SedonaOffice modules such as the Service FSU module to allow them and our service dispatcher to have real-time updates as to what ticket they are in and what they have next on their schedules. We also have smart phones with the ability for our technicians to take photos if they need to further explain to someone what they are working on and request additional help and/or perspective on how to best resolve for the customer.” Brinkman notes that all of the company’s trucks have GPS devices installed to help with scheduling, job management and others.

The average technician does not necessarily consider worrying about what’s in the best interest of the customer or the business in his job description. So the key is to provide tools that help them do their jobs and cut down on the amount of paperwork they have to fill while establishing constant communication with the home office. The manager can know where they’re at, where there’re going, what they did, what parts they used and much more without having to ask. 

#2 Key Performance Indicators

Information equals power for a growing company. Finding issues in order to correct them is a basic necessity for any dealer to stay afloat, but identifying best practices and techniques that work are crucial for growth.

Some of the most useful key performance indicators for installation and service departments include 1) the total number of service calls completed in a day and 2) the daily average number of service calls a tech can complete. These may sound basic, but the first step is to establish a baseline so that over- and under-performance can become obvious and to measure improvement.

“Whenever you can automate something, you can make your entire operation more efficient,” says Larry Halpern, president of Safe Systems, Inc. “We automate so we can do more work. Through SedonaSync, our people to get vital information on things they need to see right on their desktop.” The company uses morning reports automatically created by on sales numbers for the month that allows them to see how much new RMR has been sold. “Could I get online and run those reports and look at that data myself? Sure, but boy is it nice to have the email there when I start my day.”

The company also has weekly meeting to inspect KPIs in its installation and service departments and identify outliers. It measures productivity across every salesperson, slice it by sales, technician and type job. More often than not it finds positive outliers in its performance. “And we found types of work that we do best and the type of jobs we shouldn’t be doing,” Wrzesinski says.

For its service department, Custom Alarm regularly measures the number of service tickets completed every week against how many of them were billed and how many were ‘no charge’ tickets. The company also measures the number of ‘call backs’ and ‘go backs’ which are still outstanding as well as unresolved tickets. In its installation department, Brinkman continues, the company measures the total weekly number of jobs that were billed and the total dollars in revenue billed. They split that by project manager as well. The number of call backs generated from the installation team and the inventory levels that each technician is maintaining week to week are also reviewed.

“By reviewing and understanding how our business ebbs and flows, we can better respond to anomalies and make corrections much quicker,” Brinkman continues. “An example is looking at the total dollars billed per week. Even if we have a low week, we look at the next week and if that isn’t up, we are following up with the installation team to find out where we are at with finishing jobs and/or generating billing. This has allowed us to have more consistent billing week to week as well as people are more aware of what is flowing through the funnel and doing their part to move it to the billing stage as quickly as possible.” 

#3 Creating a Painless Billing Process

For Custom Alarm, keeping the customer happy through the billing process is paramount, and was also holding some employees back when it was time to send an invoice for installation or service. Service customers were regularly unhappy about having to pay travel costs. And in some new installations, the company was unsure of when to bill, especially in cases when the customer was holding up the installation process. “We address it by talking with the customer as it relates to the service issues and working towards a mutually agreeable solution for billing,” Brinkman says. “On the installation end, we evaluate where we are at in the completion of the total job and then determine that we either bill it or we wait.”

For Amherst Alarm, some of the issues surrounding billing were solved by looking inward. Sometimes, people can be afraid of asking for money, Tim Creenan, CEO of Amherst Alarm, based in Amherst, N.Y.,  says. The solution was in focusing on internal training and preparation before the service or installation call to get both the technician and the customer ready for the transaction.

Outside of any “when to bill?” hesitation, the number one reason for issues in billing is lost or incorrect paperwork. After a technician has finished a job, leaves the premises and moves on to the next job, paperwork still needs to be completed and submitted to the office. This is not only a slow process, but there is a strong relationship between the time it takes that paperwork to make it to the office and the likelihood of it getting lost or filled incorrectly. If one or several parts used are left out of the paperwork, a customer doesn’t get billed for parts. The company then loses an opportunity for revenue and incurs an additional cost for the part. Double whammy.

Safe System’s technicians store information and collect payment from the customer on their tablets at the end of every installation or service call. This way, every ticket is closed on the day the call is done and sent to the office electronically.

#4 Control Inventory to Control Costs

Inventory and parts usage is probably one of the top two or three biggest expenses a security company has.

Creenan says, “We track everything so the installers have to sign out the parts they’re taking for a job and fill out a return slip for parts they bring back and note why they were unused. If parts need to be added to the system after the initial parts are pulled when they’re on the job for whatever reason, then they have a change order slip to fill out. It takes dedicated effort and many times it takes a lot of coaching to keep the inventory as accurate as possible.”

Custom Alarm manages its inventory by pulling inventory sheets out of its management software and creating reports to track those parts based on events and part cost. The company also does regular spot checks on trucks for inventory balancing.

Part of having a good inventory solution today is tracking every piece of equipment that’s ever been installed for any system. When going to do service, dealers need to know what kind of hardware is in that particular system. Not having the stock to solve a problem right away is terrible news for both the dealer and the customer because going back a second time, you can’t charge the customer again. That translates into lost time for the installer, additional gas and mileage costs and very possibly an annoyed customer. “Our project managers review the jobs two days before they’re scheduled to start to make sure all the parts are in-house and any special tools required are available for that crew to use,” Creenan says.

Wrzesinski adds, “Each one of our vehicles is a rolling warehouse.” And with the help of GPS, Safe Systems can direct technicians to grab parts for a nearby vehicle. “The challenges become human in making sure parts are added or taken off jobs when used or not used.”

Unfortunately, many installers who work for security companies do work on the side and they’re not going to their friendly neighborhood distributor to buy their parts. Managing shrinkage and usage of equipment is necessary. The big retailer model of compensating for shrinkage by raising prices on sold products is outdated and completely unsustainable in this highly competitive security industry.

Keeping up a reasonable level of inventory at all times takes careful planning as well. All three dealers use experience and reports to determine minimum and maximum numbers to keep on the shelves. 

#5 Tracking Key for Project Management

Managing an installation today is about being efficient in terms of doing that installation, getting it completed on time and managing the cost. Successful dealers are tracking every task that must be done, tracking milestone dates, responsibilities, notifying the customer of progress and making sure it’s being done on time. What these dealers are not doing is waiting for the customer to let them know there is an issue, regardless of whether it’s a small residential or large integrated system.

It used to be you could look at a job and not instantly know if it was losing or making money, Wrzesinski says. “Technology changed the efficiency of the job and simplified the process for acquiring information. Now we’re able to get a manager involved sooner, sales involved sooner, learn from the issue and even correct it on that same job.”

In tune with that is what’s called job-costing. Job-costing is about measuring actual profitability of a job versus its projected profitability at the time of the sale. The variances between what was estimated as incoming expenses and what was actually spent on any one project can be a big lesson to a company. Truly understanding any one company’s creation multiple makes up the difference between making and losing money, but it will also help manage cash-flow and identify the types of jobs that company is best at.

Creenan shares, “Our jobs for the installations people are assigned a certain number of hours based on how the salesperson has composed the job. Sometimes they go under and sometimes they go over. We run reports that show us job-costing and part of that is looking at the hours expended in a particular job versus the hours that were quoted. We look for variances and determine why and try to improve. If there are things we could avoid the next time, then we want to learn from that and make sure they are not repeated.”

A decade ago, these procedures may have been too labor-intensive and costly to be viable. But today, dealers are putting technology and automation capabilities to work for them and improve customer relations while increasing profitability.