A common question I see on social media forums is how different services providers handle on-site services. Questions about trip charges, minimums, and percentage of remote vs. on-site work are common. The most interesting thing to me from an efficiency standpoint is the percentage of on-site versus remote work. In this article, I’ll break down three costs service providers often overlook when trying to determine how expensive truck rolls really are.
Cost of the truck
When thinking about the cost of a truck, you should add insurance, maintenance, and fuel costs to the purchase/lease price. If you do a lot of on-site work, it probably makes sense to purchase a vehicle. But I think most of us can agree we’re actually trying to reduce the number of truck rolls. Therefore, our goal from a productivity stance is to have that truck sit idle as much as possible.
If you’re an owner, it may make sense for the business to purchase a vehicle that’s also available to you after hours. The downside of this is that it doesn’t scale. At some point you may grow to where your on-site work is a low percentage of your overall service, but you have enough on-site work to efficiently utilize a company vehicle. This is the place we want to get to when it comes to proper utilization of company vehicles and on-site service.
On-site calls inherently introduce delays
This may be a less tangible cost, but waning customer sentiment has large financial costs. Customers begin to churn due to slow response times and extended time to resolution metrics. Losing customers because your techs are tied up driving from place to place is unnecessary. Make sure you’re doing everything possible to remotely solve a problem before turning a ticket into a dispatch.
Driving time equals downtime
Lastly, technician downtime doesn’t just cause delays that can churn clients. Financially, every minute your technicians spend driving is a minute they’re not earning money working for another customer. This matters less for all but fully managed services providers (MSPs). When you transition from the other service delivery models into fully managed, one of the major shifts in mindset is that of dollars per tech to end users per tech.
In non-fully managed models, you can recoup lost revenue due to lack of efficiency by charging trip charges, hourly rates, or minimums because the measurement that matters is dollars per technician. On the other hand, fully managed models use a different metric since a tech’s time isn’t tied to an hourly billing rate. The new metric is based on the number of customer issues a technician can solve in a given time period. The more end user issues a tech can handle per hour, the more end users (and therefore clients) the MSP can support per technician. If idle time in a truck reduces the number of end user issues the technician can handle, then it reduces the overall revenue because the MSP cannot handle as many end users.
I hope this gives you insight into some of the less obvious costs of doing field service work. It’s not always about the obvious dollars—it’s more about utilization rates, especially in a fully managed model. Look for ways to make sure you’re making the most of your resources and keep customers happy by providing great service, which doesn’t always include going on-site.
Eric Anthony is the head operations nerd at SolarWinds MSP. Before joining SolarWinds, Eric ran his own managed services provider business for over six years.
You can follow Eric on Twitter @operations_nerd