In this interview with field service industry expert, Michael Israel, we lay out the most important KPIs service managers should be aware of and highlight some pro tips to help service teams succeed.
Key indicators of a successful service organization haven’t changed much in the last few years. According to Michael Israel, Vice President Operations, Jolt Consulting Group, service Key Performance Indicators (KPIs) in 2016 are not so different than they were a decade ago.
“The traditional KPIs are still important,” he said.
With those traditional service KPIs in mind, Michael addresses why they’re still important, and how service managers can effectively meet them using 2016 best practices and technology.
Getting Started: Why Service Managers Should Set Goals that Measure Process over Results
When it comes to setting and measuring KPIs, Michael and his team at Jolt suggest service managers focus on the process of delivering service, rather than the results. For example, rather than measuring profitability or number of service calls per day, analyze the success of the processes involved in delivering service.
When the process goals are being met, the desired results will follow. First time fix rates, for example, are indicative of overall service business success; the more effectively you can eliminate a problem on the first visit, the more productive and profitable you’ll be, and the greater customer satisfaction you’ll experience.
The list below highlights some of the most important KPIs service organizations are measuring today. Michael emphasizes that service managers should start with only four or five KPIs that will be most useful for their business instead of trying to implement all of them at once. Determine which are most important to your organization by evaluating problem areas, and then, only after reaching your original goals, add to the list.
Service Process KPIs Every Service Manager Should Know
- Average travel time: Track the average time to get from site to site.
- Average travel distance: Track average miles techs spend driving.
- Average travel costs: Track fuel costs, wear and tear on vehicles, and overall cost of getting from place to place.
By reducing the amount of travel and identifying where routing can be more efficient, service teams are able to spend more time on billable tasks and tackle more work orders, not to mention the customer satisfaction that comes from getting to a jobsite and resolving an issue faster.
Pro Tip: Service scheduling software with GPS allows schedulers to see where techs are on a map and assign the closest available qualified technician to an incoming work order to reduce travel time, distance, and costs.
The quicker techs respond to problems, the more work they’ll be able to do in a day, and the quicker the customer’s problem is resolved the happier the customer will be.
Pro Tip: With instant status updates through mobile, schedulers know when each tech is available so they can schedule someone quicker and speed response times.
Average repair times
Average repair time is a potential indicator of training needs; for example, if one tech is taking much more time to repair the same type of equipment as his peers, then that tech might need additional training. Or it could highlight product serviceability difficulties, which manufacturing might be able to correct with an engineering change order.
Pro Tip: Repair times vary based on equipment, type of customer, industry, usage the equipment gets, etc. So, before you start tracking, segment your customers and assets appropriately so you’re not measuring apples to asparagus.
Average SLA compliance rate
Measuring service level agreement compliance is nothing new, but it’s still very important. If you’re missing the SLAs, that has implications for customer satisfaction and downstream revenue.
Pro Tip: Equip techs with a mobile service app that shows SLAs for each customer they’re working with so there’s never any confusion about what’s expected of them.
To track technician utilization and productivity, divide the amount of time the tech is working on things that are part of the job description vs time filling out time sheets, attending meetings, other activities unrelated to productive work.
Pro Tip: Improve productivity significantly by eliminating paper and duplicate data-entry with an all-in-one FSM system. When workers don’t have to worry about reentering data, their time is freed up to work on more important tasks.
Measure technician billable time
After you’ve figured out technician productive time, service managers can determine what percentage of that was billable.
This KPI is important, said Michael, because if organizations have a high ratio of billable to productive time that is a potential indication that not enough equipment is covered by a maintenance contract. “We push customers to implement robust maintenance agreement programs and sell maintenance agreement contracts aggressively.”
Pro Tip: To even out this ratio, make selling more service contracts a deliberate strategy in your service organization. “Maintenance agreements are the true path to profitability and consistency.”
Percentage of expiring warranties that are converted to maintenance contracts.
Ideally, as a service organization, you’ll prove your value during the warranty period, so customers will be eager to purchase a maintenance contract through you.
Pro Tip: Set alerts to remind you when warranties are expiring and designate someone on your team to be in charge of converting those to maintenance contracts.
Percentage of maintenance contracts that are expiring that have been renewed
If you have a sales person in charge of selling service contracts, make sure they’re also renewing expiring ones. Set up alerts so there’s never any ambiguity as to whose contracts are expiring when.Pro Tip: Make it a priority to build a relationship with your customers, and always do a thorough job during PM visits. This is your opportunity to prove your service team’s worth and make sure customers renew their contracts on time.
Percentage of ordered parts that are returned unused
If technicians are consistently ordering the wrong parts for their jobs, that has a direct impact on productivity and customer satisfaction.
Pro Tip: Give technicians full-access to customer history and inventory so they can see what’s been done on the equipment in the past, what tools have been used, and what skills were needed, so they show up on site prepared with the right parts and guidance to resolve issues the first time.
Emergency parts order costs
Track how often techs are rushing out to the store to purchase last minute parts, or how frequently parts must be flown in from another location on an emergency basis. These costs add up and also cut into worker productivity.
Pro Tip: To analyze accurately, filter emergency parts order costs by technician, territory, work order, etc. so it’s easier to point to trends like an education issue or a local stock issue.
Ratio of preventive maintenance work to reactive work
“We believe that the higher the PM work, the lower the reactive work will be,” said Michael. “We encourage companies to be aggressive about the number of PM programs in place to reduce the amount of emergency fix calls they get.”
Pro Tip: Tie PMs to service contracts so regularly scheduled PM activities become a vital part of your service contract offerings.
Tips for Service Managers to Successfully Set, Measure, and Exceed KPIs
Knowing what your KPI options are is one thing, setting, measuring, and meeting them is another. Here are tips service managers can use to set and exceed the goals you’ve set:
Choose the most important KPIs for your organization
To determine which 4-5 KPIs are most important, ask yourself:
- What are the most important goals for my service organization this year?
- How do we get the information we need?
- How do we disseminate that information to the right people?
Based on your answers, you may determine that it’s more important to focus on SLA compliance than selling more service contracts, so you make a plan and work towards keeping customers happy before you try to sell them a contract.
Communicate goals clearly to the service team
You can’t expect your team to meet or exceed KPIs if you don’t clearly communicate what the goals are. Once you choose which KPIs you’re going to focus on for the year, visually display progress in a public place for the whole team to see, or disseminate the information on a regular basis via email, newsletters, etc.
Make it a competition and acknowledge strong performance
In addition to communicating goals, acknowledge when team members meet or exceed them. Michael suggests turning it into a competition. Post tech stats in a public place; reward your highest performing technicians. A little recognition can go a long way when it comes to motivating workers to meet goals.
Use analytical capabilities inherent in an FSM system to track performance
If you’re using a field service management system with analytical capabilities, use the intelligence to generate reports to regularly measure the KPIs you’ve set. Decide what you want to report on, and then build the reports that you want to show. Don’t forget to share this data with your team to keep them in the loop and motivated.
Conclusion – New Technologies Make it Easier to Track and Measure Smart Service KPIs
Technology has made it easier to identify what to measure and to retrieve accurate information quickly. So while the KPIs themselves have remained relatively stable over the last decade, service managers’ ability to set smart goals, track performance, and make informed changes has made it more important than ever to perform well and exceed customer expectations.
7 Best Practices for Choosing a New Field Service Software Solution
Looking for ways to exceed KPIs in your service and repair business? Eliminate paper and streamline the service process with field service management software. Learn best practices for choosing the right solution in this free guide.