Profit down the pan

Have you noticed how we're losing the personal touch nowadays? Have you noticed how everything is centralised and designed to be efficient but not to serve the public like it was supposed to? Now that I have hit the big 60 and the bus pass has thudded on the mat I have found myself reflecting a little on life and times.

It started when I decided to ring my credit card company to argue about the late payment charges, (my wife says I get more like Victor Meldrew every day).

An Asian voice at the other end couldn’t help and I was passed to another operator – also Asian. So I asked "Where are you based?”

“Bombay" came the reply. Then it all made sense. The whole service had been centralised and moved to India to save costs, and for maybe 80 per cent of the their enquiries, the operator could find the answer on the computer screen by looking up the account. However, for anything out of the ordinary, or for something that had to be negotiated, it was totally out of their remit. They did not have the details and were not in a position to make a decision.

More to the point, they had no facility to refer me back to head office in Britain to someone who WAS in a position to sort out the enquiry. All they could do was to take my number and promise that someone would ring back. After several tries I discovered that whatever phone number I rang it took me straight back to Bombay and the whole thing went round in circles.

Cheaper to write off the charge

It was nearly two weeks before I got to speak to someone who had the authority to remove the charges, and to do that I finally had to look up the address of head office in the small print and then ring round the telephone directory services until I found one that could give me the direct dial 01 number instead of the national rate 0870 number.

The ploy now became clear ... I had wasted much more of my time than the saving itself warranted. It would have been easier and cheaper to write off the unjust charges. Is this what they are trying to get us to do? It's a nice little scam if you can get away with it. The question I have to ask myself is: Can they offer a fair and reasonable service from India?

The answer: From that distance – no.

This sort of "centralisation" happens in most industries today and our industry is not exempt. Most of our big nationals have taken the advice of the high-flying accountants and centralised. This means the customer gets to see a different engineer every time and they lose the personal touch. This is OK with the bigger corporate customers but the smaller customers vote with their feet and go elsewhere. I often wonder if the same high flying accountants ever take "lost customer” into their accounting or do they just write them off as natural wastage?

The other point that comes out of this is the extra charges that are put onto the things we buy in our daily lives. The other day I was looking at the finance agreement for my wife's car. There was an "acceptance fee" of £95 and a documentation fee of £75. Neither of these charges was explained to me at the outset, only the monthly figure I was to pay. Is that unethical or just the way of the world?

Here are two problems that a lot of smaller installers get wrong. They let themselves down by not getting their communications right and then cap it all by not charging a fair and reasonable fee for their work.

Smaller installers need the business, so why do they leave the incoming calls to an inanimate answering machine? And why do they insist on being the cheapest at everything? It’s almost like they have a death wish for their businesses.

Telephones have to be answered. But if you leave it to the answering machine you lose business, especially if you start with an apology like "I'm sorry, there is no one here to take your call”.

So, give them a positive answer like: “Hello, this is Acme Alarms. If your message is urgent and cannot wait please ring the 24hr helpline on ... Alternatively please leave a message and I will return your call.”

Alternatively, you can divert your phone to your mobile and answer the call personally ... and a lot of small installers prefer to do this. However, every time you answer the mobile phone you are taking time out of paying work and losing profit – and it costs you the price of the diverted call. You are actually being charged for answering your own phone. There seems to be no fixed answer for the small guy. One answer may be to make use of one of the messaging services that uses real people to take your messages. A good messaging service will sort out the emergencies from the mundane and act accordingly, leaving you to get on with the serious job of earning money. Then there is the other side – not charging where and what you should. Almost every small business falls into this trap. They go out, do a very simple repair and then say to the customer "Oh, have it on me this time".

I must admit I did the same when I had my business and it is a big mistake and we have got it back to front. The big nationals (who can afford to do the job free) always charge ... and what’s more, if there is some doubt as to whether it should be a free job or not they charge anyway! It’s up to the customer to argue. The small guy (who is often in desperate need of the money) lets the customer get away with murder. You must learn to charge a fair and reasonable amount EVERY time ALL of the time and stop giving your profits away.

Another thing ... as the quality of equipment improves the manufacturers have started giving two, five or even ten year guarantees on their products. Installers immediately pass it on to the customer as a free bonus!

Come on lads, get real – that is your profit and your business going down the pan. Stop giving it away. When you offer a parts and labour maintenance contract to your customer, the five year guarantee is your perk and profit, not theirs.

As far as your customers are concerned never be ‘just passing by’ ... charge your trip from base

One more golden rule – you are NEVER “just passing by”. Your trip always starts at your base, even if you are just round the corner. So charge for the travel time.

Obviously you cannot charge the customer the extra time if you are in the opposite end of the county ... but that is charged to the customer you are dealing with there. Your service visit always starts and finishes back at base. Then, if you can arrange your trip to take in three or four visits in the same area, you are making hidden profits. This is not ripping off the customer, this is fair and reasonable profit.

Remember, if you do it cheap this time because you were just around the corner, the customer will expect you to be just around the corner next time and you have lost even more hard cash and made a rod for your own back in the meantime.

Banks are another lot who know how to charge. They offer some people free banking and then sting the hell out of others – usually the small businesses. But you can beat them at their own game. You will need a business account to keep the taxman and your accountant happy. OK, shop around and get the best deal. Don't be fobbed off by offers of free banking for the first year or so. They WILL make their money back later, so go for the lowest rates of charge. The trick is to put only

a small part of your business through that account. Then open up a private account in your own name at another bank and do most of your banking there for free (provided you stay in profit).

Once a month you can pay in a big cheque from your private to your business account to cover your incoming earnings.Then you can draw a large fat amount out in cash every month equal to your outgoing bills etc and pay that into your private account. If the accountant asks, you are dealing with cash. With a bit of careful balancing you can save a lot of bank charges and you are certainly NOT doing anything illegal or immoral.

The same goes with your maintenance customers. Get them on a monthly payment – (it sounds so much cheaper than yearly) in advance. Then at the end of the year they have enough in the account to pay their next year’s maintenance without them actually having to write out that big cheque. They are used to doing it for their car payments ... so why not introduce monthly payments for your maintenance customers?

You will probably need a different account at a third bank, preferably an interest earning account. The other thing is that you don't have to pay the VAT until you pull the payments out and enter it in your books at the end of the year. Then if the customer decides that they don't want the service after all, you can give them their money back less a small documentation charge.

These are all the sorts of hidden charges that we are hit with every day of our lives, perhaps it is time that we cottoned on to the trick and did the same.

Disaster waiting to happen

‘SYD THE PRINTER’ TELLS ME HE IS PRINTING labels for mains wiring like they are going out of fashion. This is all to do with the change of colours of mains wiring to bring the UK in line with the continental standards. You may remember that I wrote about it some months ago. To re-cap ... the old Red and Black are going to change to Brown and Blue. That's OK, but the three phase colours are also going to change from Red, Blue and Yellow to three Black wires with phase labels.

This means that the old Black was a neutral and the new Black is live. It also means that the old Blue was live but the new blue is neutral. Syd and I both agree that it is only a matter of time before someone makes a fundamentally simple mistake and a poor unsuspecting consumer gets fried.

Who is responsible? This could be a problem.

If there have been several lots of work done on the installation and some DIY, then pinning the blame or finding the real culprit could be a nightmare.

I know there should be all manner of tests completed and certificates issued for work done, but who can put his hand on his heart and state categorically that all work is actually tested and certificated? I predict this will end up a shambles.

To my way of looking at things, a simple piece of legislation could have gone a long way to preventing this happening. A rule should have been introduced to say that after the changeover date all new wiring will be to the new colours.

Any additions and alterations from before the changeover date should be done in the old colours. It would have ensured there was no mixing of colour schemes, and made it illegal to mix the colour schemes. This, I am sure, would have saved lives that may well be lost in the future.