In this ADDcast episode, we welcome back Jim Gillis, Energy Consultant at ADD Systems, to discuss a key challenge in the industry: generating profit from service departments. Jim shares insights on how competitive pressure leads many companies to offer no-charge services and the hidden impact this has on profitability. He also introduces a best-practice solution developed by ADD Systems to help clients highlight the value of their services while maintaining efficiency and customer satisfaction.
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Brian Cohen: Welcome to ADDcast. I’m ADD Systems’ Multimedia Specialist, Brian Cohen. Joining me today is Jim Gillis, Energy Consultant at ADD Systems. Jim, welcome back.
Jim Gillis: Hey. It’s great to be back. Thank you, Brian.
Brian: Well, now even though this is your third time as a guest, for those who may not have heard episodes 10 and 24 yet, can you please tell us a little bit about yourself and your role at ADD Systems?
Jim: Yeah. So I’ve got about 40 plus years in the industry between the actual industry and the software side of it, so I have a good amount of experience that allows me to assist our clients and help them be more efficient, make more money, and have more fun.
Brian: Well, it’s no secret here at the company, as well as to our customers, that you’re frequently described as passionate about the capabilities of software. What are some of the things you feel most passionate about?
Jim: Trying to help our clients identify opportunities that sometimes they overlook, and helping them make better decisions that will affect the company’s health.
Brian: Well, over the years, you’ve worked diligently to share the benefits and rewards of our E3 and E360 software. Service is a crucial component of our industry, yet a lot of our clients struggle to generate significant profit from their service departments. Can you maybe talk about why that’s the case?
Jim: Absolutely, Brian. The primary reason is just purely competitive pressure. Many of our clients feel compelled to offer routine services at no charge because their competition is doing the same thing. It’s this no-charge service practice, while beneficial to customers, it leads to significant issues. Our clients often avoid sending no-charge invoices to prevent a flood of incoming phone calls from their customers needing clarification about an invoice that they sent to them that doesn’t really have any charges on. And as a result, you know, the end users perceive that the parts and the labor provided really have no value.
Brian: Now that sounds like it can end up being a challenging situation. So what impact does this have on our clients’ profitability?
Jim: In reality, the upfront costs that our clients absorb are valuable. When these expenses are not recouped and inventory is not updated, it ultimately causes more effort on our clients’ positions. Not charging clients for labor parts on work performed extends the time it takes for our clients to become profitable with the customers they acquire. This can stretch into months or even years to break even. It’s a significant concern because it affects the overall financial health of their service departments.
Brian: So what can be done to address this issue and help our clients highlight the value of their services?
Jim: Well, after extensive discussions internally here at ADD Systems and thorough testing, we developed the current best possible method to enable our clients to send a no-charge invoice to their customers when work is provided with no plans of charging that customer. This method makes every effort to ensure that customers understand the value of service provided without generating extra phone calls for clarification, which can be overwhelming to our clients, all while updating the customer service history, updating parts, and fittings inventory. It’s really a good practice. By implementing this method, we aim to help our clients highlight the true value of their services, ensuring that their customers appreciate the effort and the resources invested in maintaining their fuel-consuming systems.
Brian: It’s quite the solution. How do you think this will impact customer satisfaction in the long-term profitability of our clients’ service departments then?
Jim: Well, by sending the no-charge invoices that clearly communicate the value of services provided, customers will better understand and appreciate the labor parts, and equipment involved. This approach not only enhances customer satisfaction, but also supports long-term profitability of our client service departments. It helps bridge the gap between perceived and actual values, fostering a more sustainable business model.
Brian: Now if anybody has questions or wants to set this up at their company, how would they go about doing so?
Jim: Yeah, so there’s a couple of places in system maintenance, in the service applications that would need to be set up. And if any of our clients were interested in doing that, they could reach out to us, and we’d be more than happy to walk them through the process.
Brian: Well, Jim, it’s always a pleasure. Thank you so much for joining me today.
Jim: You bet. It’s my pleasure, and I really do get a real joy out of helping our clients be much better.
Brian: And once again, if you found this discussion insightful and you want to learn more about implementing the process of no-charge service invoices, you could reach out to your sales account rep, or directly to Jim. And to keep up with the latest happenings at ADD Systems, visit addsys.com/blog, or connect with us on social media by following ADD Systems on LinkedIn, Facebook, Instagram, or X. If you have any questions about ADDcast, feel free to reach out to us at addcast@addsys.com. Thanks for listening and have a great day.
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