Diagnostic Fees

| April 27, 2016

There’s a lot of debate on whether service companies should charge a diagnostic fee. Steve Stone of Steve Stone Plumbing and Heating & Air and ShuBee® CEO shares his opinion on diagnostic fees from his experience growing his company from 7 to 32 trucks.

I started to evaluate whether or not we should charge diagnostic fees, and what we found out was we were losing a lot of opportunities to trade jobs by charging diagnostic fees. The other companies around us were working by the hour. We would charge a $70 diagnostic fee we would waive once we did the work. But the customer would say,“ You mean you’re going to charge me just to look it at?” So we started to think about the best way to approach the diagnostic fee. What we decided was not to charge a diagnostic fee between regular working hours. Here’s how we did it.

We beat our competition by telling our customers we didn’t work by the hour; we worked by the job. We’d say to our customers, “We’ll send a technician out to assess and diagnose the problem and tell you exactly what the service will be.”  My theory was that we live in a “right now” society, and when people have a plumbing or heating and air problem it usually means they had to stop their day and even take off of work.  So after we showed up to a customer’s home with our professionalism and expertise, the urgency of calling another plumber was eliminated and they could easily see they called the right company. The key to being successful is to invest in your technicians. They should be well trained in their appearance and how to greet the customer. Your technician should exude a wow factor when a customer sees him or her for the first time.  Take that wow factor and turn a customer into your client for life.

Your technician should have a clean uniform and their shoes should be polished. We even had a shoeshine box at our office that our techs could use. It quickly became a habit and most of our technicians would keep their shoes shined on their own. Respecting a client’s home should be a top priority, and shoe covers should always be worn to keep dirt off of a client’s floors. Wearing shoe covers is a small act that goes a long way in client retention. Your technicians should always be wearing Trust Me™ Id Badges, and they should never smell like smoke.

Appearance does not just mean a uniform; it also includes your technician’s truck. A dirty truck gives off the impression of sloppy work.  This includes the dashboard. A messy, cluttered dash is a driving hazard and appears very unprofessional. Your truck is your billboard. It should always be clean and organized as an extension of your work and reputation.  Bottom line; a customer should know they called the right company the first time they see their technician at their doorstep. Because we showed up to our client’s home with a professional appearance and were face-to-face rather than trying to charge a diagnostic fee over the phone, our closure rate skyrocketed! For us, it became a no brainer.

How you manage your technicians is imperative. Your service manager needs to know every time a job is being diagnosed. If we sent them to a job and they diagnosed the job but didn’t trade the job, that would be strike one for the day. We let that slide. If we sent them to another job and they diagnosed it without trading it, that was strike two. So then the service manager called the tech and said, “ What’s up? Why didn’t you trade that job? That was your second opportunity today.” If the tech had a third strike for the day we sent him home. Our techs knew on the third strike they would go home. I have to say in all the years we were in business it was extremely rare we would send a tech home.

If one of our service techs missed an opportunity to trade a job, our service manager would call the client and ask if the tech explained what the he or she needed to do or if they mentioned we offered a five-year warranty or any other added values. The service manager would even let the client know the tech was still in the area and could come right back.  We would be amazed how many times the client would say they were fine in that moment but would call back the next day or following week. It became evident we had built good will; so then that customer became our client.

But let’s say your tech did everything you trained him or her to do and still didn’t trade the job. When the second technician comes in from another company working either by the hour or working flat rate and doesn’t have that same appearance and professionalism, you will get a call back. Even if the other guy is cheaper, you will still get a call back.

I want to mention our company was located in a smaller, metropolitan area. If our company was in Atlanta or even California where there are millions of people and it takes hours to get anywhere, then I absolutely think charging a diagnostic fee is necessary.  I also want to note you need to make sure you are flat rating. This approach will not work if you charge by the hour. If you’re flat rating, look at each one of your trucks and calculate how many jobs that tech is diagnosing. Take that cost and include it in your flat rate. Remember what I said, the customer pays for everything. So you’re not really loosing anything because the clients you trade are paying for the ones you don’t trade.

What about after hours?  I fully believe if you get a call after regular working hours, you must charge a diagnostic fee. You don’t want to be doing free visits after normal hours. We would charge a diagnostic fee for after hours visits and then wave the fee when we traded the job.  By charging a fee, we found out a lot of the time the customer will discover it is not an emergency. So we’d tell them if you can wait until Monday there is no diagnostic fee and we’ll send a service tech over first thing to look at the problem. We still captured the call and provided the service during normal business hours. If the client cannot get anyone over the weekend, they will call you back Monday because they know you will not charge a diagnostic fee.

If you’re wondering if this is the right approach for you and your company, here’s what I ask you to do: Count how many calls you capture if you don’t charge a diagnostic fee and send a tech on site first versus how many you capture if you do charge a fee. For this to work you really have to manage your technicians. If you do not hold them accountable it can burn you. Try it and I know you’ll see the results. You’ll see that you capture more calls and trade more jobs. You miss 100% of the shots you never take. If a potential customer hangs up because you charge a diagnostic fee, you lost that shot.  Your clients need a service done. They want to give you money. Don’t lose a potential client by charging a diagnostic fee.

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