Written on: November 1, 2012 by Phillip J. Baratz
That phrase, “Garbage in–Garbage out,” more commonly written as “GIGO”, always gets a laugh from first year computer students. Usually it refers to programming mistakes that yield answers that “can’t be right.” In actuality, the computers didn’t make a mistake, but the programmer did.
In our business world, however, the programmers are not the ones creating the “garbage.” That honor goes to the billing, service and customer care departments of heating oil dealers. As one of our divisions, Angus Performance Advisors (APA), prepares to roll out its new web-based product, it has spent hundreds of hours tweaking and testing not only the programming, but also the “beta test” data from an assortment of dealers. This testing has revealed a number of GIGO moments that all should lead towards better reporting—but only after the correct information is put into the system.
One dealer was having the BOS (Back Office System) report to us that they have about 10,000 active customers. It is a pretty impressive number of accounts for an operation that we understood to be much smaller than that. Actually, the owner reported that he had fewer than 4,000 customers! After some basic testing, we found that the company had indeed, as most companies do, added customers with regularity. We also found out that this company—per their BOS—had absolutely ZERO customers who left them. No one sold his house, no one converted to natural gas, no one left for a cheaper offer, and no one got upset over a customer service problem! How nice for that company, if that were the case; but, alas, the company really only has about 3,500 customers. The rest are long gone—but no one told their system. That is, until now.
The same missing data can make diagnosing problems difficult in areas other than customer count. If you don’t enter the reason for a service call—as opposed to “customer called for service,”—or reasons for customers who do leave (move-out, price, convert to nat gas, etc.), how can you attempt to fix the problem that is leading to losses and excessive service calls?
Although this column generally focuses more on the supply and hedging parts of an oil business, there is only so much that tweaking of supply and trades can do—short of just speculating—but we keep seeing more and more opportunities for dealers to shore up their bottom lines on the side of efficiencies. The efficiencies could be in larger average deliveries, or in fewer service calls that result in overtime pay. In addition, if you KNEW why certain servicemen had “call-backs” on their work, while others did not, that might give you something to look into.
Back-office accounting systems, sold and in use today, most often contain significant and useful functionality, development of which has been fueled by the demands of their clients and the market in which they serve. Unfortunately, most dealers employ only the features which provide the obvious and immediate results needed for their daily operations, such as posting transactions, invoicing, degree day and service accounting, periodic processes and general reporting.
Any penalty for a specific field’s lack-of-use, or inaccuracy of values put into it, are generally non-existent unless this complacency is reflected in the dealer’s inability to bill or service their customers. The fast and competitive nature of our environment today demands that we analyze our data in ways we never had to before, but perhaps always should have. The system(s) today must, more than ever, reflect the most up-to-date performance of all departments within your company, as well as the most accurate profile of your customers, to which all activity is posted. Coupled with good reporting tools, this discipline will provide critical, timely and accurate insight into the ongoing health of your company and to the benchmarks you have set and must respect in order to survive.
The times are tough now, and seem to keep getting tougher (yeah, it’s mostly from the Springsteen song, “Cover Me”). The elbow room that made this an enjoyable business has all but faded away. However disheartening that may be, perhaps it is time to find out how good you and your company can and should be! Over the next decade, it seems that the “have’s” and the “have not’s” will be separating themselves from one another. Since it is clear that if the only differentiator is price, we all lose, there must be focused attention on maximizing margins while still remaining competitive. In addition, there is a big need to create and maintain barriers of exit for your customers.
If you can do this better than your competitors—and the tools are out there—the fact that the world is rough, and just getting rougher (yeah, paraphrasing the same song), won’t be a bother to you, but an opportunity. Start to clean up your data, start to get the reporting that you need. Mostly, start to use that data and reporting to maximize the bottom line profits of the business that most of you have poured your hearts and souls into.