Mike’s Electrical

Michael is a small electrician who lives in Nashville. He’s been in business since the early 2000’s. He services Smyrna, Goodlettsville, Murfreesboro, Woodbury, and West Nashville. A typical visit last between half an hour and 90 minutes. He has a large roster of customers most of whom call him once or twice a year. However, he does have two large apartment buildings behind Vanderbilt University that he services on a pretty regular basis. These two large customers account for about 50% of his gross revenue.

To keep his costs down has always operated from his home in East Nashville. He was able to buy an older home and fix it up and recently he has had many requests to sell his home. Each year his costs increase but is revenue fluctuates. He has noticed that many of his fixed costs such as his annual audit fee and the cost of maintaining his vehicle and become larger and larger portions of his revenue. He also notices that the amount he spends on gas increases much more than the cost of gas would seem to justify.

When he first started Michael would always spend time with his customers before the visit finding out about their day-to-day activities and family news. That is seldom possible now. Many of his customers who were in the prime of their life are now retired and living on a fixed income.

Michael goes out of his way to choose customers are totally satisfied. Some of his customers will often ask him to come back multiple times to get a light fixture just right. Michael seldom charges for more than one visit per installation.

Given all the information above and using what you’ve learned about activity-based management what suggestions do you have to make Michael’s business better. You need to include a brief but clear explanation of the theory behind customer identification and some potential customer types is encountering. Please do not exceed one page double-spaced for your answer.

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