Participation Rates and Market Share

By Walter J. McDonald

Participation Rate is the key to market share growth for a machinery dealer. However, there are two machinery distributor deal participation rates. And, the opportunity for one occurs much more frequently than the other. Each Participation Rate reflects purchase activity between an end user and the machinery dealership. The Primary Participation Rate is the customer’s purchase of service and parts.  The Secondary Participation Rate is the customer’s purchase of machinery.

Today we have clear evidence that the Dealer’s participation in the frequent sales of parts and service has a significant impact on whether or not the end user will consider that dealer as a potential vendor for their next machinery purchase.

Unless the end user is purchasing service or parts at least once every 6 weeks, this end user does not consider the dealer to be their preferred vendor.  And, the dealer may not be invited to participate in this end user’s next machine purchase.

Consequently, a critical driver of Market Share growth is the dealer’s consistent delivery of high-quality aftermarket support in at least 8 or 9 service and/or parts sales transactions per year. If 6 weeks pass without a parts or service purchase, the account should be flagged for contact. The dealer must determine why the cadence of purchase activity has stopped by this account.  Have they gone to a competitor? Are they angry with the dealer because of some performance issue?

The frequent purchase of aftermarket parts and service must be supported by 8 – 9 customer satisfaction calls every week on completed work orders.  This ensures that the customer is being taken care of in a highly satisfactory manner and that this end user will most likely take the initiative to contact the dealer when next in need of a new machine.

Of course, the ultimate impact on market share is machinery deal participation. This participation rate depends greatly on the dealer’s comprehensive approach to marketing, lead development, and professional selling skills:

  • Does the dealer capture “active interest” website visitors? We know that 95% of prospective buyers will attempt to investigate product information on a dealer’s website before moving ahead with the purchase process. Pop-ups with “Can I Help You” for website visitors are very effective.
  • Does the dealer send out email promotions of the full capabilities of the business: rentals, service, parts, new and used machinery at least monthly? These need to target specific managers in larger customer accounts.
  • Does the dealer sales rep conduct a disciplined A/B account contact strategy with call frequencies based on size of potential, level of competition, and number of contacts? The rep must bring value-added ideas on how to improve their operations.
  • Does the dealer sales rep follow rigorous diagnostic questioning and listening procedures or just show up and focus on pitching the customer, rather than understanding their business? Customers see thoughtful, probing questions as indicators of professional competence.

Even though the secondary participation rate is greatly dependent on the primary influence of exceptional parts and service performance by the dealer, the sales rep must execute highly competent roles of relationship development, diagnostic selling, and getting commitments. Sales reps must adjust their approach for wildly different customer types: engineering, finance, operations, or ownership.

So, how does all this market development effort impact machinery dealer market share? How does the impact of both Aftermarket Participation Rate and Machine Dealer Participation Rate affect Dealer Market Share? Here are the results of a study by Tim Murphy, former President of NORTRAX, a large, multi-location, highly successful Deere construction equipment dealership.

Machinery Deal Participation RateAggregate Dealer Market Share
70+%7-10 points higher than OEM company market share
50 – 70%Slightly below average dealership share
Under 50%10 – 15% points below OEM company market share

According to Tim, in all categories, their deal closure rates hovered very close to 50%, which reflects the dealer’s product line, the level of product support, and sales training. The clear message is if you have the skill sets and support to yield a closure rate of 50%, then the market share number will remain consistent the more deals you are in on.

The following is a schematic that illustrates the entire Participation Rate development process.

Typically forklift Account Categories are based on customer fleet size in units:

A 20+     B 11 – 19       C 6 – 10      D 2 – 5       E – 1

Typical construction equipment Account Categories:

A 10+     B 4 – 9           C 2 – 3         D 1       

Account Categories
A BC D (E)
Build and maintain an accurate email contact list for at least 95% of all accounts.
At least monthly email promotional mailers: Rentals, Parts, Service, Machinery
Monitor aftermarket purchase activity. Flag accounts for phone contactwhen 6 weeks pass and no aftermarket sales activity
Website captures “active interest” visitors
  • Identify the highest potential market segments and every machine owner in those segments.
  • Establish call frequency based on purchase potential, level of competition, and number of contacts.
  • CRM provides an account contact schedule for the next month for each sales territory.
Field service technician becomes dealer’s relationship manager. And, fortunately, the service technician has the highest level of credibility with customers than any other dealer employee.
  • Hold regular strategy sessions to find ways to add value.
  • Bring new ideas, and focus on process improvement.
  • Transact business. Grow in any department possible: service, parts, rentals, used machinery, new machinery.
  • Build Scheduled Maintenance business for regular contact and longer-term commitment. The customer will contact you first for any need.
  • Dealer Email Promotions, Operations Efficiency, and Performance Excellence help retain and grow these accounts.


Dealer Market Share gain or loss is the result of a combination of a dealer’s overall marketing prowess and strength of aftermarket operations.  If a dealer strategically recognizes the primary role of aftermarket support in deal awareness and participation rate, market share development efforts are significantly enhanced.

Walter is President of The McDonald Group, Inc., The Global Leader in Dealer Development, For more discussion on this topic, please contact Walter at