Why do so many dealer sales and operations managers appear to be stuck at the transaction level? They may be caught up in a whirlwind of activities, chasing back orders, struggling with rework, running after low-margin sales. They may be constantly reacting to emergencies, never getting ahead of the curve. Every day is a frustrating firefight.
Successful completion of transactions is important to the dealership. But in the midst of the fray, it is often extremely difficult to see how these problems can be solved more efficiently, at less cost and in a more customer-friendly manner.
Market Share is like mom's apple pie, the bigger your slice the better!
Market Share gains occur because we outsmart and outwit our competitors. But, to get a bigger slice, you must have the basics in place. Very surprising recent research shows that 95% of equipment sales are to current customers, buying Parts and Service NOW from their dealership.
This has huge implications for an equipment dealership’s entire sales and marketing strategy.
These amazing insights are derived from tracking 10 years of equipment dealer customer transactions in over 100 dealerships, managing 500,000 customer relationships, courtesy of Winsby, Inc.
Some dealer departments have been living in confined silos for five decades: sales are sales --- service is service --- parts are parts. These isolation silos are irrelevant and very harmful today. Dealers must manage a holistic model of the dealer sales and marketing effort if they are to succeed.
Equipment Dealer Principals tell me,
“Successfully setting up and managing a profitable remote start-up branch service and parts operation is one of the most difficult aspects of the equipment distribution business.”
What is the Overall Strategic Objective for a New Service and Parts Branch Operations? What does a highly successful start-up branch look like? What is the fundamental sales and marketing strategy necessary to quickly become profitable? What kinds of personnel are required to make it work? What type of headquarters support is essential?
Here is what is really working today in your equipment industry....
A recent industry survey of Dealer Principals ranked Cash Flow as their #1 issue of concern. Everyone knows that “cash is king.” But, how do you build the systems infrastructure to defend and optimize your cash flow?
The amount of money flowing through a dealership makes cash control critical. How do you avoid “cash leaks” that can cause “Death by 10,000 Cuts”?
There are three important steps to the process. Better Asset Management and Unfreezing Cash will accelerate cash flow. Optimizing Margins will build more robust and profitable cash flow.
Here are some practical suggestions in each area you might find helpful...
A sinister force in our industry today is cutting down many excellent employees in their prime. The hidden problem is Service Management and Parts Management BURNOUT! Many dealer executives tell me the expected time on the job for service or parts managers may be only 3½ to 4 years. Way too short for these very talented people!
I have privately surveyed over 700 service and parts managers in my Service and Parts Management Workshops. About 672 (96%) said burnout was a very significant problem for each of them! The result of my survey caused me to continue looking into this unsettling situation. What follows is a summary of the responses from service management and parts management discussion workshops I conducted during my formal Dealer Management Seminars to identify the causes and possible remedies for burnout.
Responses from these managers follow, including conclusions and recommendations for Dealer Principals, Senior Executives as well as for Service Managers and Parts Managers.
Today, most dealers understand a top performing technician can be the greatest revenue producer in the business. In addition, each dollar of labor sales generates about an additional dollar in parts sales. A skillful service technician can provide more than a three-fold revenue return on wages and benefits.
Yet, why do so many dealer executives and operations managers struggle with the issue of technician recruitment? We know there is a shortage of qualified service technicians across all equipment industries: heavy-duty truck, Ag equipment, construction equipment and forklift. Dealer owners now recognize that each additional service employee, if kept busy, can generate over $110,000.00 in annual labor billing plus at least an additional $80-$100,000.00 in parts on those Repair Orders.
So, let’s look at some of the ways how successful technician recruiting it is getting done today.
We’re in an economic battle for survival! The equipment and machinery dealer who gets and keeps the most profitable customers wins. But, how does he win? Fortunately, there is an elusive but highly-effective strategy available.
I have spent the last three decades personally interviewing dealer customers. I have seen how aftermarket product support can either bring prosperity or disaster. Clearly, aftermarket product support is the essential driving force behind Customer ACQUISITION as well as Customer RETENTION. Product support will determine the success or failure of many dealer organizations.
These “21 Gorilla Marketing Ideas” will surely help contribute to your Aftermarket success.
By Walter J. McDonald
Where are your equipment sales going to come from next year?
Today, there are exciting NEW tools that help you identify a very large percentage of these potential sales way before they happen. The machinery and equipment industries have changed significantly since we were given a price book, shown how the machine worked and were told, "go get some orders!" The name of the game today is
What is "
Deal Visibility is the percent of deals your sales rep "sees" or is "aware of" in the territory before they are closed.
A sales territory with high Deal Visibility has identified and zoomed in on at least 90% of the active deals in the territory. This must be done early enough in the purchase cycle to be able to influence the outcome. The later you get in on the deal, the lower the probability of success and the lower your margins, if you do win the deal.
The later you arrive on a deal, the lower the probability of success.
The earlier the sales rep can identify a potential sale and work the account, the greater the likelihood of success. The sales rep should probe, early on, and uncover fears and concerns of the key influencers. He/she must conduct needs analysis and problem diagnostics. The sales rep must understand the buyer's psychology well enough to know how the buyer wants to be sold. For example, is he an engineering type that requires lots of details? Or, is she a financial manager expecting operating cost reduction data?
Who are the major influencers in the account on the deal? Who is your coach in the company that can provide insight into their overall situation? If your sales rep arrives late in the buying cycle, there is no time for any of this. As a result, PRICE becomes the primary sales tool.
If your sales rep arrives late in the buying cycle,
price becomes primary sales tool!
The problem is that in the typical machine territory, there are many, many deals in various stages of development. Buyers first recognize need based on work that must be done, perhaps on unit replacement or new green grass operations. The later your sales rep arrives in this process from needs recognition to purchase decision, the weaker his selling position.
The real problem is the sales rep cannot drive his/her truck fast enough to get in on all the deals early enough. In the typical equipment territory, they may not "see" or become aware of 65-75% of the active equipment deals.
We know that strong Deal Visibility or "Awareness" is the result of three essential selling activities:
1. Capture "Active Interest" Leads from your Website.
Did you know that 90% of prospective buyers of machinery from your dealership will probably go to your website before their final selection? These prospective customers are demonstrating "active interest" by studying equipment specifications, exploring your dealership's capabilities, watching a machine demo and possibly getting better acquainted with the background of your management/ownership team. Identifying and capturing the identity of these web visitors with "active interest" in your products and services is the cutting edge in industrial equipment lead generating activities. This is best done through an imbedded AI* (Artificial Intelligence) application.
Your web visitors go to the pages relevant to their area of interest. If they click on "service," you know service is of concern to them. Same for a new or used machinery model. Today, more than 90-95% of purchasers (customers and prospects) will investigate a potential vendor's website before contacting a supplier. It is now possible and economical to monitor your web visitor activity. But you need the visitor's email address to do this. AI captures the email and helps identify the visitor contact on your website landing page.
Identifying contacts with "active interest in purchasing" creates sales leads for customers and prospects precisely at the time customers want to be contacted. This is very big and a radical new way of looking at sales development.
These are the HOT DEALS and your CRM system must help ensure proper follow-up.
By Debbie Frakes, Winsby, Inc., Guest Contributor
Surveys Are A Critical Driver of Customer Retention and Revenue Growth!
In an Equipment Dealership, there are opportunities for a variety of issues every day. It is impossible to track every problem that might occur, especially for a Dealer with multiple locations. By conducting customer satisfaction surveys every month, it is likely you will uncover any problems quickly. And, you may hear about all the things that are going well, too.
A recent study compares growth metrics for two groups of Equipment Dealers: those that are conducting customer satisfaction surveys each month and those that are not. The results are based on analyzing data over 10 years for over 500,000 Equipment Dealer customers at over 150 Equipment Dealerships, with over 15 million Dealer transactions.
Surveys Boost Your Bottom Line
Business metrics are significantly better for Dealers conducting customer satisfaction surveys than for Dealers that do not:
You have just spent time, effort and money recruiting and selecting what you hope will be a highly productive new member of your sales team. Your recruitment process has been developed over the years, including testing, screening, reference checking and multiple interviews. Now, this handsome, impressive, candidate is ready to start next Monday. You feel confident about your new hire. Yet, there is a very good chance he may flounder. More than 3 in 10 new sales hires in this industry fail. Only about 40% meet their first year performance expectations. And, new sales rep turnover costs about 150% of total compensation. The good news is, you can improve your odds for recruiting success. Here’s how.
Successful sales of complex, custom designed, high-value equipment demands an intelligent diagnostic methodology. Sales tools should also include testimonials, website enhancements and powerful capabilities presentations. Additionally, product support has proven to be a highly effective entry strategy that can yield high-level management access. Product support work also enables you to identify major influencers, decision makers, technical and financial evaluators involved in the large new equipment purchase process. By utilizing product support early in the sales cycle, your company can build in the prospective target account management team the perception of your interest and capability of supporting them after the sale.
Organizing and conduct a successful East African camera safari is not much different than organizing and managing a highly successful equipment or product support sales territory. You must demonstrate the skills essential to identifying the game, then, you must competently execute the skills necessary to capture the photo. Included in this paper is a personal selling skills inventory checklist on the skill sets essential for high performance machinery and aftermarket sales professionals.
Unless you are from another planet, you must know that many dealer principals are extremely unhappy with their current sales organizations. Does your boss have the perception that you are the weakest link between his dealership and profitable new business? Are you in danger of being seen as a dinosaur by your company owner? Are you in danger of being replaced by a more cost-effective sales process in your sales territory? Check yourself out…
Building competitive strength through more robust Product Support has proven to be most effective. This is a practical guide to both internal and external programs that work best to differentiate your business from competitors. Internally we first focus on performance improvements in critical customer support areas including the dimension of employee attitudes and competencies. Then, externally, we monitor customer attitudes and perceptions on how well we meet their expectations. These combined efforts build "world class" product support that serves as an effective barrier to competition.
Equipment dealers want and need to know how to improve service labor sales and profitability. Until now, nothing seems to work very well. Here are 16 dynamite field-proven tools you can implement today.
Equipment industry end-user customers are now demanding both product quality AND competent aftermarket parts and service support. By the end of the last decade, many equipment manufacturers have learned how to deliver quality products. In several industries we now see great parity between competitive product technologies and equipment performance. Consequently, the major differentiator today between equipment vendors in any given market becomes the responsiveness of the manufacturer-dealer partnership in the delivery of premiere aftermarket product support (service and parts). This guide helps you do just that.
Dealer Principals aspiring to be a top 10% performer in their class must look beyond the historical scoreboards of the P&L and Balance Sheet to optimize their business.
In order to optimize dealership performance and achieve financial prosperity, highly successful Dealers are exploiting the Four Dimensions of Dealer Development: Markets, Customers, Operations and Management.
What are some aggressive high-performance equipment dealers now working on to bolster revenues, strengthen customer relationships and improve operating cash? Hint: Service labor can contribute 8 to 10 times the gross profit per dollar sale than new machinery. Yet senior management often focuses the vast majority of their time and attention on lower margin machinery sales operations. The four horsemen of dealer profit improvement for strategic thinkers include renewed focus on service, rejuvenated objective focused machinery sales, creative parts marketing plus customized skill and knowledge training for each individual dealer employee.
A relatively robust economy may help the multiples of EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) for which some business owners sell their dealerships. And, a stronger economy will drive a perceived sense of urgency to sell. However economic cycles are just that. And, no matter when you get ready to transition your business on the spectrum, if you haven’t considered some of the things mentioned in this article your business will be undervalued. Detailed here are the mistakes to avoid and positive steps you should take to preserve and optimize the value of your business.
In this paper, we continue the discussion on how to improve OEM- dealer/distributor relations by examining ways to avoid problems with the OEM Sales and Service Agreement. Both the OEM and the dealer, as they conduct their business, need to be respectful and mindful of the intentions, mutual expectations and landscape defined by a business Agreement. The thoughts and recommendations presented in this article may help you and your OEM get to “yes “rather than battling out legalities in court.
By Walter J. McDonald, President, The McDonald Group, Inc.
Industrial Equipment and Machinery customers demand BOTH high product quality AND excellence in aftersales service and parts. By the end of the last decade, most equipment manufacturers learned how to deliver quality products. Consequently, the major differentiator today is Aftermarket Support. The difference between competitors in any given market becomes the responsiveness of the manufacturer-dealer partnership to deliver PREMIER aftersales service and parts support.
Quality of Product Support Determines Competitive Advantage
Quality aftermarket product support is a powerful competitive weapon. For both manufacturers and dealers, product support level can raise the barrier against all competitors. For the past 45 years The McDonald Group, Inc. has been working with manufacturers and their dealers to improve marketing and operations effectiveness. Our ongoing field research clearly identifies quality product support as the primary determinant of competitive advantage and market success. We found clear evidence the more a dealer can successfully deliver excellence in aftermarket product support, the higher the barrier against all competitors. Benefits of this strength cascade through an appreciative, loyal dealer customer base.
World Class Aftersales Product Support Performance Targets
World Class Aftersales Product Support Performance Targets are the benchmarks set by highprofit – high-market share market place leaders. Top tier machinery dealers at these performance levels have focused management attention on delivering superior aftermarket product support. They have invested in the information systems and employee training and development essential to reach these levels.
World-Class Machinery Dealer Product Support Performance Criteria *
Legend: > "greater than," < "less than," ± "plus or minus."
Superior Performance Level
Dealer Off-Shelf parts fill rate/availability to dealer Service Department
Dealer Off-Shelf parts fill rate/availability to end user customer
Accuracy of Dealer Repair Estimates
First Trip Field Service Right Part
First Trip Field Service Job Completion Rate
Rework/Come-Backs as % Total Service Billing
*For Comprehensive definitions see Achieving Excellence in Dealer/Distributor Performance
by Walter J. McDonald, Chapters 2 – 7.