By Chris Holmes, President (ret.) Nortrax, a John Deere Company
Over my career, I've had the privilege of working with and learning from many great entrepreneurs and leaders. As I write this article, we are in the midst of trying to navigate our way through the COVID-19 virus and the impact it will have on family, friends and business. My hope is that many of the principles of leadership that I have learned will not only help guide any business through trying times, but also enable them to regroup, rebuild and succeed. I just can't think of a better time to write an article on leadership.
I have learned that leadership comes in many forms and there is really no one size fits all. What appears to be the common denominator between average and highly successful leaders is the ability to engage and motivate individuals and teams. If I learned anything from successful leaders is that most businesses are in the "people business". Peel back what you manufacture, sell or service and there is a customer (or employee) at the other end who usually has a choice whether to do business with you and whether it is at a premium or discounted level.
I'm an admirer of Richard Branson and all the success he has earned by simply placing immense focus on his own people. His belief that "If you look after your staff, they'll look after your customers" carries a powerful message for all leaders as we look to drive engagement, loyalty and profitability both with our teams and our customer base. It's really about trust – trust in your vision, trust in your actions and ultimately, do you as a leader care about me as an employee.
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...
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.
Focusing on Winning and Losing Distract from Focusing on Great Performance
By Tim J. Murphy
My daughter had the honor of serving on the "Old Masters" host committee while she attended Purdue University. This was an annual program where Purdue brought back to campus alumni who had achieved great success in their chosen field. As parents of committee members, my wife and I were invited to the event and were able to mix and mingle with the former alumni. I recall meeting the President of McDonald's USA (who later became McDonald's CEO), the Business Manager for the "Red Hot Chili Peppers," (supposedly a big deal, but Fleetwood Mac or Steely Dan and I would have been impressed), and the then Chairman and CEO of UPS, by the name of Michael Eskew.
Over a beer with Eskew, I asked him the very simple question. What advise could a guy like him, the CEO of an organization that at the time had over 400,000 employees worldwide, give to a guy like me, a manager in charge of a small little region in the Midwest with 150 employees? He simply said, "Treat triumph and tragedy the same, they are both imposters." In his explanation he further explained that too many times people get focused on the end result. While keeping focus on the goals was important, simply executing and giving your best every day was more important. Markets change, and while they always won't be great, they always won't be bleak. But great managers must manage in both environments and unless you are managing to or beyond your potential daily, long term success will be tough. I thought his advice was pretty good and I placed in my personal "Leadership Lessons" for future filing.
By Walter McDonald
Your Used Equipment Business Can Be Profitable
If you have been losing money or just breaking even when you sell your used equipment now is the time to audit your operations. Selling trade-ins or former rentals can be a big profit challenge.
If you have more than fifteen rental units that have either a poor rental utilization rate or total monthly cost (depreciation + maintenance + interest) that exceeds monthly revenue, then you should pay close attention to the "Seven Deadly Sins." You are in the Used Equipment business whether you want to be or not. And, used equipment can be a very profitable opportunity for your dealership.
For many years we have been working with dealers across North America on issues related to running a profitable used equipment business. The following guidelines are the principles and best practices of some of the most successful used equipment dealers we've met in the U.S. and Canada.
By Tim J. Murphy
In our business, the customer is on the other end of the counter. When getting employees aligned on customer service, its important to get them to think of themselves on the other side of the counter as well. It's easy to do by simply reminding them of their own personal situation where they didn't feel valued as a customer. I know every one of you has made the statement at one time in your life, "I will never do business with "XYZ "again. I have…and I won't! After all, we all have choices as to where we spend our money. So do our customers. So, the biggest mistake a company can make is not making the customer feel valued for making the choice to spend their dollars with them.
How many times have you ever had to take a problem as a consumer to "customer service?" In those experiences, how times did your problem get resolved to your satisfaction…without a hassle? Its amazing how many great companies there are who invest millions in product quality, logistics, market research and all other facets of a business, but invest very little in training their employees…or empowering their employees to resolve customer problems quickly and painlessly.
By Walter J. McDonald
As you continue to layout your plans for this New Year, here seven Magnificent Management Actions you can take to leap ahead of competition.
Off-Shelf Parts Fill Rate is the single most important performance metric in your machinery dealership. If you have a strong off-shelf parts fill rate, your labor productivity is higher, your customers are happier and your management team has greatly reduced heartburn. If you have low Off-Shelf Parts Fill Rate, all kinds of bad things happen: constant fire drills, expensive emergency parts orders, frustrated technicians, disappointed customers, plus, a huge negative impact on your Aftermarket Product Support reputation, greater strife between service-parts-sales in your dealership and a disappointing bottom line. The number one reason for losing customers is not meeting and not managing expectations for parts deliveries.
How do you check your current Fill Rate performance? If your information system does not track Fill Rate now, review the set of service workorders from last month just for your primary line units. These are the machines that should be receiving the highest level of Product Support and Parts Fill Rate.
To calculate Parts Fill Rate, total up the number of parts line items on all of these Repair Orders last month for your primary line units. Then, count the parts line items that were 100% filled immediately out of stock at this location. (Partial fill is no fill.)
Divide number of line items with 100% fill by total parts line items in this batch. This percent is your Off-Shelf Parts Fill Rate. Your target performance rate is Over 95% for Primary Line Units.*
Parts Fill Rate is the life blood of your sales and service machinery business. A competent Parts Manager, utilizing the right information technology, can consistently deliver over 95% Parts Fill Rate for your primary line units, while controlling obsolete and excess stock and maintaining acceptable inventory turns.
The real question is why do you have a low part fill rate, especially for your primary line?
This is the Case Study Report on how Heavy Machines, Inc. doubled their sales with guidance on growth from Winsby, Inc.
Diversification has been a key strategy for Heavy Machines, Inc. (heavymachinesinc.com) since it was founded in 1971 as a specialty equipment dealer in the forest products industry. Over the years, they added and dropped product lines, opened and closed branch locations from Maine to Nevada, and expanded their customer base into mining, construction, waste/landfill, scrap/recycling, and inland ports. Today, Heavy Machines, Inc. operates nine branches in five states, in the Southeast and Northeast. And, the dealership represents Link-Belt Excavators, Hitachi, and Liebherr, as well as other specialized brands.
In 2015, even though their business was doing well, they decided to take a look at a new program Link-Belt was sponsoring through Winsby, Inc., to help gain insight into their business. "Because we had diversified, we were running in many different directions. We wanted to make sure we weren't losing control over our customers," says Steve Northcross, Senior Vice President of Sales and Marketing at Heavy Machines, Inc.
Here's what works
By Debbie Frakes
Winsby has been growing dealerships for over ten years. They have identified a group of services that are bulletproof for growth. And they make it easy. Winsby can be your marketing department. All you need to do is review, suggest changes, and edit what they develop. Here are their essential services for growth.
Key Metrics Reports
The key metrics reports are based on Artificial Intelligence to determine customers at risk of being lost and what actions you need to take to grow your dealership. The reports make sure you are growing, and all your employees know why.
Build Your List
People change jobs. Companies go out of business. New companies are founded. You need to monitor your market area constantly in your target SIC codes. Winsby identifies the codes that are most prevalent in your previous transactions, suggests others for your review, and pulls companies in your market area. Then, they look up emails and call to confirm and add more emails for decision makers. Without this effort, 20% of your list becomes inaccurate each year.
By Debbie Frakes, Guest Contributor
It's hard to believe that some Equipment Dealers are burning as much as 30% or more of customer calls by not answering the phone or letting them go to voice mail. If the dealership is busy and doesn't answer the phone, and is dumping calls into voice mail, less than 4% will leave voice mail message. If your potential customer has another vendor number to call, he will more likely call that next vendor. This is a big, big problem. In one dealer case, a 30% drop rate represented $2.4 million in lost annual parts sales for this dealer's parts department. This was soon recovered when an AI monitoring software system was launched.
Also, if customers did not have a VIN (Vehicle Identification Number), 70% of these customer calls were rejected by parts counter personnel! Instead of helping the customer with their order, the customer was sent away by the parts counter personnel. This rejection represented $1mm parts sales per month not sold. They were turning away more than half of their parts business. Unbelievable but common.
Equipment Dealers need to track if employees answer the phone. Calls come in during two peak periods. Dealers are often not staffed to answer calls during these peak times, dropping them into voicemail. Most dealers are lucky to answer 80% of their calls. They swear they answer 100%. But when checked, this is not true.*
At the same time the customer is on the phone, the parts people should be reinforcing "do you need service?" They should be presenting service, rentals and parts available at every opportunity. This is how and where you improve your Absorption Rate.
A highly useful and effective AI application can determine:
Dealers need to monitor phones to determine if employees handled calls properly at all points of contact, especially if there is a performance problem. An embedded AI system electronically communicates how well you get that information into hands of someone who can handle it.
* Equipment Dealer Call Answering Statistics courtesy of Debbie Frakes, Managing Director at Winsby, Inc. For additional information on these and other powerful imbedded Artificial Intelligence dealer management tools, contact Debbie at (312) 870-5656, winsbyinc.com, email@example.com
Artificial Intelligence (AI) is much, much more that robots. AI, sometimes referred to as Cognitive Computing, is a collection of capabilities that allow computing machines to sense, comprehend, perform, adapt, and learn. For equipment dealers, AI means computer systems that perform and enhance business activities by simulating or reproducing human intelligence with the purpose of increasing efficiency, effectiveness, and engagement. Advances in computing and data gathering have propelled AI from hype to reality.
This AI reality is already being experienced in practice. Businesses recognize its growing importance and are evaluating, experimenting with, and adopting AI. Surveys reveal that executives are expecting and realizing the following main benefits from AI investments: increased sales and profits, stronger customer experiences and responsiveness, and improved decision-making by employees.
Surveys also reveal the top obstacles to taking full advantage of AI are lack of a clear AI strategy and persistent commitment, the absence of people with appropriate skills, and issues with the AI software and its vendor. Going forward, dealers that do not aggressively use AI technologies will be replaced by those who do! But recognize that it takes significant time, effort, and money to digitally transform.
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:
Founded in 2003, Winsby has been growing businesses across the world for nearly two decades. They specialize in working with dealers and their manufacturers and use proven processes that are constantly monitored to ensure consistent growth and results. Winsby is unique because they will take the reins and become your complete marketing department.
From building and optimizing your website, gathering emails and identifying needs through calls, crafting and distributing emails that boost sales, analyzing invoices, and calling your customers to find out how recent transactions went, Winsby handles all of the critical marketing functions. All their clients need to do is review and suggest changes on what they develop or correct any internal issues they uncover, while Winsby does all the heavy lifting for marketing tasks.
Who Winsby Serves
Winsby handles the marketing for a wide range of businesses throughout the United States and on multiple continents. Clients include equipment distributors, various types of technology and industrial manufacturers, contractors, auto repair and home service providers, software companies, and the list goes on. The common thread that runs through them all is Winsby's focus on determining what the customers' habits and needs are so that everything is presented to maximize revenue increases.
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.
The Key to Dealer Growth and Professional Sales Compensation
by Tim J. Murphy
I attended a sales / product training meeting several years ago where customers using competitive equipment were part of a panel taking questions from our sales team. One question posed was, "how often should a sales rep call on you?" The response was classic and one that hit home. "You can call on me every day, as long as you bring me value when you do." That answer to me cut right to the chase, as well as set up the following question..., "how many calls do our sales team make without bringing any value?" I didn't know what the answer was, but knew that no matter what the answer, any call that did not bring value was a wasted call. This one exchange set up a valuable coaching opportunity for years to come with the challenge that I made to every sales professional to ask this one simple question PRIOR to making a call. What value am I going to bring to the call today?
When one gauges their own personal buying experiences, the adage "people buy from people they like," rings true. Why would it be any different from customers who buy from us…or who don't? People buy from people for different reasons, but rarely is a purchase made from someone a buyer doesn't like. I'm not necessarily talking about personalities here. Buyers buy from people who either deliver value or who successfully articulate value to be received. Value awareness clearly enhances the chances for a sale. Bring no value…don't expect a sale.
Prior to getting to my main point, let me set this up further with an example of what I'm talking about. While reviewing a branch operation's sales challenges several years ago, we conducted a meeting with the local Territory Managers assessing the market and competitive landscape.
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.
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…
by Bob Levin, Chairman/Founder Material Handling Supply, Inc.
The Lift Truck Industry is offering great opportunities to people who possess technical abilities. Not surprisingly, technicians are the backbone of this industry. We see great demand for specialists competent to deal with technical challenges. And, there is always a demand for new talent entering the field.
However, during the past 35 years, the focus has been for young people to go to college and receive a college degree. Some young people should go to college to receive an education to help them achieve their career objectives. Yet, there are many other young people who are clever and interested in technical careers. They have skills in the electrical field, making metal products, repairing machinery and so on.
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.
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.
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.
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.