It has been a strange and pleasantly surprising two weeks. I am not writing about the debt crisis or even the stock market decline. I am talking about the fact I have been receiving numerous phone calls and email telling me just how much they appreciate reading and receiving my articles concerning service marketing. There was one dealer who happened to be in town on business that called and invited me to dinner as a thank you for my articles. This has happened before, but not to this volume and it is certainly appreciated.
I tried to think what caused this small flood of calls and emails. Possibly some had heard me say at one time or another that after 200 articles I would retire (this article is 197), but that is not the case, because not that many people have heard me say that. The fact of the matter is I am having too much fun to retire. The clue to the cause came about when I was told in so many ways that the articles of recent have truly opened their eyes as to the overall importance of service to the typical equipment dealership.
One dealer told me I was the “Mother Lode” of information. Now I’m not old enough to remember the California gold rush, but I do recall reading about what they call the “Mother Lode.” It had to do with the source of gold and where gold came from. I went to Webster for a definition which stated that it was: “An abundant or rich source.” What a great compliment! It would make any consultant feel like they were on a cloud and the comment was most certainly appreciated.
I feel lucky, after all these years I have hit a topic that equipment dealers recognize and have truly begun to focus upon as an opportunity to genuinely grow their businesses, not only with sales but with great profitability. I am blessed to know that I have played a small part in their success. Having expressed my thanks to both my readers and my listeners I want to write a bit more to those who have not yet truly focused on this opportunity and present a few more basic ideas for success.
Equipment dealers market product for their suppliers. Whether the manufacturers like it or not, the fact of the matter is that dealers are the manufacturers’ customers (more about that in future articles). The market today is overcrowded with excellent product, but these products as a general rule have become commodities. The customer has so many choices, with product look-alikes all performing basically the same function that the major concern of the dealer’s customers becomes, “Where can I get the best price?” Consequently, equipment margins become stagnant, and there are always some who are willing to “cut a better deal” to provide their manufacturer with increased market share.
Successful equipment dealers recognize this scenario is not going to change anytime soon, despite all those fancy “business models” out there for them to look at and try. The “mother-lode” has been there since equipment dealers first opened their doors, but its value lay undiscovered except by a few. The marketing of the equipment dealer’s service department has been ignored for too many years. This is very evident if you study Industry Cost of Doing Business Studies.
Most CODBS indicate that the typical equipment dealer’s Service Contribution to Total Sales is between 5 percent and 10 percent. The exception is the Lift Truck industry which has service contributions in the low 20 percent. There are some logical reasons for this which we have discussed at length in the past.
The equipment dealer should review his financial statement and ask this question, “If the margins in my Service Department are the highest of any department in the dealership why am I tolerating the departments having the lowest contribution to total sales?”