More than 17 years ago a good friend and client, Dave Kahler, retired Executive Vice President of the Ohio/Michigan Equipment Dealers Association, suggested that I write a monthly article for the affiliated associations and Trade Associations that dealt with farm, construction, industrial, heavy duty trucks, golf and turf, material handling and the lift truck industries.
At the time I believed it would be a restricting chore, placing me on a schedule to produce this monthly article; but Dave was persistent and I decided to give it a try. Today while writing my 200th article, I thank Dave for his persistence. My computer tells me that 200 articles are roughly 350,000 words that my readers have read concerning the numerous topics about their aftermarket or product support, which has kept their customers coming back for more and more product.
I appreciate the hundreds of notes and emails thanking and critiquing me for those 350,000 words. I thank my wife Carol for her diligence in proofing (with patience) my material. I thank all of my editors who kept me on schedule and never let me miss a deadline and offered me suggestions for up-coming articles. Thanks, and I have decided and agreed to continue for as long as I continue to enjoy and have fun doing what I am doing; so this is not my “swan-song”!
For this month’s article I decided to re-write and update one of my first ten articles. This article was important over 17 years ago and it is still important today: Knowing Your Product Support Market Opportunity.
Information provides the framework from which a dealer develops his strategy to increase aftermarket volume, profits and market share. Inadequate information means an inadequate framework and an unworkable strategy!
Every year, both manufactures and associations calculate and determine product and/or product market share, which indicates to their dealers what their particular market share was for their specific line of products. Surprisingly, if you ask parts or service managers for their market share, they are hard pressed to come up with anything but a “wild guess.” In a dealership’s overall market plan and/or budget, if a dollar figure for parts and service sales is established for the coming year, it is basically done by taking last year’s sales figures and adding a percentage increase factor; not considering the typical manufacturer gives you at least five percent per year in parts price increases.
Parts and service sales are tied directly to the amount of equipment sold by the dealer to the end user. Every piece of equipment sold by the dealership should represent a parts and service sales opportunity for the dealership. The “all-makes” parts programs that are initiated by many manufacturers, adds yet an additional dimension to the overall formula.
Not knowing your market for parts and service sales is an area of great vulnerability with most manufacturers and dealers. Without first knowing your market potential, it is impossible to plan expenditures for inventories, service facilities, training, hiring, advertising and promotions.
An accurate Dealer Aftermarket Sales Analysis or Customer Profile is vital to the success of your marketing program. As marketing professionals you must visualize both equipment owners and types of equipment that they own. If this information is not available to you through your manufacturer or your suppliers, it can be pulled from either your sales and/or rental departments.
Establishing an average value in parts and service sales for a piece of equipment is what you should be searching for. You would certainly recognize that a piece of equipment used in a foundry three shifts a day, or in a rocky abrasive soil, is going to consume more parts and service than the same piece of equipment used one hour a day in a relatively “clean operation.” There are averages to be computed, and these averages will show you where you are today in market penetration and where you can go with your market planning.