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December 2017
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Times are tough!

I was born “smack-dab” in the middle of “The Big-One” and have survived by my count 12 business down turns. I have always been an eternal optimist. Right now times are tough. They might get tougher, but they will improve. I am also extremely “bullish” on the equipment dealer’s aftermarket or product support. I believe it is the equipment dealer’s major opportunity to survive economic and market downturns now and in the future.

It is important to understand that manufacturers are going to do what is in their own best interests and dealers must do what is in the best financial interest to their dealership. Dealers should remember that you cannot deposit “market share” in the bank. Banks and lending institutions require cash, or the profits of your business for deposit. You cannot pour market share back into the company or leave it to your heirs. It can be a positive factor at the time of sale of your dealership.

I am sure that those of you who read our articles, attend our seminars, or work with us as clients, well understand our thoughts on “market share”. We do not believe that market share should be the “end all” standard by which the success or failure of any equipment dealer should be measured. There are too many variables to the standard of measurement set up by any Original Equipment Manufacturer (OEM) or industry associations to use market share as the major criteria of success.

Recently, Dr. Jim Weber, of Weber Consulting, who is well-known in the farming industry, wrote an editorial for Farm Equipment Magazine entitled: Dealer’s Sales Philosophy. I believe that Weber nailed it when he wrote: “Dealers interested in being in business for the long run must adopt a selling philosophy that is good for them.” “But to rely solely on market share is, and will be, an egregious error. Managing your business so that the volume business will be the difference between success and failure is not managing your business at all. Receiving plaques for being the number one selling dealer is akin to receiving a death penalty.” This reflects my sentiments exactly!

It is unfortunate, but in my 50+ years working with equipment dealers, I have grown accustomed to the fact that dealers are being rated, graded, pressured, and, in some instances, terminated due to lack of market share. This is a shame because market share is always somewhat “fuzzy” as measured within industries and between various suppliers. Should not there be some standard by which market share measurement is determined and should not this standard be widely known and agreed upon within the specific industry?”

Too many equipment dealers view the solution to achieving their manufacturer’s required market share as a need to reduce equipment prices to the point where their survival is questionable. It is at this point where they believe their survival can only be through the sale of their product support. This is also quite possible. Unfortunately, too many dealers believe that the sale of product support is basically automatic with the sale of new equipment.

For years the typical manufacturer (and 35 years ago I was personally  part of this problem while working for numerous manufacturers) told their dealers something akin to this: Work at getting as much market share as you can as this alone will accelerate your profitable product support sales. In a sense this is true, because without the unit sale you have no product support sales.

We were telling dealers their product support sales were “guaranteed” Put up a parts counter and watch the customers beat a path to your door. You might even want to “bump” your price a bit, you’ve got a captive market and as far as service are concerned, the customers have to come back to you, don’t they?

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