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Material Handling Wholesaler Cover
December 2017
Enjoy the December cover story as Dave Baiocchi helps you transition from supplier to strategic partner

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Downtime is costly!

Association and manufacturers’ surveys consistently point out that customers purchasing equipment are concerned primarily with this question: Is the dealership concerned with taking care of my needs after the sale? Will the dealer be there for me if I should experience unscheduled downtime? Will the dealer be there for me when I need service at my most critical time?  Farm equipment owners are concerned with whether or not their equipment will be operational when they need it for planting or harvesting. Corporate operation people are concerned about tomorrow and whether their fleet of lift trucks will be ready to move loads from one spot to another in their distribution centers, factories or on their loading docks. Construction foremen are concerned with whether or not their crawlers will start when they have to move tons of material from one location to another, or dig a trench ten feet deep for a thousand feet through hard rock. Will the floor sweeper take care of sweeping the shopping mall on opening day? Will the greens mower be ready to mow the course’s greens to the exact length for tomorrow’s tournament, a tournament scheduled to be seen by millions on TV? Will homeowners be able to cut their acre of grass as well as the landscaper who has one hundred yards to cut a week? This concern goes on and on with customers buying product from thousands of equipment dealers in every industry! Are the dealers as anxious to service their customers after the sale as they are to sell their customers at the time of the sale? While customers may not lose sleep over their concern about unscheduled downtime, it is a concern that too few equipment dealers address thoroughly before, during or after the sale! In the equipment industry service is not a commodity! World-class equipment dealers will perform and provide quality service at a level unheard of or recognized by average or mediocre equipment dealers. Top equipment dealers absolutely excel in the level of service provided to their customers. This world-class service provides the dealer: 1) increased profitability on product sold and, 2) a return by the customer to purchase more and more equipment from a world-class dealership. Providing world-class services is a win-win situation for every equipment dealer. It is that focused opportunity we have, so many times, spoken about in past articles.  We have mentioned on numerous occasions the dealer who, in the early years of his business serviced his customers out of his garage or in his back yard! He was the type of equipment dealer who knew from the start the quality of service his customers wanted; not free of charge, but at a price commensurate with the quality of service he consistently provided. He was a world class dealer! This dealer, through his quest to provide customers with world-class service after the sale, was also able to produce exceptional market share for his product, market share at a profit to the dealership, to his more than 300 employees and to himself. Years after he started his business he positioned himself to sell his company for a price he most certainly could not have imagined when he first turned his garage behind his home into a “world-class full service dealership”. He proved to the industry that by providing a one-stop-shopping culture to customers, with terrific quality service to all customers, it is possible to achieve a high market share, while at the same time providing a high level of profit. We have found after fifty plus years of working with equipment dealers that too many equipment dealers have a “single focus.” That focus is to achieve market share with the lines of equipment they select to market. Years ago, many dealers viewed their service facilities and their service departments as little more than a necessary evil. They viewed this portion of their business as necessary to make equipment ready for sale and/or to perform warranty. They neglected to recognize the customers’ concern for avoiding unscheduled downtime. They neglected to fully recognize that product support and particularly the dealers’ service department was what brought the customer back time and time again to purchase more and more of the dealer’s equipment. Too many times they failed to operate their shops in a professional manner; they failed to operate it as a true profit center. The days of dealer entitlement are gone! For the equipment dealer it is imperative to understand the difference between intention and accomplishment. When you sell a commodity, and today most equipment is looked upon as a commodity, you have to out perform your competition. This is because all of your competitors make equipment that does the same thing as the product you sell. Intending to change won’t put more sales and more profit into the dealership. It will not create customer loyalty; it will not develop repeat business or customer retention. It is by adopting and accomplishing a unique customer focused service culture that your dealership will earn new and repeat business every time! Culmination of being a “world class, full service, one stop” equipment dealer is enhancing the customer’s buying experience and this develops the dealership’s self-feeding-profit spiral.  The self-feeding-profit spiral will spiral upwards like this: 1) the equipment sales person evaluates the customer’s application and provides a piece of equipment that meets and exceeds the customer’s needs and requirements. 2) The parts and service department, along with the dealership’s customer service representatives (CSRs) continues the process by evaluating and fulfilling the customer’s expectation and by providing the aftermarket products and services offered by the dealership. 3) Fulfilling the customer’s aftermarket needs generates additional equipment sales with improved profitability. 4) Additional new equipment sales generate more aftermarket opportunity and profitability. This upward spiral also feeds the dealership’s absorption rate and provides an improved cash flow for the dealership during business downturns. This is the dealer’s self-feeding-profit spiral. The better the dealer’s aftermarket program, the more equipment sales are made. The more equipment sold, the larger the opportunity for aftermarket sales. This spiral puts increased (profitable) sales into the dealership’s parts and service department, as well as the new equipment sales department.  Because the equipment dealer will be selling the value-added service of the dealership, more of the dealership’s line of product will be sold. As a rule, because of a value-added reputation for the dealership, more of the dealership’s line of product will be sold and as a general rule at a slightly higher margin. This increased margin is shown in the Penton Publishing survey that states that 87.1% of equipment purchasing customers will pay slightly more for the product if assured a high quality of service following the sale. By increasing the sale of product, the dealership’s parts and service departments will have the opportunity to sell more services at higher levels of profitability. The equipment dealer gains through a much higher level of his return on assets.  The self-feeding-profit spiral can spiral in two directions and the dealer principal and the managers and personnel responsible for change will decide the direction of the spiral for your dealership. The two directions are: 1) Upward and highly profitable as we have described or, 2) Downward and unprofitable as we all wish to avoid. It is your dealership’s choice as to which direction you desire to go. You need to decide whether or not you will be merely a supplier or a marketer! The difference between the two words is a simple matter of your dealership and your personnel becoming proactive rather than reactive. The dealership that decides to focus on value-added services will be proactive and will be a marketer and focused upon becoming a world class dealer operation. Special Offer to Readers: After Market Services has published a 63-page document on how to sell your dealership’s service to customers who have purchased their equipment from you, but are using a competitor, an independent or providing their own service through their own shop and with their own “hired hands.” This manual retails for: $49.95. There are two additional manuals entitled: The Sales Call and Sales Psychology, both retailing for $15.95. All three of these manuals are written for the equipment dealers’ customer support sales representative. Simply e-mail your request for these three manuals, stating your name, your dealership and your dealership’s location, as well as your product line and your e-mail address, and the manuals will be sent to you along with an invoice in the amount of $19.99, which you will pay after the materials have been received. If, after receiving the materials, you are not satisfied, simply e-mail us telling us of your dissatisfaction and withhold any payment whatsoever … simple enough? Our email address is:  John R. Walker is president of After Market Services Consulting Co. Inc. You may contact him by e-mailing

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