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

Industry News

View Material Handling Wholesaler's profile on LinkedIn

Customer satisfaction and market share

Customer service (satisfaction) is an attitude displayed by every employee within the dealership. It is not a separate department within the dealership. It is the whole dealership. World-class customer service requires that everyone provides superior customer service to the dealership’s expanding base of customers. There is no room in any organization for those who believe that “the customer is the enemy!” Customers and prospective customers are the absolute life blood of any equipment dealership. There is little chance for survival in today’s market place for an equipment dealer without a culture of customer satisfaction. This culture must be expressed by everyone within the dealership, from the receptionist to the president. No one is exempt from the development of a strong and loyal cadre of customers. This includes everyone: technicians, truck drivers, administrative employees, counter people, sales personnel, managers, owners, everybody!

The term market share is the loosely worded formula which measures the performance of a particular dealer’s unit sales in that dealer’s given area of prime responsibility, versus the like units being sold by the dealer’s competition.   Herb Kelleher of Southwest Airlines is quoted as saying; “Market share has nothing to do with profitability. Market share says we just want to be big and we don’t care whether we make money doing it!” Kelleher’s second sentence in this quotation says it all. Big is not always better. Too many times for the dealer to achieve his manufacturers’ required market share, the sale will be made at a reduced price. We strongly recommend to any dealer who is interested in understanding more about market share to read Richard Minter’s book entitled: The Myth of Market Share: Why Market Share is the Fool’s Gold of Business.

Over the years, market share has become the sword that manufacturers hold over dealers’ heads if dealers want to continue selling the manufacturers product. We contend that this does not have to be. If manufacturers would be patient and work harder with their dealers to develop a culture of customer satisfaction, then market share would follow and the dealer would see the profit opportunities necessary for them to grow and survive. Industry surveys have indicated that in the equipment market, customers and potential customers are willing to pay a bit more for a product if the customer can be assured that he will be treated as a customer and that the customer will see a continuation of this culture after the sale has been consummated. We have studied and read customer surveys performed by the equipment industries for well over 40 years. Despite all the seminars, books and discussions on customer service, indifference continues to lead the list of reasons why customers continue to leave one supplier for another. Indifference can be basically defined as an attitude of not caring.

So where do we begin? Superior customer service develops strong customer satisfaction. Customer satisfaction is how the customer views their relationship with the equipment dealer, who by the way is the manufacturer’s customer. It is what makes the customer want to come back time and time again for the dealer’s superior service. Customer satisfaction is a genuine feeling that the dealer cares after the sale has been made. Customer satisfaction is a caring attitude expressed by the dealership and all the dealership’s personal toward the customer. Customer retention is earned through customer satisfaction and builds customer loyalty toward the dealership. Listen-up all you manufacturers: Customer loyalty builds market share!

It has been estimated that equipment dealers spend six times the amount of money to capture a new customer versus what they spend in keeping that same customer loyal to the dealership. Is the equipment dealer’s emphasis misplaced? Customer retention means financial success for the equipment dealer. Losing a customer carries a cost five times the annual value of that customer’s yearly account to the dealership. We have always maintained that how you satisfy the customer’s needs after the sale determines customer retention.

I will use the words of an equipment dealer I believe is a true world-class dealer. He states that the dealership’s major reason for success in customer retention and loyalty is: “Hire people with a customer focused attitude and then help them to continue the development of this attitude through encouragement, praise and training.” He points out that most dealers hire people that can do the nuts and bolts side of the position very well, but some dealers never ask a potential hire what does world class service look like to them? The dealer goes on to say that you can train people on what a culture of customer service means, but to be the best it must be part of the prospective hire’s character.

Believe it or not, I once met a service manager who absolutely loved his job, and the only thing he disliked about it was he constantly had to deal with unhappy customers. Talk about a “square peg in a round hole.” In most cases, in any dealership absolutely no one has more employee and customer contact over the phone or face-to-face than a service manager. If a potential hire for service management has “poor people skills” don’t hire him no matter how great his technical skills are.

How many times in the last five to ten years have we written that the department with the greatest opportunity for increased sales and the greatest opportunity for increased profitability is the service department? At the same time we are writing or discussing this with dealers we are also pointing out that service generally provides the dealership with the lowest contribution to total sales. When a dealer is hiring or replacing a service manager the greatest concern should be finding an individual with people skills who understands how to provide customer service to the dealership’s customers, while at the same time is able to develop throughout the department the customer service and customer satisfaction culture with his/her employees.

Is there a correlation to all this? Do you, the dealer principal and your sales personnel, show an attitude of indifference to your service department? Is the indifference picked up by the customer and yes, by all the employees in your shop? Could it be this indifference that causes customers to search elsewhere when they are having repair work done on their equipment?

Many times in discussions with equipment sales personnel we ask why they don’t discuss the dealership’s ability to provide quality service to the customer. Understand that the customer’s number one concern when buying a piece of equipment is his concern about unscheduled down-time! Customers want to know that your dealership is going to be there for them after the sale. Surveys consistently express the fact that customers want to know that their equipment is going to be fixed right, the first time, on time and at a competitive price! Unfortunately, too many times the sales person replies to our question by saying figuratively, “I’m not sure I want to tell a customer we can do that because I am not sure our shop can perform at that level!” With this reply, remember what was said on the Apollo 13 flight, “Houston, we’ve got a problem!”

As we said at the beginning . . . . . customer satisfaction, customer loyalty and customer retention, all lead to the equipment dealership’s financial strength and to those so loved words manufacturers like to throw at dealers - increased market share. All are interrelated to that single phrase - customer service! Those equipment dealers who have achieved world class service status recognize that customer service is not a department. It is everyone from top to bottom within the dealership working together to create that culture that defines true customer satisfaction.

Special Offer to Readers: An After Market Services recent publication is Enhancing the Customer’s Buying Experience. This document shows you how to create a customer-for-life culture within your dealership, how to bring customers back time and time again to buy from your dealership and provides basic but profitable ways to create market share. Along with this document we will email you, free of charge, a second document entitled Customer Satisfaction is Customer Loyalty, is Customer Retention, is Dealer Financial Strength and Higher Market Share. Simply e-mail your request for these two publications, stating your name, your dealership and your dealership’s location, as well as your product line, and the document will be sent via email to you along with an invoice in the amount of $19.99, which you will pay after the material has 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. E-mail to contact John.