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August 2017
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Let’s work at becoming proactive

While working with equipment dealers in all types of industries, we often witness what we refer to as a reactive style of selling. This is when a customer comes to the counter or telephones the dealership and we react to what the customer requests, offering nothing more or nothing less. Many dealers quite simply have become suppliers rather than marketers of goods and services. We see this reactive mode of selling happening at both the parts counter and over the telephone when the customer calls to purchase a particular item from the dealership. Rest assured that the reactive mode of selling also exists within the dealership’s service department. We have a tendency to miss the opportunity to “up-sell” our customers when they are indeed in a buying mood.

When a customer walks into your parts department, he or she at that point in time is in a buying frame of mind. It is your dealership’s opportunity to sell the customer what they came for, what they didn’t particularly come for and, to have their purchase installed in your shop.

Impulse sales can be generated through merchandising displays, promotions, etc. It is a “created buying atmosphere” which entices customers to buy more than they originally intended to purchase. Related/suggestive selling is the art of increasing the size of the customer’s purchases through suggestion. It is like the person behind the counter at McDonald’s who suggests “fries or pies” with your order.

Listen to how customers and prospective customers are handled over the telephone in your parts department. How many times have you heard your parts people give a customer a price over the telephone? When they hang up, ask them what the call was about and listen to how many times you are told, “It was merely a price check!” That’s reactive selling. The customer called to buy and the call was “chalked up” as merely a price check!

We know one very successful parts manager who schools his counter personnel to imagine a red light going on when they step up to handle a customer at the counter. The light signifies the counter person is now on stage and should begin following the six steps for making a sale:

1) Meet & greet the customer. Make the customer feel welcome.

2) Analyze the customer’s needs and help the customer select the correct part.

3) Always build value into your parts and accessories. Overcome any price objections.

4) Ask for the order and obtain a commitment from the customer.

5) Add to the sale. Sell the customer everything he/she needs (related selling).

6) Follow through with complete customer satisfaction and thank the customer for his/her business.

These same six basic steps also work very effectively over the telephone.

An interesting sideline occurred recently while listening to a talk show host. He was discussing how the registers at today’s check out counters display short sentences for the counter person to “mouth” to the customer, such as: Say “Good Morning!” “Did you find what you wanted?” “Is there anything else you need?” and “Be sure to tell the customer Thank You!” Ten to twenty years ago we would have automatically followed this procedure because we were all brought up (raised) to follow these steps when dealing with people in a business situation or personal situation.

Dealer principals, general managers and department managers - we should not assume that our personnel learned these simple courtesies while growing up. If you want to increase your counter and phone sales, do a little training with and for your personnel.

Spend fifteen minutes every morning discussing the importance of handling customers over the counter and on the telephone. The same scenario should be taking place in the service department and on field service calls. Everyone in the dealership when interacting with customers and prospective customers should be clearly indicating to the customer: We want your Service Business!

Encourage your people to get into the habit of following the six steps toward making the sale. Discuss related/suggestive selling. Pick a couple of items customers may ask for and then discuss those related items that also might be sold. Remember, related items do not always mean adjacent items. A failure of a part may cause a problem in a totally unrelated area of the equipment. Get your personnel in the habit of asking for the order and increasing the size of the order through related suggestive selling techniques.

Can related or suggestive selling be put on an incentive basis within the typical equipment dealership? Could the process be goal orientated? Yes it can, if you remember that goals must be: specific, measurable, time planned, challenging and achievable.

What if, you knew how many counter tickets for parts customers were written during a period of one year? What if, you knew what the average counter ticket was worth in parts sales per year? Most equipment dealer’s computers can print this information out in a matter of minutes. With this information you’ve got all you need to put a highly motivational parts program into effect.

Assume last year your dealership wrote 6,355 counter tickets and the average sales per counter ticket was $235.95. This amounts to $1,499,462.25 in total parts sales for the dealership. In this example it is only counter ticket sales to customers and does not include internal sales. 

Your parts department could then set into motion a pay for performance program based upon some specific sales increases per counter ticket. As an example:

$10.00 ticket increase = $63,550 increase or at 30% GP = $19,065
$15.00 ticket increase = $95,325 increase or at 30% GP = $28,597
$20.00 ticket increase = $127,100 increase or at 30% GP = $38,130
$25.00 ticket increase = $158,875 increase or at 30% GP = $47,662
$30.00 ticket increase = $190,650 increase or at 30% GP = $57,195

Since there is little increase in cost for the operation of this incentive program, then the gross profit achieved would be very close to a net profit increase of the same amount. A percentage of the overall gross profit could be paid out as an incentive to the parts counter personnel. We would recommend that it be paid on a quarterly basis.

Yet another interesting scenario in becoming more proactive is that in using the above exercise, you have determined the number of counter tickets written a year. This number also provides a measurable opportunity to paying for performance. What if, you increased the number of counter tickets written yearly? If you did, it would be fair to assume that your parts sales would also increase.

Any pay plans set up for the above scenario would be based on the team effort. If not there would always be a problem determining who got the sale. Some customers do call in for price checks. They may get one person answering that question and another person taking the order later in the day.

Statistics show that 80% of all parts sales begin with a phone call. The majority of phone calls are to the parts department (reactive). What if, you increased the number of outgoing calls from your parts department (proactive)? Would this increase the dealership’s parts sales? We believe it would and we are currently test marketing this program with twelve equipment dealerships.

We have set up some specific goals within the test markets parts departments to make a minimum of seven outgoing calls a week asking for the customers’ parts business. So far the results have all been extremely positive.

Opportunity exists in so many areas of the equipment dealer’s aftermarket. Being only reactive is costing sales. If you are not proactive, if you are not searching for ways to attract your customers’ parts business you should consider the fact that your customers really don’t need you after the sale of the equipment. They have a choice as to where they can purchase their parts.

John R. Walker is president of Aftermarket Services Consulting Co. Inc. E-mail editorial@mhwmag.com to contact John.

 
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