Developing a focus to your business!
Selling a piece of equipment should not be the only game in town for dealers and manufacturers. Over the years equipment dealers have experienced the erosion of margins on their complete goods sales. Too many equipment dealers fail to generate the amount of sales necessary for financial success. Manufacturers continue to pressure their dealers for increased market share, and in too many cases market share becomes the determining factor of dealer survival. That comes at a price to the dealer. These facts lead intelligent business people to question the financial reasons for distributing specific lines of products.
An objective comparison of equipment dealers suggests that most industries have similar lines of products, a lift truck is a lift truck, a tractor is a tractor, a back hoe is a back hoe, etc. But some competitive products that perform in the same manner may have more bells and whistles. Typical equipment dealers promote and sell their products in the same manner, provide about the same services, offer comparable or same prices and same delivery, etc. The result becomes a disturbing level of sameness, ending up with price being the major issue for the sale. The equipment industry then becomes like the airline industry as one airline lowers the price of a seat, everyone else follows suit and the only difference between one airline and another is the paint and the decals on the plane.
This perception of sameness will inevitably cause a long-term decline in customer loyalty. It is important to note that increasing customer loyalty through customer satisfaction will not only increase sales, but will provide increased dealer profitability as well. I know of a manufacturer whose product has been #1 in market share for years, yet their dealers still do not show any higher margins on their product then do those dealers who are selling the same equipment that has a far lower market share. I know of yet another manufacturer who has in their industry the ranking of #1 but whose dealers are showing continued increases in their margins. The second mentioned manufacture has dealers who have broken away from sameness . . . and are unique in how they service their customers.
We encourage dealers to focus upon these three words of – value added selling. If the equipment dealer is to increase sales and profitability, the equipment dealer must give the customer a unique and non-typical reason to buy. The dealer must break away from the pack and eliminate that dreadful market sameness that has existed for too many years.
Many successful equipment dealers have discovered that the best technique for value-added selling is thoroughly promoting the aftermarket services which their dealership has to offer. In so doing, they see both their sales and profitability increase dramatically.
This of course, should come as no surprise to anyone. For years manufacturers and associations and a handful of dealers have been conducting intensive market surveys asking the question, why do customers buy from one supplier versus another?
These market surveys have been going on for more than 40 years and the answers always come up the same. The number one customer concern about the dealer/manufacturer is parts availability. Number two, is the dealer/manufacturer service response time. A survey conducted years ago by a very large manufacturer selling through a dealership network, listed 22 customer concerns in descending order of priority. Two-thirds of the concerns centered on the dealer/manufacture’s ability to provide aftermarket services. The selling price of the equipment was actually eighth on the survey list.
The unfortunate situation is that after conducting these extensive and expensive surveys, manufacturers and dealers seem to pay little attention to the customers’ answers. How often does an equipment salesperson mention to the customer, “our dealership has more than one million in stocked parts available, with overnight delivery service from the manufacturer” or “our dealership has 15 factory-trained technicians with a combined total of 185 years of experience servicing the equipment you are about to purchase.
How many times do you hear the salesperson thoroughly review the manufacturers’ warranty with the customer? For that matter how many times does someone mention that the dealership wants the customers’ service business? Lack of doing this creates buyers’ remorse and a lack of customer loyalty to the dealership.
As pointed out in these few examples, of many, if the customer’s major concern is service after the sale, the dealer must emphasize the value-added factor of his ability to provide service after the sale. In other words the customer is not just buying a piece of equipment, the customer is buying the entire dealership’s services and the dealership should sell the entire dealership as the customer’s one stop shopping alternative.
Marketing your product support is absolutely no different than the marketing of complete goods. Everything a dealership does to market complete goods must be done to market the dealership’s product support, its’ aftermarket. The equipment dealer must become a marketer of product support rather than just a supplier.
The equipment dealer, as a general rule, already has an efficient, well run parts and service department in place. That expense is already covered, but those two departments require a steady flow of customers. Customers who buy your equipment but not your parts and/or your service are not contributing to the expense of these two departments and need to become prospects for additional sales and profits. So why not stress these important facts when making a sales presentation?
Over the years, we have met sales personnel (and dealers) who hesitate to mention the many strengths of the dealership’s product support. When asked why, many (still) will tell you, “this is negative selling and indicates there may be problems with the equipment after the sale.” Believe it or not many (dealers) believe that the sale of parts and service is guaranteed and the customer must come back to the dealership for parts and service . . . which today is unbelievable, but true! This is nothing but negative thinking on the part of dealers and sales personnel. Customers most certainly recognize that hard-used equipment is going to require parts and service and again, all surveys point out the customer’s major concern is and has been service after the sale. We strongly encourage training all dealership personnel to market the features, advantages and benefits of the dealership’s aftermarket performance. When this is done effectively, we have seen dealers improve their whole-goods margins by one, two and even four percentage points.
Involve your dealership’s parts and service managers in the closing of the sale. Create a teamwork effort. Bring the prospective customer in to see your parts department and your shop. Introduce your prospective customer to all your managers. Allow these managers the opportunity to explain the unique and important services they have to offer the customer after the sale. Have the managers thoroughly explain their parts and service programs that they offer.
If your dealership has a training manager or someone who handles operator training or safety training, introduce your prospective customer to that individual. Allow them to explain to the customer the training facilities available after the sale. This could well be an important feature to the customer. It helps eliminate buyer’s remorse and builds customer loyalty.
Introduce the prospective customer to your financial manager. Allow this person to explain the many financial programs your dealership has to offer. Involve the rental manager in the sale, as well. Customers are always interested in knowing that during peak times, your dealership has the capability of renting the customer additional units to suit their short-term need. Again, market your entire dealership! Help the customer to understand that you are not just interested in selling a piece of equipment. You are interested in taking care of all their needs and requirements after the sale. You want to be the customers’ one-stop shopping center for all of their requirements.
Will these techniques always work? No they will not, but most certainly not, if no one tries to make your dealership a world-class dealership within your industry by focusing on what we refer to in so many of our articles as your unknown opportunities. We do encourage dealers to truly focus on that large percentage of the market who are concerned about what your dealership has to offer, after the sale. Focus upon these opportunities, and watch your margins and sales increase. Focus upon getting your business on target . . . you are in the business you have chosen to satisfy the customers’ requirements and never doubt that one of your equipment customers’ un-spoken requirements is to have your dealership take care of his needs after the sale. All industry surveys suggest that customers are willing to pay the price for value-added services if they are satisfied that your dealers can provide those services.
Again this month we are offering our readers two manuals for the price of one. For $16.95 you will receive Laying the Groundwork for Value-Added Selling and When your Price is Right, Sell it! Simply email us at [email protected] and request our two manual special. We will email you the two manuals and invoice you and you will have the manuals immediately. Please when you order give us the name of your business, your address and the line of products your dealership handles . . .
John R. Walker is president of Aftermarket Services Consulting Co. Inc. E-mail [email protected] to contact John.
