We never can say goodbye

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We never can say goodbye

Equipment Dealers & Service

From the new machine sale to the scrap heap. That is the life of a machine, and it defines the responsibility of an equipment dealer. The only precondition involved is that the machine has to stay within the dealer’s territory.

The way that market coverage has been defined hasn’t changed for some dealers, who cling to the “old tried and true methods.” They start with the salesman, and the customer, and market coverage. The equipment salesman has a territory, which may include specific customers or specific geographies (counties, for example.) The salesmen go about their business calling on customers in whatever manner they determine and keep a “black book” of their customers. This black book contains all of the pertinent information that the salesman requires: the customer’s name and address, personal attributes, hobbies, family, etc. The salesman will find out from the customer what machinery they own, the different brands, model sizes, and the machine applications. Then they will go to work trying to upgrade the equipment that the customer owns.

But, more modern dealers have adopted

technology and tools that have changed the way they function. Business software systems help them manage everything from customer relationships, to machine ownership, territories, sales, and more.

How technology and software business systems can help equipment dealers

find new opportunities.

By Ron Slee, R.J. Slee & Associates

It starts with market coverage

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White Paper Equipment Dealers & Service

Customer relationship

management

Territory management

For many dealers, managing market share starts with customer relationship management (CRM) software. CRM software takes the place of the salesman’s “little black book.” It’s used for every contact between the dealership and the customer—whether it is a call into the parts department or into the service department or into the rental department. Each equipment sales call that every salesman makes to every customer is logged, as well. In this manner, the dealership knows its actual market coverage.

CRM software allows dealers to manage their success more precisely. With CRM software, dealers can answer important questions, like: How often does every customer receive a contact from the dealership? How many equipment sales calls are required prior to making a machine sale? In this manner, dealers also determine the configuration of the sales territory. It is no longer merely a list of counties.

The dealership can determine how many machines they want to have in a sales territory, as well as how many different customers. They can make this determination based on the workload of the salesman: the number of calls that the salesman can make to each customer and/or for each machine. This is a very different business now. The dealership manages and controls its market coverage now, rather than letting a salesman control the market coverage.

Territory management has also evolved. Traditional sales management involved a face-to-face meeting during which the managers were able to determine the truth behind what the sales team was telling them. What deals were they working on? What was the probability of a sale in the coming week? They would use that information to make judgments about the business process. These are the deals we expect to close over the coming quarter, coming month, and coming week. In so doing, they had to keep track of their sales activity. The salesmen submitted call reports identifying which customers they saw and what they talked about during the call. These call reports also highlighted problems that the salesman saw or heard about from each customer. In this style of territory management, the salesmen and the sales manager had to remember a lot of details. Some people were very good at this, but most struggled to keep all the information straight.

The modern, technology-driven approach to territory management is very different. The manager knows the number of calls that took place last week. They know the details of each call with precision. They know what the salesman is expecting for coming time periods as a result of information pulled from the CRM system. They know who the largest competitors are from the monthly sales data that they receive. They know which salesman has the highest market share. They know which salesman is the most effective, from the calls to close ratios. They know which customer profiles fit each salesman. Similarly, they know which customer profiles do not fit with a particular salesman. This is a much more scientific, by the numbers, territory management approach. It is enabled by the use of technology. There is little left to chance.

To make it work, the software business system must report on call frequency and management measures of sales effectiveness: calls to close ratios, competitive deals lost and why, dealers closed without participation.

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For many people, sales performance is difficult to understand. The perception is that the salesman doesn’t really have to work all that hard. They get paid a lot of money. The reality is far from that. Salesmen have a very difficult task. They talk to lots of customers both face-to-face and on the telephone. Their day never really ends. The customer can contact them early in the morning, as well as in the early evening. They get lots of turn downs. They lose business. On top of all of this, they have very strong egos. They are performance driven and to them performance is measured by how much money they make. How did they do compare to the other salesman?

Managing a salesforce is almost an art form. The sales manager has to be able to deal with all of these diverse personalities and emotions, and keep the salesman motivated and on track. This is a very difficult task.

Technology doesn’t make it any easier to manage the personalities, but it does make managing the job function more precise. The performance of each individual salesman is clear. The dealership knows how many calls each salesman makes each month. They know which customer receives a call and the subject of each call. The salesman has an objective for each call and through the use of the CRM system, the company knows the results of the call as well.

Sales performance

The company can also get equipment sales

information for all brands, by county, within the sales area monthly—which allows for strong professional management. The dealership can determine which equipment sales were concluded without any contact from an equipment salesman. This is commonly called a “coverage” management measure. In other words, what is the percentage of the sales that took place within your sales territory, in which you were involved? Ideally, every equipment sales transaction that took place in the preceding month was one in which your dealership was engaged. Sales management views a case when there was an equipment sale and the sales team didn’t even know about it in a completely different manner. If you lose a machine sale on which you were involved that is a very different situation than if you didn’t even have an opportunity to be involved. With technology and the good information it provides, you can make a very objective evaluation of each and every salesman. This is a very

different world.

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White Paper Equipment Dealers & Service

Market share

The ultimate measure of performance by a salesman, and in fact of the dealership, is the percentage of business that they obtained. The OEM has an expectation of market share for each and every territory around the world. This market share information is used by each dealership as a means of continuing the relationship. If the dealer is not performing in their territory, not obtaining a high enough share of the equipment market, the OEM has a responsibility to intervene. The salesman who does not maintain a specific market share within their territory runs the risk of being replaced. In some rare instances, an OEM may replace a dealership, if it doesn’t achieve appropriate market

share performance.

Market share is measured by category of machine, the models, as well as the specific industry in which the machine is sold. Some of these industries include general construction, mining, forestry, road building, sewer work, and oil and gas. There are competitors, other OEMs, who could better engage in each and every one of these industries. There are multiple brands that are all competing for this business. This is a critical measure: the machine market share. The software business system for equipment sales, new and used, must be the ultimate arbiter of these measures.

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Once a piece of equipment is sold, it is the role of the product support representative to help customers maintain the availability and operational lifetime of the equipment, while at the same time maximizing the potential revenue from ongoing parts and service offerings.

Normally, when a machine is delivered, a dealership specialist comes along to review the machine with the customer. The specialist will cover some of the details of the machine’s operation, which may be different from the operation of the machine that used to be in the application. This specialist provides the customer with contact information for the dealership’s parts department or for the service department. They review the warranty provisions, what is included and, more importantly, what is not included. This personal contact helps enhance the buying experience. The operating department provides these

specialists with the information they need to support the equipment, communicate the warranty terms and conditions, provide strong parts availability, and responsive service repairs and maintenance. It is said that a salesman sells the first machine and product support sells everyone thereafter. A solid business software system can help operating department managers improve and automate this process.

Dealerships should be making a personal statement when they deliver a machine to the customer. This is a big event. Equipment today normally is extremely expensive compared to what it cost 10 years ago or 20 years ago. However, the productivity of that machine has been significantly enhanced. Through advances in hydraulic systems, the use of computers in componentry, engines and transmissions, and also

Support during the life of the machine

through the use of electronic control units connected to the dealership through telematics, there are a lot of tools that are available to the dealership today that previously didn’t exist. This allows a “mission control center” approach to machine operations in

the territory.

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White Paper Equipment Dealers & Service ₆

Today, the customer calls in and orders any parts that they need, or calls to the service department to obtain labor to correct a problem that they are experiencing with the machine. The customer drives the relationship. With the proper use of technology in telematics, the dealership can drive the relationship by helping the customer manage the machine. The dealer knows how many hours the machine is working. They know when the engine is overheating. They know when the engine oil filter is clogged. With this type of information, the dealership can intervene on behalf of the customer to help manage the machine. This is very similar to the medical community for people. With advancements in technology, people who have pacemakers will have that device communicate with their doctor’s office when something goes wrong. The doctor and the patient have a completely different relationship. The doctor is managing the health of the patient, even when the patient is not present.

The parts and service businesses within a dealership are in the same position today. Almost every brand of equipment sold today has telematics built-in. Through the GPS and electronic control units, the dealership knows where every machine is and how each individual system within the machine is performing. Managing the machine becomes a shared

responsibility. Of course, we still have the variable of the machine operator. But barring that, every other aspect of the machine performance can be monitored remotely by the dealership.

This allows the creation of a “mission control” center. In mission control, every machine in the territory can be managed and monitored. The objective is to reduce the owning and operating costs and protect the residual value. Today, the dealership has the tools to be able to do this in a very comprehensive manner. They are also in a position to minimize downtime— a primary concern for the customer.

Machine management

Dealers have the responsibility to manage machines within their territory from birth to death. Current technology and business software systems give dealers new opportunities to:

Equipment dealers know the operating costs per hour for each machine. They can do all of the work on a machine and supply all of the parts needed. With this knowledge, the dealer can work with the customer to replace their machines before the repair and maintenance costs become too high. This is all made possible when dealers implement the proper technologies and software business systems.

The time is now.

■ Design sales territories for maximum

market share.

■ _{Monitor sales results through}

management measures and dashboards.

■ _{Stay current on all sales activities}

of all brands.

■ Help manage all the machines

within their territory.

■ Create a system-driven customer profile.

■ _{Manage machine deliveries.}

■ _{Manage and minimize downtime.}

■ Perform all maintenance services.

■ Perform all the repairs through

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Ron Slee is President of R.J. Slee & Associates, a management consulting firm specializing in the operational

aspects of businesses in the Heavy Equipment, Material Handling and Data Processing Services Industries. The company, an AED sustaining member, is headquartered in Rancho Mirage, California. In nearly thirty years in the industry, R.J. Slee & Associates has worked with several hundred dealerships, distributors and manufacturers located in Canada, the United States, Europe, Asia Pacific, the Middle East, Russia and Latin America.

Between his work with dealerships representing most of the major manufacturers and his management

experience in dealerships, Ron has gained first-hand direct knowledge of the challenges and opportunities most dealerships confront in the Parts and Service operations. He has written numerous articles and monthly columns for Industry publications for over twenty years.