After being in the equipment business for over 30 years it’s clear to me that customers have a myriad of needs and a pallet full of expectations. Never has there been a time where well run dealerships were more needed than they are today. The width and breadth of the various makes and models of equipment never ceases to amaze me. In the agricultural sectors of the country, specialty equipment continues to mechanize crop production and harvesting in ways that we never expected. Innovation in our industry is robust, and the brightest minds continue to engineer equipment that cuts waste, improves yields and increases efficiency.
A comprehensive offering for an agricultural equipment dealer may include multiple OEM vendors for a wide range of products including tractors, implements, seed planters, sprayers, dusters, spreaders, swathers, hay balers, choppers, gleaners, tree shakers and harvesters for every crop from tomatoes to walnuts.
The material handling business is no different. Forklifts are the tip of the iceberg.
In addition to the growth of equipment offerings, market forces have constrained larger dealers to represent multiple brands of equipment under the same roof. Mergers and acquisitions have made their mark on dealership operations, and have created both synergies and challenges that continue to alter the distribution landscape. With some notable exceptions it’s much more likely to see dealers today carrying alternative brands than it was 20 years ago.
As the list of equipment and brands continues to grow, the challenges of aftermarket support grow with it. Vendor management becomes cumbersome. Every OEM has their own set of expectations, not to mention their differing policies, pricing schedules, stock order terms, warranty considerations and technician certification requirements. This makes inventory control, dead stock management and technical training “red flag issues” that can be much more detrimental to the bottom line than in past years.
The fact that customers (in many cases) can no longer service and repair their own equipment only increases the pressure on dealers to assimilate and overcome these internal challenges in order to adequately serve the customer. Complex fuel systems, CAN bus electronics and computer controlled ECM and VCM technology have now all but eliminated the option of self-service unless the customer makes significant investments in training and technology.
In this new and changing environment, we need to find ways to balance customer expectations against the costs of inventory, training and tools. One of the quickest ways to balance this scale is to manage your customer’s expectations.
There was a day not long ago where being all things to all people was the goal of every dealer. It was also the expectation of every customer. We lauded the employee that said YES to every request. My business partner Ray tells a story about when he first started in this business. We had a parts counterman back in the 70’s named Jerry who one day greeted a customer at the counter. The old man threw a greasy broken part on the counter and ask Jerry if he had “one of those.” Jerry looked the part over and said “No, but I can get it for you!” The customer asked “how long will it take to find one?” Jerry replied “two weeks!” The old man left, calling over his shoulder “see you in two weeks Jerry!”
During this time Ray was putting away a stock order back in the warehouse. He climbed down off his ladder and started inspecting that old greasy part. He asked Jerry, “What in the heck is this thing?” Jerry winked and laughed, “I haven’t got a stinking clue what that is…..but we have two weeks to figure it out!”
I love that story. It perfectly captures the attitude of customer service that we want to see in every employee that interfaces with a customer. The problem however is that we aren’t operating in the environment of the 1970’s. Jerry probably invested the better part of a week running down a $50 part. He could afford to do this because at the time, the dealership had one line of equipment. Most parts were purchased from one vendor. The complexity of the equipment and the investment that was needed to support that equipment allowed Jerry’s efforts to be appropriate for that environment, and at that time.
Don’t get me wrong! I love the attitude of “yes we can,” but I question the profitable sustainability of that practice. Today we operate in a different world. The meaning of customer service has evolved. There is a greater need for us to provide counsel to our customers rather than to simply say “yes we can.” Today, I believe it is our responsibility to have a chat with that old farmer about upgrading his equipment instead of taking a week to track down a 30-year-old part.
The best way to start managing expectations is for you to analyze your business practices, and decide if your operations are profitably sustainable. This speaks to both culture and vision in your dealership. I’ll share another story that illustrates this point.
Our dealership started in 1936 as an Allis Chalmers tractor dealer. We got into the forklift business in 1960 when Allis Chalmers purchased the Buda Forklift Company, and initiated production of the AC forklift. Our long history caring for agricultural customers included salvaging a lot of hard to find one-of-a-kind parts that a customer may come in looking for. Over the years we collected quite an assortment of used gears, bearings, housings, weldments and shafts that we kept in a room aptly named the all-crop room.
When I took over the aftermarket side of our business many years ago, I observed our activity in regard to the all-crop room. My observation told me that less than 5 % of our over the counter customer base required a trip into this room, and that those trips were very costly. A customer would throw a gear or a bearing up on the counter and our men would dutifully go to the all-crop room and invest from 20 minutes to an hour trying to match up the needed part. We were successful about 50% of the time. But, out of all the times the part actually fit, half the time the used part would fail. So, let’s do the math on this:
· 50% of the time we disappointed a customer because we could not match up his part and had to sell him a new more expensive part.
· 25% of the time we disappointed a customer because the $10 used part we sold him failed, and he had to disassemble his machine again to install a new more expensive part.
· 25% of the time we succeeded in satisfying a customer with a used part.
Was the all-crop room really helping us? Was it really helping customers? From my perspective all it was doing was building unrealistic and seldom realized expectations in the minds of our customers.
I don’t think it takes a degree in mathematics, or customer relations to determine that the all-crop room was a bad investment. My efforts to rid ourselves of that room however were met with less than enthusiastic support. The all-crop room had been there since the 1950’s. It had become a cultural icon inside the dealership. Some of the seasoned parts countermen in our employee base did everything they could to retain some vestige of that room. Somehow that room was attached to an idea that being in the used parts business was necessary, and profitable. It was neither! I put my foot down. I decided that from that point forward, we would only be in the NEW parts business. Business was changing, and we had a duty to manage the expectations of our customers. Our customers needed to buy new parts, or buy another machine, but not throw good money after a bad investment.
The lift truck business has its own all-crop room parallels. How many times have we dumped $3000 in repairs into a $500 forklift truck? The same thing happens every time. Another failure in a worn out unit, and the customer wants to trade it in and get his $3000 back. These are our opportunities to counsel our customers, and manage their expectations before the money is spent, and the customer is dissatisfied.
It is a futile exercise to try to continue to be all things to all people. You can change this culture inside your dealership if you are committed to defining your business offerings, and limiting them, especially in the aftermarket, to sustainable investments in both time and resources.
Dave Baiocchi is the president of Resonant Dealer Services LLC. He has spent 33 years in the equipment business as a sales manager, aftermarket director and dealer principal. Dave now consults with dealerships nationwide to establish and enhance best practices, especially in the area of aftermarket development and performance. E-mail firstname.lastname@example.org to contact Dave.