All Talk, Little Action
10 ways to make more money in 2003.
After several painful years of sluggish equipment sales, more and more equipment executives are saying how important it is to pay more attention to the parts and service departments.
But I’m not seeing much action.
So, in keeping with this time of year – Christmas and all that – I’m making some lists.
First, let’s consider the different venues in which the focus on improving the performance and profitability of dealership product support operations has taken place.
AED’s 2002 convention featured a panel of equipment dealership and manufacturing company executives talking about ways of improving the parts and service operations.
Unfortunately, some manufacturers have such difficulty getting their equipment serviced that customers are reaching out to non-AED dealerships for help.
Your suppliers also are telling you how important your service operation is at parts fairs, expos and other parts-related training selling and merchandising events.
Most significantly, they’re reinvigorating their training programs for parts and service department managers – not just product support sales reps.
End users said loud and clear what they want and need from their equipment suppliers at AED’s Executive Forum in September and in AED’s Product Support Opportunities Handbook, which contains the results of an extremely comprehensive customer-preference and -satisfaction survey that was conducted earlier this year.
Their concerns are always the same: work with us to do whatever it takes to eliminate downtime. Otherwise, we’ll take our equipment elsewhere or service it ourselves.
AED, the equipment dealer’s association, is making parts and service a priority with new educational programming at its upcoming convention in San Diego, Jan. 9-11, 2003.
For the first time ever, your sales, rental, parts and service managers can attend sessions developed for their specific informational needs. They’ll return home with ideas that will increase the profitability and effectiveness of their respective departments. And this will boost the dealership’s overall competitiveness.
AED’s annual Cost of Doing Business report reveals that parts and service as contributors to revenue declined over the past decade.
Different industries go through change at different rates and different times. But in the end, they all end up in the same place.
AED’s Executive Forum featured a financial analysis of dealerships in the automotive, material-handling, truck and lift truck industries. More than half of their total revenue comes from their parts and service operations. In some cases it was as high as 70%.
Equipment dealerships, on the other hand, are stuck at between 25% and 45%.
Equipment margins are not going to go back up. The number of units sold is not going to clear out your surplus inventory of new and used equipment in 2003. And interest rates will start going up.
It’s time to start walking the talk and not just flapping our gums.
Ron’s Christmas Wish List
Dealers who act on each of these 10 items will be much more profitable with much happier customers and employees by the end of 2003.
Here’s what I wish:
- That each dealership knows its customer retention rate and tracks it monthly.
- That each dealership creates a department within the service department solely for maintenance services.
- That each dealership employs one product support sales rep for each equipment rep.
- That each dealership’s parts inventory turns at least 5 times a year.
- That 80% of all labor performed at equipment dealerships is flat-rated.
- That all work orders close within 3 days.
- That all backorders are supplied within 48 hours.
- That dealerships’ technician population grows by 20% in 2003.
- That dealerships bring back service apprentice programs.
- That the presidents, owners and other principals of equipment dealerships – not just technicians – attend parts and service training.
About CED Magazine
Kim Phelan, Executive Editor, CED Magazine
Construction Equipment Distribution is published by Associated Equipment Distributors, a nonprofit trade association founded in 1919, whose membership is primarily comprised of the leading equipment dealerships and rental companies in the U.S. and Canada.
With CED, content is king. No fluff, no advertorials – CED just gives AED members what they want to read: business information, industry and association news, plus fresh, original and useful feature articles that they share with their management teams. Our subjects range from rental, product support, sales strategy and customer service to technology, construction markets and legislation – and much more.
December, 2002
CED Magazine