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We are hearing all kinds of comments regarding the slowdown in the American economy. The GDP will grow at a rate of some 2% to 4%. That is significantly slower than the past three years. Imagine complaining about an economy growing at that rate. Caterpillar and Ingersoll Rand have issued warnings regarding 2007 and many other smaller manufacturers are saying similar things. So why have we been waiting for this year?

I have been waiting for this year because we will not have the excuses that we have been using for the past few years. We are too busy keeping up with the business at hand to do that. I can’t find any people to hire and that is why I don’t have enough staff. Pretty weak excuses they were but they will not work at all as the market slows down. Now is the time to recapture market from our competitors and regain control of our dealerships from the employees.

So what do I want us to do in 2007? It is pretty straightforward:

1. Sell more maintenance agreements.
2. Decrease non productive inventory.
3. Train more parts and service people in customer service and sales skills
4. Find out why your customers are defecting from you and what you need to do to stop it.
5. Stratify your customer base and cover more of your customers.
6. Become a parts and service selling organization.
7. Upgrade computer systems to take advantage of technology.
8. Help everyone become better at what they do.

This is by no means a complete list but this list will keep you pretty busy throughout the year.

Maintenance Agreements

Sell maintenance agreements when you sell machines – new and used. There is really no excuse as to why we do not include a maintenance agreement when we sell the machine. Is there? And don’t forget that the labor rate for maintenance should be significantly lower than the labor rate for repairs.

Decrease Non-Productive Inventory

You should not have more than 10% of your productive inventory in parts for which you have a quantity on hand and the part has not met your stocking criteria. Exclude protective parts and the non productive inventory must not exceed 10% of the productive inventory.

Training

A number of years ago the AED Foundation suggested that everyone in the dealership be given 40 hours of training through the year. I believe that most people in parts and service need to have 80 hours and in some dealership in the service department more than 80 hours.

Customer Defection

There are still way too many dealerships that do not measure customer defection. Do you know yours? And if you know the rate of defection what are you doing to slow it down if not stop it? If we have a 20% annual defection rate in parts and service that means that in five years we are losing nearly 60% of our existing customer base. Not a pretty picture.

Customer Stratification

Treating each customer as they want and need to be treated is a serious goal for everyone in the customer service business. To have one size fitting one customer is a noble goal but one that is in truth not achievable. To set out to cover your market better means that you need to group customers, stratify them, in a way that groups customers with similar wants and needs together and then putting forward a plan to satisfy them.

Parts and Service as a Selling Organization

To have everyone in parts and service assigned customer for whom they have contact and service responsibility would be a wonderful thing. Having these people able to sell parts and services to those customers would be fantastic. How many of your parts and service can actually sell? How many of them have been to a sales training class? Isn’t it time we got started on this?

Computer Systems & Technology

If the systems in use do not support the goals and strategies of the company then the employees become cynical and take on “a ho hum” type of attitude. Is this true at your dealership? The first question a customer service employee in parts or service has to ask the customer if they don’t recognize the voice is “who are you?” Then we provide the employee with the name and address and a credit position for the customer. This is not very good systems to provide to the employees that are responsible for keeping our customers satisfied. Is it?

Mentoring

You didn’t get to where you are by yourself, someone helped you. Are you helping others develop the way you were helped? I think this is a serious issue for us. We don’t trust the younger generation; they don’t work like we did; they don’t care. Common points made by people in my generation – and completely off the mark. The younger generation of workers coming into our industry is so much better than we were at their age that it is scary. Help them by sharing your experience. And try and do it in a manner that suggests that you care about their success. After all, your pension is dependent on them isn’t it?

So there you have it, a short list. Not telling you what to do but suggesting that if you look after these eight points 2007 will be a very good year indeed. The time is now...if not now when?