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For the
first time since the 1980s I'm sensing a lot of anxiety among
our industry brethren. Inventory levels, interest costs, weather,
politics and consolidations-along with finding and keeping
good people to work for us-are just a few of the worries that
are raising doubts in our minds. Such anxiety requires strong
leaders to make tough decisions.
In product
support, we have all the tools to weather the storm. We have
talented people, willing customers and excellent products.
There's still a large working machine population that is the
source of our sales. We still have a strong potential market
to work within. But the dynamics have changed quite a bit.
For many
of you, your business depends on product support. Yes, we
certainly need to keep putting more equipment out into the
field, because it makes for more aftermarket business. But
it is viscerally clear that without strong growth in parts
and service sales-and at effective profit levels-many dealerships
could be in jeopardy.
New and
used equipment "net incomes," after-interest expense, have
reached rock bottom. For many of you, the descent happened
too quickly to deal with. To adjust, we must turn more of
our attention and investments toward the parts and service
side of the business.
Knowing
what to do is the first step toward survival. After we learn
the "what," we can address the "how."
We must
determine the right levels of customer service and profitability.
To do this, we must closely monitor gross profit levels, inventory
levels, labor efficiency, inventory service levels and turnovers.
We must make sure we have the right number of skilled people
on board. And we have to be experts at expense management.
Customer
retention-along with acquiring new customers-is vital. Maintaining
the status quo no longer is enough to pull us through. We
must develop a strong customer base and hold on to all of
the profitable customers we serve. At the same time, we need
to recapture the business that we've lost to competitors.
We must
identify better sources of information. We receive loads of
data, but does it contain the information we need? Do we learn
machine population, customer profiles, customer buying habits,
parts and service potential, asset management and purchasing
habits? This is the effective management information we need
to move forward effectively.
What we
need is a facelift. Our image in parts and service needs a
makeover, internally and externally. How easy is it to attract
young workers? Do we recognize that mechanics are every bit
as important as equipment sales people to our continued success?
Many of you don't and, as a result, our technical staffs are
underappreciated and unrecognized.
" I check
on sales every time I call the dealership, but perhaps I should
be checking on service, too." I heard this from an executive
during a recent gathering of dealership managers.
Some dealers
have come to realize they need to invest in parts and service.
While we don't have the luxury of throwing money around, why
can't we have extra mechanics on the payroll? Don't we realize
that this is money well spent, money that will produce many
happy returns? Product support personnel should be measured
the same as equipment inventory. The purpose of both is to
make money for the dealership. Why is it that we can have
an interest expense that is substantial in supporting equipment
inventory, yet we don't have a tolerance for "too many" mechanics?
There's
never been a better time to get serious about parts and service.
We know what needs to be done. We must act on that knowledge.
"Can
you do the job?" "Will you do the job?" I always ask people
with whom I work these two key questions. They pertain to
everything we do. These two questions also have to be presented
to the dealership as a whole. "Can you do the parts and service
job?" "Will you do it?"
Give your
answers some serious thought. It could determine whether or
not your dealership survives.
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