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It's probably
safe to say that by now most dealers have some manner of customer
satisfaction program in place, whether as a result of surveys
initiated by the manufacturers or dealer-generated programs.
Customer
service and customer satisfaction programs have become all
the rage in business. But what have we really accomplished?
Have we provided better service to our customers? Do they
feel better about the relationship that they have with our
businesses? Do our employees, who interact with customers,
provide a positive, professional and informed experience when
they communicate with the customer?
Perhaps
the first question we should be asking is: Who is the customer?
It sounds
pretty simple, doesn't it? A customer is someone who buys
our products or services. Of course that is true-but who is
the customer really?
- Is
the customer large or small?
- Do
they buy a lot or a little?
- Do
they own equipment or rent?
- Do
they have their own mechanics or not?
Obviously
there are many types of customers. Yet how many different
customer service strategies do you have in place?
- Has
your customer base changed over the years?
- Do
you have fewer customers now than 10 years ago?
- Have
their requirements stayed the same?
- Have
your abilities to serve them changed?
- Will
the customer be the same in 10 years time?
Are all
of your customers created equal? Of course not. Do all of
our customers receive the same level of service? Should they?
Before
you answer that, think about the telephone sales process.
Is there any difference in staff (hours of service) qualifications
of the personnel? Unless you offer a differentiated service,
then you treat all of your customers the same. Isn't it the
same in the service department and rental department, also?
CUSTOMER
LOYALTY
Loyalty is one of the measures we use to determine the level
of satisfaction that our customer has with our company and
our supplier. Your most loyal customers are not necessarily
the ones who buy the most from you. They might be the ones
who buy only from you for all of their needs.
Many times
that dollar amount doesn't reach the threshold that you have
set for a "good" customer. As a result, some of these customers
might not even be assigned a sales rep for direct coverage.
This class of customers probably deserves more loyalty from
you, the suppliers, than they currently get.
Do you
know who these customers are on your list? Sure you do. But
most likely you do not pay sufficient attention to them. After
all, they are not part of your top 10%.
Should
that matter? Shouldn't it matter?
In today's
competitive market, all customers are important! Yet we still
cling to some old thinking relative to how we cover our marketplace.
The focus of the commentary is on parts and service, and I
will address that area specifically-please note, however,
that the same comments are applicable to equipment sales and
rental coverage.
What is
the number of customers that a product support sales rep can
cover? If this territory is not assigned arbitrarily, then
it has been determined typically by how many calls can be
made. As an aside, there are still a large number of dealers
who believe that the "shingle" sells-the company name and
product-and do not use product support sales people. Imagine
expecting that your dealership will satisfy customer needs
without even calling on them for parts and service!
No matter
how you cover your territory, the question remains, Who is
the customer?
The customer
is anyone who owns or uses a piece of equipment in the size
categories that you represent. It is also anyone who provides
services to this group of people.
Now how
are we supposed to deal with that group of people and companies?
Segmentation!
The traditional
segmentation techniques use:
- Industries.
The industries in which they earn their living-one method
to segment would be SIC codes.
- Fleet
size. Determinations are made by the size of the equipment
fleet that they operate, regardless of whether they own
or rent.
- Purchase
volumes. This rounds out the list.
All of
these should be combined in a geographic unit. The one that
I use is county.
INDUSTRIES
Within the AED membership there are three categories of markets:
heavy, light and general equipment. Within each of these categories
there are several different customer segments that can be
split into specific industry groups. Each of these industry
groups will have similar characteristics. For instance, in
the heavy equipment sector, mining and forestry although similar
in the nature of the businesses, are very different in the
approaches to equipment usage and requirements. The expectations
are different.
I would
not expect you to segment your customers by each and every
industry group. You do need, however, to segment the industries
in as specific a manner as possible that allows customers
to share a similar set of expectations. I do not think, for
example, that you have to have more than 10 major industry
groups. That is not to suggest that you do not need more.
But you do need a smaller number of each of the categories
to allow coherent strategies to be developed.
FLEET
SIZE
If we stay within the sector of heavy equipment, then there
will also be splits based on the number of machines owned
or owned and operated that are significant. Again, we are
trying to segment customers into groups of like expectations
in these categories. So these categories can vary from dealer
to dealer and industry to industry. The splits that I normally
use are the five categories that follow:
None...........No
machines of the brands that your dealership provides.
Small .........1-3 machines
that the customer owns or operates.
Medium ......4-9 machines
Large......... 10-24 machines
Fleet............25 machines
and more.
You need
to arrive at your specific size splits. The key here is that
the customers have similar requirements and expectations.
This can only be determined by visiting with the customers
and conducting interviews with the key people. These calls
must be made by management and not by the sales rep
alone.
Remember,
if you have 10 industry groups you will now have 50 customer
segments.
PURCHASE
VOLUMES
This is typically the easiest of the categories to obtain
because the information is already in the hands of the dealership.
You need to have categories for parts, service, sales and
rentals. The segments that I use cover the following levels
for parts and service:
........Parts
- None
$0-$1
- Small
$1-$2,399
- Medium
$2,400-$11,999
- Large
$12,000-$47,999
- Major
$48,000-above
........Service
- None
$0-$1
- Small
$1-$999
- Medium
$1,000-$5,999
- Large
$6,000-$19,000
- Major
$20,000-above
You now
have 1,250 segments.
This will
come down in size, as a result of interviews of the customers,
by the executive and management, to some 50 segments-each
with differing expectations and needs. Does this surprise
you? It shouldn't.
The number
of customers that you deal with is large.
Sadly,
I say, the number of customers that you may be dealing with
effectively is significantly less.
EXPECTATIONS
A fundamental truth about customer service is that the service
provider must offer a perceived level of service that exceeds
customer expectations. If you exceed their expectations the
customers will view you as a company that deserves their business.
Isn't that interesting? However, there is a catch with this.
These
expectations and perceptions belong to the customer and aren't
openly displayed on his sleeve.
Do you
know what they are?
What
are these expectations and perceptions that your customers
have of you? How do you find out what they are?
Are they the same for all types of customers?
Again,
a rather clear No resounds.
Not all
customers are created equal, and yet we provide one level
of service for all customers, irrespective of what they want
or need. This shouldn't come as a big surprise to you--I don't
find too many dealers who segment their market. If you do
segmentation, congratulations, If you don't, what an opportunity!
CUSTOMER
COVERAGE
From the different segments that you have identified, you
will now have the opportunity to determine the level of contact
that you want to provide to these customer groups. For several
years now I've been talking to dealers about the cost per
call.
Yes, the
cost is high. But under no circumstances are we suggesting
that you should stop calling on your customers. Yet when we
assign territories to sales people in parts and service (unless
we just divide up the customers and leave coverage up to the
sales rep) we have left customers without a rep. Note: Even
when we assign all the customers to a sales rep, we still
have left our coverage responsibilities up to the sales rep.
Many times they have way too many customers than they can
cover.
For example,
let's assume that a parts and service sales rep can cover
no more than 150 customers properly (five calls per day, 250
days per year). If you have 1,500 customers, you will need
10 sales reps. But rather than have 10 sales reps, we have
somehow determined that we cannot afford that level of coverage
and have settled for a sales staff of five.
This will
leave 750 customers we have chosen not to cover. Of course
we can rationalize it-these will be the bottom 750 customers,
from a purchasing volume perspective. Competition is ready
and willing to make these customers their customers.
After the earlier discussion on segmentation, it will be clear
that this is not the way to go. Nor should it be.
So now
let's assume segmentation has been completely and thoroughly
performed. Assume also that each sales territory has been
assigned geographically, by county, and that the coverage
capacity meets with customer expectations. What do we do with
the customers that we do not cover with a parts and service
sales rep? Have we got a plan? What expectations do these
customers have regarding coverage?
This is
where we get into a "telesales" program and direct mail. That
is another subject for another day. Here we need to determine
the characteristics of these customers and what expectations
they have for service from your dealership.
Further,
we should have management cover customers on a regular basis.
Managers should call on customers-not just for problem resolution,
but for courtesy and business development, interviewing customers
about their needs and expectations. How many of us do you
think operate telesales, direct mail and management coverage
programs? Most likely not enough.
Remember
from an earlier article, we are in a strong market, and that
forgives our ineffectiveness in market coverage. But when
the market is not as robust, we cannot just turn on a switch
and tune up the coverage. By then it is too late.
Segmentation:
people say that it is too much work or that it is a consultant's
cute make-work idea. However, I suggest that those of you
who have not, and do not, align you customers within segments,
will be exposed-exposed to competition, to the risk of having
a high level of customer defections and to the risk of failing
to satisfy and exceed customer expectations.
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