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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 (www.aednet.org/am).
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.
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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.
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