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Owners
and operators of compact equipment, light industrial equipment,
general equipment, and heavy construction equipment are becoming
more and more sophisticated in managing their fleets. I hesitate
to use the word sophisticated; however, in this instance I
mean that they are much more knowledgeable and competent in
managing their owning and operating costs.
Of course,
in order to be able to manage their owning and operating costs
it is first of all necessary to know these costs. Today there
are computer software programs that track all of the usual
expenses attributed to a piece of equipment. The cost of the
operator, fuel, repairs, wear parts and regular maintenance
are collected and reported in a way that allows the owner
to know the facts about these costs.
Also,
some dealers have been very conscientious in communicating
to machine owners the need to "plan" for repairs rather than
be surprised by failures. After several decades of pushing
the message, it is now commonly understood that unscheduled
repairs are much more costly than scheduled repairs. The cost
of the repair of the component that has failed will in many
cases be more than double the cost of repairing that same
component before it has failed. With this much of a difference
in cost it is more important now than ever before that we
know the condition of equipment. From the dealer's perspective,
to "know" the equipment means that we are performing all of
the manufactured suggested maintenance functions at the prescribed
time intervals. Of course this includes oil sampling at all
the usual intervals as well.
For the
dealer, maintenance is not something that the service group
has been tremendously interested in performing. There are
other priorities, like equipment that has failed and needs
to be repaired, equipment that requires a warranty repair,
new or used equipment that must be prepared for delivery and
equipment that has just left the shop and something is wrong.
BACKGROUND
Somewhere in the late '50s or early '60s dealerships ran out
of time in the available service labor hour pool and stopped
pursuing the market for machine maintenance services. The
customers, the owners of the machines, were left with no alternative
but to hire their own mechanics or contract with independent
mechanics when they wanted to have preventative maintenance
services provided. This is the time when the dealerships started
losing major market share of labor hours performed in their
territory.
The customer,
after having hired a maintenance mechanic, quickly found that
there was not enough work to keep the mechanic busy. The customer
mechanics then moved on to minor and simple repairs to fill
his day rather than lose his job. The level of maintenance
services that was performed, without being too critical, reverted
to filter and fluid changes and grease jobs.
SO
WHAT?
Today, the consumption of parts and service is significantly
reduced for machines, and dealerships are overloaded with
repairs--not because of equipment quality, but due to the
level of work in the marketplace. At the same time there is
a severe shortage of skilled technicians. So why do I want
to push dealerships to pay more attention to maintenance services?
Because it will save the customer money!
Our job
in product support is to reduce the owning and operating costs
for machine owners while at the same time protecting the residual
value of the machine. Short, simple and to the point!
Maintenance
services, as outlined in the operating handbooks provided
by the manufacturers, is much more than strictly changing
filters, fluids and greasing the occasional joint. It is a
comprehensive review of the condition of the machine to maintain
optimum performance. The intervals are very important. They
are designed to maximize component life and minimize sudden-death
failures.
There
is, however, a very real conflict. Your service manager is
in a tough spot. He must provide repair services in a timely
manner at a high-level quality. He must provide warranty repairs
within the time guidelines specified. He must hire, retain
and train mechanical personnel. He must be getting ready for
the transitions that his workforce is facing with the "aging"
of his mechanical pool.
He does
not have time on his side. Yet I am asking for more of this
scarce resource.
THE
MARKET
Maintenance services are roughly half of the labor market.
The market share that dealers have of the labor hours is very
low. This is true whether we are talking about the automotive,
agricultural, material handling or construction equipment
dealerships. For the most part it is because none of these
dealerships did a particularly good job of providing maintenance
services.
Let me
just walk through how to do a "quick and dirty" calculation
of the labor hour opportunity for maintenance services. First,
what is the total equipment machine population in your territory?
Ne, what are the average hours of work for these machines?
From this we can calculate how many labor hours there would
be in the maintenance service market. How? Let's look at the
following facts.
If there
are 10,000 machines in your territory, and they work on average
1,250 hours per year, there will be six maintenance intervals
each year. Let us assume that the standard hours to perform
a 250-hour service is three hours, a 500-hour service takes
four hours, and finally a 1,000 hour service takes 10 hours.
Each year
you will have 3- to 250-hour services taking a total of nine
hours of mechanical time. Also you will have 2- to 500-hour
services taking a total of eight hours of mechanical time.
Lastly you will have 1- to 1,000-hour service requiring a
total of ten hours of mechanical labor.
This is
a total of 27 hours of maintenance per year per machine. If
there are 10,000 machines then the total maintenance market
is 270,000 hours per year. At 2,000 working hours per mechanic
that would mean I need 135 mechanics that do nothing other
than maintenance. This number of people will increase when
you perform the maintenance in the field as we must add the
travel component to each job.
The point
I am trying to make is that there is a huge opportunity in
the market we are missing.
SO
WHAT DO YOU NEED TO DO?
How can we expect to penetrate this market when we will charge
the same labor rates for a highly technical test on a transmission
test bench as we will to perform a 250-hour service? Further,
what are we doing sending out a $70,000 field service truck
to perform that service? The customer can see that we are
not set up to perform maintenance services. It is pretty obvious.
We need
to have a technician with a basic level of mechanical skills
and a lower wage perform the 250-hour and 500-hour services.
This technician needs to be completely trained in these services.
In addition, he does not need a fully loaded field truck.
He could do this job with the van, a small pickup or even
pulling a trailer. Of course, at the 1,000 hour service we
should use a journeyman mechanic.
So really
what I am talking about is making sure that we have a match
of the skills necessary to perform the job and the degree
of difficulty of the job. If you look at balancing out the
workforce, you need to have roughly one basically trained
maintenance mechanic for each fully trained journeyman mechanic
in the pool of maintenance mechanics.
I suggest
the market is large enough that you could establish a separate
group within the service department that does nothing but
maintenance services.--give them different uniforms perhaps,
and call them XYZ Pro-Tech Maintenance Services for instance.
Customers must see and believe that you are serious about
performing maintenance services.
The vehicles
that you use could have a different color scheme. There clearly
is a need for less expensive vehicles. Depending on the equipment
for which you will perform maintenance in your market you
need to design a job-matching vehicle. Whether this is a combination
of vans, pickup trucks, trailers and full-service qualified
service vehicles you must decide according to your market
needs.
We also
need to be quite flexible. Your customer will not hand you
just the machinery you sell and service for maintenance. He
needs to have someone to look after his complete fleet. I
can hear you saying it now: "I don't have the service manuals
for other equipment lines. I don't have access to parts. Do
you mean you want me to do maintenance on his pickup trucks
as well?" Well, I am suggesting that we do exactly what the
customer would like us to do.
Rarely
will a customer give you the maintenance responsibility for
three of his machines that you sell and service when he has
30 other machines. He might already have someone on his payroll
who performs these maintenance services for him. Or he might
contract with an independent mechanic who does maintenance
services for him. I suggest that the customer will want to
do all of his equipment or he will continue to do what he
is currently doing.
Here's
something you might want a consider: if the customer has his
own employees who performs these services for him today, you
might want to hire those people, train them and employ them
in your "new" maintenance services group. Oh, and while we
are at, this is a very difficult program to sell to the mechanical
superintendent or maintenance supervisor of your customer.
They will not see your entry into this market very positively.
They will view you as a threat.
HOW
TO SELL THIS NEW PROGRAM
The first thing to remember is that we have to make this easy
for everybody. When you sell a machine to a customer, new
or used, the machine salesman should sell maintenance services.
When a machine is in your shop for repair the service manager
or foreman should sell maintenance services.
When the
product support salesman is calling on a customer he should
sell maintenance services. Think about this. Any machine that
is your shop is a prospect for a specific service interval--a
250-hour, a 500-hour service or sometimes even a 1,000 hour
service. Do you try and sell that while the machine is in
the shop? Do we try and sell this service?
What this
means is that we need to create a "maintenance services sales
guide." To make it easy, this sales guide should be broken
down into several sections. The first section should cover
the features and benefits of having maintenance performed
by you, the equipment dealer. Remember the features are for
you while the benefits should and will accrue to the customer.
The second
section should cover basic programs that are offered. For
instance, you might want to have a program for a machine that
works only 600 hours in a year. Another program might cover
a machine that works 1,800 hours in a year. I normally use
five different programs--600 hours, 1,200 hours, 1800 hours
straight, 1,800 hours seasonal and 2,400 hours For each of
these programs the sales information should contain the cost
per year. Normally, I like to quote standard hours with parts
and travel extra, but that is your choice.
The third
section contains detailed information on hours and dollars
for each of the five programs and for each of the services.
I usually split this section by machine model family--backhoes,
loaders, skid steers and tractors, for example. The fourth
section contains detailed checklists for each of the services
within the model family--250-, 500- and 1,000-hour checklist.
The final section contains special pricing information regarding
multiple machines enrolled, program prepayment methods, other
buyers benefits, etc.
This maintenance
services sales guide" should be available to each equipment
salesman, product support salesman, parts manager, service
manager and sales manager. In general, anybody who has an
opportunity to sell one of these programs.
So get
started. Put together this maintenance services sales guide.
Establish the standard hours for these services. Ask your
customers what pricing rate would work. (Don't be surprised
if it is 20%-25% lower than your current rates.) Train mechanics
to perform the services. Train the sales force to sell the
program.
This is
an opportunity waiting for you. It will be good for your customer,
reducing owning and operating costs. It will be good for you,
taking in more service labor hours. It will be better all
the way around. Don't you agree?
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