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The
piece of equipment, not its owner, is the true customer for
a dealership's parts and service business.
Sure,
your responsibility is to reduce customers' owning and operating
costs while protecting their equipment's residual value. So
you and your employees courteously and professionally serve
the people who walk into your shop. You strive to meet--if
not exceed--their expectations.
But the
single most important piece of information you need to increase
service revenues is the working machine population in your
dealership's territory: the make, model and serial number
of . each and every piece of equipment, the number of hours
it's logged. That's how you determine the available parts
and service market of your dealership's territory.
Without
an accurate count of machines in your territory, how can you
know how well you're looking after them? Part of your company's
responsibility--and source of income--is to look after equipment.
How can you do a good job at this without determining an accurate
machine population?
Most of
you dealerships have software that keeps track of machine
population. Do you use yours? How accurate is it?
If you
know the annual number of work hours for each machine in your
dealership's APR, you know much maintenance work is available
to your service department. Depending on the manufacturer,
a machine that works 2,000 hours in a year typically requires
40 hours of labor to perform the manufacturer's specified
maintenance checks.
Think
about that for a moment. For every 40 pieces of equipment
on maintenance contract, you need one technician. One technician
generates between $80,000 and $120,000 a year in labor revenues.
Add to that parts sales and other related revenues. So isn't
knowing how many machines are out there a good thing?
How many
machines are working in your territory? 20,000? 15,000? You
do the math. If 20,000 machines are out there and they each
put on 2,000 hours a year, there are 400 technicians in your
territory performing maintenance. How many of these technicians
work for your dealership?
Let's
go down another path. Engine oil filters, which I believe
have become a lost market for most OEM dealers, are changed
every 250 hours. Using the example above, that means eight
filters are required per year per machine. Or, looking at
it in the aggregate, with 20,000 working machines, 160,000
engine oil filters will be sold in that territory. How many
engine oil filters does your dealership sell? How large is
your engine oil filter market?
These
two simple illustrations highlight what you can do with an
accurate machine population figure. You could do a much better
job of penetrating your dealership's service market if you
had this figure.
Moreover,
if you know where the machines are and what they're doing,
and what equipment and services each customer buys, you'll
know what to do to increase service sales while reducing the
ownership costs for each customer's machine. This is where
the knowledge of your parts and service personnel becomes
critical. They must know and understand the features and benefits
of each parts family sold and each service program offered.
They also must know the features and benefits of each part
and service offered by your competition.
How do
your parts and service employees stack up?
This also
underscores the need for proper and continuous training of
each customer contact employee. Features and benefits, sales
techniques and negotiating skills must be in the forefront
of your training programs. What you should invest in training
these employees stems from how well your dealership knows
the potential working machine population.
And I'm
not talking about just the brands you represent. To be most
effective, you should have a count of all machines of a class
and kind your dealership sells and rents. Last month I talked
about oil sampling as a way of reducing your customers' equipment
owning and operating costs and raising your revenues in the
process. But you have to know who uses what equipment and
how often. This also requires an accurate machine population.
With an
accurate machine population, everything is possible. Without
it, all your service department is doing is reacting. And
reacting turns your service employees into order processors,
not salespeople.
Having
an accurate count of the number and type of equipment in your
territory could mean a significant change in your business
direction. Isn't it time you took a hard look at your approach?
It could mean the difference between success and failure.
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