Disputed Work Orders Cause Delays in Payment and Increase Unnecessary Interest Expense

Guest writer Ron Wilson covers a crucial snowball effect we experience in our businesses in this week’s blog post: “Disputed Work Orders Cause Delays in Payment and Increase Unnecessary Interest Expense.”

We are all aware of the common causes that impact the accuracy of work order reviews, closing, and the customers invoices not being paid on time.

Digging a little deeper into the specific causes and frequency for the invoice being disputed by the customer can have a major impact on the reduction of the Service Department’s receivables. We often correct and resolve the disputed invoice without determining the root cause of the issue, and the problem often re-occurs.

Reducing the disputed and aged invoices also reduces the corporate interest expense due to not carrying the aged invoices within the accounts receivables.  This can greatly improve profitability without much effort.

Some of the common reasons work orders are disputed are:

  1. Pricing Discrepancies
  • Unexpected Costs: The final bill is higher than the original estimate, and the customer wasn’t informed beforehand.
  • Disputed Labor Charges: The customer believes the labor charges are excessive or doesn’t understand how they were calculated.
  • Parts Pricing: Customers may feel the parts are overpriced or question whether they were necessary.
  1. Scope of Work Issues
  • Unapproved Repairs: Work was performed that the customer didn’t authorize.
  • Missed Repairs: The customer feels the dealership failed to address the initial issue or left something undone.
  • Over-repairing: Customers may dispute repairs they believe were unnecessary.
  1. Quality of Service
  • Recurring Issues: The problem persists after the repair, leading the customer to question the quality of the work.
  • Damage During Service: Equipment is returned with new damage or wear that wasn’t present before the service.
  1. Miscommunication
  • Poor Documentation: The work order lacks clear descriptions of the problem, repairs, or costs.
  • Misunderstood Terms: The customer misunderstood warranty coverage or service agreements.
  • Incomplete Updates: Failure to update the customer about changes in the scope or cost of the repair.
  1. Warranty and Coverage Disputes
  • Warranty Denial: The dealership claims the repair isn’t covered under warranty, which the customer disputes.
  • Incorrect Coverage Application: Misunderstanding of extended warranty or service contracts.
  1. Timing Delays
  • Delays in Repairs: The customer disputes the bill if they feel the service took too long or caused operational downtime.
  • Missed Deadlines: Promised completion times were not met.
  • The age of the invoiced work order is excessive:  Customer feels the work order is should have been billed in a timelier manner.  The machine may have been sold or the job the machine was on is completed and the customers internal billing has been closed out.
  1. Customer Expectations
  • Performance Post-Repair: The equipment doesn’t perform as expected after the service.
  • Lack of Preventative Insight: Customers may feel they weren’t informed about future issues during the service.
  1. Inadequate Communication about Diagnostics
  • Charges for Diagnostics: Customers may not realize diagnostic fees apply even if they choose not to proceed with repairs.
  • Disagreement on Findings: Customers may not agree with the dealership’s assessment of the problem.

Strategies to Prevent Disputes

Below are some recommendations to prevent the disputes:

  • Clear Communication: Provide detailed and upfront explanations of the work, costs, and expected timelines.
  • Customer Approvals: Always seek explicit approval before performing additional repairs.
  • Thorough Documentation: Keep clear records of customer complaints, work performed, and parts used.
  • Warranty Clarifications: Ensure customers understand their warranty coverage and any exclusions.
  • Proactive Updates: Regularly update customers on the status of their equipment.

These steps can reduce misunderstandings and foster better customer-dealership relationships.

Sometimes the smallest, non-flashy improvements can yield the greatest improvements.

Below is a table and a chart showing some possible  ways to prioritize reducing the number disputed work orders.

 

Cause Occurrence % Total Accumulated
Warranty 981 34.6% 34.6%
P.O 793 28.0% 62.6%
Labor Dispute 615 21.7% 84.2%
Program Credit 237 8.4% 92.6%
Freight 99 3.5% 96.1%
Core Credit 76 2.7% 98.8%
Tax 18 0.6% 99.4%
Proof of delivery 17 0.6% 100.0%
Total 2836    

The chart above shows the data in a visual format that makes it easy to see that 84% of the overall causes are related to the first three areas.  

Take each of the first three causes and identify which of the reasons listed on page one contributed to the invoicing dispute.  Implementing the proper processes, training, policies, proper communication, and coaching can quickly reduce a costly issue and improve customer satisfaction.

Once the first three have been resolved take some time to review the remaining issues.  Often addressing the first three issues will contribute to resolving the remaining issues.

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The Growing Technician Shortage in the Construction, Equipment, Gas Compression, Marine, and Mining Industries

Guest writer Jim Dettore returns to emphasize the importance of training in this week’s blog post: “The Growing Technician Shortage in the Construction, Equipment, Gas Compression, Marine, and Mining Industries.”

Training Matters More Than Ever!

The construction, equipment, gas compression, marine, and mining industries are all facing a critical challenge: a severe shortage of skilled service technicians. As global demand in these sectors continues to rise, the number of qualified technicians to maintain and repair the highly specialized equipment used in these fields is dwindling.

The Technician Shortage: A Cross-Industry Challenge

Several factors are driving the technician shortage across these industries:

Aging Workforce: Many technicians are transitioning to Service Management roles or nearing retirement age, and there are not enough new entrants to replace them.

Decline in Trade School Enrollment: Fewer young people are choosing technical career paths, leading to a lack of fresh talent in industries that rely on hands-on expertise.

Technological Advancements: As equipment becomes more complex and automated, the skill requirements for technicians have increased, creating a gap between available labor and the needs of modern equipment maintenance.

Industries like gas compression and marine are particularly affected because they rely on highly specialized, mission-critical equipment that must be maintained with precision. Whether it’s keeping a marine vessel’s engines running smoothly or ensuring that gas compression systems operate efficiently in the energy sector, these industries cannot afford equipment downtime. Yet, with fewer technicians available, companies are finding it harder to meet these demands.

The Impact on Each Industry

  1. Construction and Equipment: The technician shortage in construction leads to longer downtimes for equipment repairs and maintenance, which can delay projects and increase costs. Every hour of downtime can result in massive financial losses on a construction site.
  2. Mining: In the mining sector, safety is paramount. Without skilled technicians, poorly maintained equipment can lead to dangerous breakdowns, putting lives at risk and stalling operations that cost millions.
  3. Gas Compression: The gas compression industry plays a crucial role in natural gas transport and processing. Equipment failures due to insufficient maintenance can disrupt supply chains and cause significant revenue loss.
  4. Marine: In the marine industry, the demand for technicians who understand the intricacies of engines, hydraulics, and electrical systems on vessels is increasing. With global shipping playing such a vital role in commerce, delays caused by equipment failure can disrupt entire supply chains and lead to higher operational costs.

THE ROLE OF TRAINING IN ADDRESSING THE SHORTAGE

The shortage of technicians across these industries underscores the importance of training. Given that fewer people are entering the workforce, the solution lies in ensuring that those who do are exceptionally skilled. High-quality training programs offer a way to close the gap, equipping technicians with the expertise to maintain, diagnose, and repair increasingly complex equipment.

By investing in comprehensive training, companies can:

Improve Efficiency: Highly trained technicians are more effective at diagnosing and resolving issues, reducing the time equipment is out of service.

Adapt to Technology: As industries adopt more advanced technologies such as automation, artificial intelligence, and sophisticated diagnostics, training ensures technicians stay ahead of the curve and can handle modern machinery.

Enhance Safety and Compliance: Well-trained technicians help ensure that equipment operates within safety standards and regulations, reducing the risk of accidents or environmental damage.

Why Quality Over Quantity Makes Sense

With fewer technicians entering the workforce, focusing on training is more crucial than ever. The idea is simple: if there are fewer people to maintain equipment, those individuals must be highly skilled to manage the increased workload and complexity.

In industries like gas compression and marine, where downtime is extremely costly, investing in the education and skill development of service technicians pays long-term dividends. Training programs that emphasize problem-solving, cutting-edge diagnostic tools, and preventive maintenance can help build a workforce of elite technicians who can handle more responsibility, more efficiently.

The Path Forward: Addressing the Talent Gap with Training

The technician shortage is a significant challenge across the construction, equipment, gas compression, marine, and mining industries. But the solution lies in adapting to this reality by focusing on developing a smaller pool of highly trained, elite technicians. By doing so, companies can offset the lack of personnel with higher skill levels and better overall productivity.

A Message to the Next Generation: Why You Should Get into These Industries

Now, let’s talk to you, the next generation. If you’re someone who likes working with your hands, solving problems, and getting a little dirt under your nails, these industries are crying out for people like you. Let’s cut to the chase—you don’t need a four-year degree and a mountain of student debt to have a successful career. What you need is the right training, a strong work ethic, and the guts to take on the kind of work that keeps the world running.

The truth is, we need more young people stepping into these technical roles—not just because the jobs are there, but because these jobs offer something you won’t always find in an office. There’s pride in being able to point to a project, a machine, or an entire operation and say, “I helped make that happen.” There’s a deep sense of satisfaction that comes from knowing your skills are indispensable. And let’s not forget about the money—skilled technicians can make a solid living, often starting at salaries that rival those of many college graduates, without the student loans.

These industries are the backbone of the economy. From building cities to powering homes, from transporting goods across oceans to extracting resources that fuel innovation—the work you do matters. And with the right training, you can step into a role where you’re valued, where every day brings new challenges, and where you can build a rewarding career.

So, if you’re considering your future, think about what you want it to look like. These industries offer not just jobs, but careers with purpose. And the best part? You can start now.

About Us. At FAS, Inc. we specialize in providing technical training programs for the construction, equipment, gas compression, marine, and mining industries. Our courses are designed to give you the skills you need to succeed in these high-demand fields. If you’re ready to take the first step toward a challenging, well-paying, and fulfilling career, contact us today!

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Cybercrime, AI, and the Equipment Dealership

Guest writer Kevin Landers returns this week to highlight the relevance of cybersecurity in “Cybercrime, AI, and the Equipment Dealership.”

It sounds like the beginning of a bad film, but the reality is that the world of digital crime is continuing to develop as technology evolves. The latest and greatest evolution is AI. As AI unlocks our world to provide us with tools to improve our performance and capabilities in business, criminals are also increasingly using it to target equipment dealerships through sophisticated fraud tactics. Unfortunately, they are leveraging AI’s capabilities for social engineering, deepfakes, and synthetic identity creation. 

Social engineering has always been difficult to protect against, but AI is taking it to new heights. Cybercriminals use AI to automate and personalize phishing campaigns. Phishing is a type of cyberattack that involves tricking people into sharing sensitive information through fraudulent emails, text messages, phone calls, or websites. 

Phishing is the most common form of cybercrime, with an estimated 3.4 billion spam emails sent daily. Notoriously, over 10% of employees worldwide clicked on malicious links, and over 60% of those who clicked submitted a password on malicious websites. And dealerships need to have this on their radar, as employees at small organizations are more likely to click on malicious links. 

AI is changing the face of phishing attacks.

AI-driven tactics enable attackers to craft highly believable emails and messages that mimic real business correspondence, including the language, style, and branding typical of a dealership’s internal or external communications. 

Without the proper training and awareness in the desire to be helpful, do the right thing, or even do what the boss says, criminals can trick employees into clicking malicious links, sharing sensitive information, or transferring funds under the guise of routine transactions. 

Voice cloning technology is particularly alarming for equipment dealerships. Attackers use AI to create convincing voice calls that imitate senior executives or trusted partners. These calls often instruct employees to execute financial transactions or disclose sensitive data, leveraging the urgency and familiarity associated with an executive’s voice.

AI allows criminals to scale these attacks rapidly. Automated AI-powered scripts can launch large-scale attempts to breach systems, such as through credential stuffing, where stolen usernames and passwords are systematically tested across multiple platforms. This capability makes it easier for attackers to find vulnerabilities in dealership systems and gain unauthorized access.

For example, when the CDK data breach and outage took place earlier this year, dealerships suddenly began receiving calls “from CDK support” and emails from “CDK support” that were saying “hey, let us connect remotely with you so that we can get your CDK systems back up and running”. The issue was that these were all malicious actors posing as CDK that were attempting to trick dealerships into allowing them access to their systems. Taking advantage of the situation in seconds, not days.

And don’t underestimate the power of a chatbot. AI chatbots can engage in real-time interactions with employees, adapting their responses to seem more authentic and trustworthy, thereby increasing the success rate of these scams. It can feel like you are having a relationship with a real person or discussing plans with your boss. And with many businesses using tools like WhatsApp to discuss businesses outside of email or your network, it can be easy to fall for things when your attention is distracted. And criminals are taking advantage of this.

How can Dealerships defend themselves from AI phishing attacks?

  • Employee Training and Awareness: Regular cybersecurity training focused on AI-driven threats is crucial. Employees must learn to identify suspicious communications and verify requests through multiple channels. Making training fun, informative, and embedded into their workflow helps make this more effective. IT teams and support services must ensure training is appropriate for dealership scenarios. Training on spotting a fake date might be useful for your personal life but probably won’t help you decide if you should click on a link from what might look like the service manager.
  • Multi-Factor Authentication (MFA): Implementing MFA can significantly reduce the effectiveness of these attacks by adding layers of verification beyond simple passwords or voice recognition. We know this can be annoying, but a good IT solution will leverage ways to make it feel seamless yet powerful to protect.
  • AI-Driven Defense Solutions: We have to use AI to fight AI. Utilizing AI for defense is also vital. Systems that monitor for anomalies in behavior, voice patterns, and transaction data can detect and respond to fraudulent activity in real-time. 

As AI fraud evolves, equipment dealerships must stay proactive, combining advanced technology with a culture of vigilance and verification to safeguard against these sophisticated threats.

Werner’s Tech Leader Talks Cybersecurity

An article by a Senior Editor of Commercial Carrier Journal is part of our content this week. Read on for Angel Coker Jones‘ report, “Werner’s Tech Leader Talks Cybersecurity.”

Ahead of an all-hands meeting, the information security team at Werner Enterprises (CCJ top 250, No. 14) combined all video archives of CEO Derek Leathers and, using a cheap AI tool, created a deepfake message announcing to employees that the company was removing all vacation time for cost cutting measures.

Many employees bought it until Leathers walked into the meeting an hour-and-a-half later, reporting that it was a fake AI-generated message. Daragh Mahon, executive vice president and chief information officer at Werner, shared this story last week at the National Motor Freight Traffic Association’s annual cybersecurity conference hosted in Cleveland, Ohio.

He said it was his team’s effort to further educate its employees on the importance of cybersecurity. Cybersecurity, he said, is the biggest thing that keeps him up at night because “that’s the one thing that can shut us down.”

The infosec team – not the corporate training team – at Werner hosts quarterly mandatory cybersecurity training for all employees, including drivers. The team also broadcasts cybersecurity messages across TVs throughout its terminals and regularly performs its own phishing testing on employees, who after three failures (by clicking on a link in a phishing email) must take additional training. If there’s another failure in the next three months, you get written up.

“We’ve taken a very hard-fisted approach to it. Employees don’t enjoy it. Yes, it scares them. Yes, it makes them worried. But that’s sort of the goal. We want them to understand the risk … and it’s not just the company; it’s their own jobs,” Mahon said. “We’re one of the biggest carriers in the United States. If we were down for a couple of weeks, that is an impact on the supply chain… It’s an impact on their jobs. It’s an impact on the prices they and their family pay at the store. So we try to get that message across and say, ‘Hey, we’re not doing this because we’re trying to be assholes. We’re doing this because we want you to understand the gravity of the situation.’”

Presented by Michelin Connected Fleet

While newer technology like AI is a rising cybersecurity concern, Mahon said he’s still most worried about older technologies, especially email because 90% of all attacks on corporate America last year came through email, yet companies use it every day.

Bare metal attacks

While internal attacks via methods like phishing (the top method of ransomware) and even piggybacking into the building with a fake employee ID are more common, he said bare metal attacks are coming.

“It’s never happened but it will. Ransomware never happened until it happened … These are the types of things we have to prepare ourselves for. We have to start thinking like the bad guys,” Mahon said. “I really do believe the bad guys who are targeting the U.S., but in general are targeting trucking, think about how to get onto the truck and utilize the hardware on the truck to cause problems. Not steal the software, not steal the data. How do we take the truck, shut it down, so we can shut down transportation? Or even weaponize it in the worst-case scenario in the case of terrorists.

 Werner is working with all the top providers in autonomous trucking, and he said he has been impressed with their level of focus on securing the operating systems that run robotics and data on the trucks, but he wasn’t impressed with their lack of focus on the possibility of bare metal attacks.

“If somebody were to get on the CAN (Controller Area Network) bus hardware, install their own primitive OS and take over the robotics, they can weaponize the truck to say run into a school bus,” he said. “Do that with a couple hundred thousand trucks across the U.S., which is what autonomy will bring to us at some point, and our enemies have a very easy way to get ahold of us. Let alone just taking over the truck and shutting it down and shutting down transportation in the United States.”

Playing defense

Mahon said he met the founder of a company called Fleet Defender, which offers a hardware device that plugs into the CAN bus to monitor anomalous traffic on and off the truck. Fleet Defender, which is deployed on Platform Science, provides real-time cyber threat detection before security is compromised. Mahon said Werner is working to deploy that across its entire fleet and its network and technical operations centers.

Werner is also moving away from the use of email.

“What does everybody do before Valentine’s Day? They break up,” he said. “We’re doing a campaign (called) ‘we’re breaking up with email,’” when the company rolls out its new corporate media platform in February.

The platform will provide alternatives to email like secure chat channels and secure file sharing through systems like Sharepoint and OneDrive.

“I feel like we don’t need email anymore; we just perpetuate the use because it’s something we’ve gotten used to even though it is the single most dangerous thing we have in our toolbox,” Mahon said. “It will kill us, and every one of us at some point are going to experience a phishing attack.”

Like many others, the company is also on a tech journey, transitioning from legacy systems to cloud-based platforms.

“We’re in this sort of weird place where I have to have perimeter security around the old on-prem stuff … and then as we transition into SaaS space … we have to be ready there as well,” he said.

Though he’s more concerned about on-prem security, he said the shift to the cloud has its own cybersecurity challenges.

NMFTA COO Joe Ohr said a company is only as strong as its weakest link, and oftentimes the weakest link is a third-party vendor. Many breaches come via a third-party avenue.

Mahon said as Werner moves from SaaS to the cloud, his team evaluates third-party providers for things like sales and back-office software not only based on functionality but also reputation. While a carrier can’t abdicate responsibility for their security to those platforms, he said they should still choose vendors that are know for being secure.

“The second thing is vet the hell out of them,” he said. “Every single vendor we sign up, they go through a security assessment … We have anywhere from, depending on the type of company, from 40 to 80 to 100 questions that they must answer, and we go through them line by line and make sure that they have the security we would expect them to have, that they have the controls in place.”

Werner then monitors its vendor platforms and assesses them quarterly for security.

“You have to watch it all day every day because you never know when somebody’s in there,” he said. “In fact, you just have to assume that (a bad actor) is in there.”

Angel Coker Jones is a senior editor of Commercial Carrier Journal, covering the technology, safety and business segments. In her free time, she enjoys hiking and kayaking, horseback riding, foraging for medicinal plants and napping. She also enjoys traveling to new places to try local food, beer and wine. Reach her at An********@***********ly.com.

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The Key Tool for Business Retention: Essential Tools for Maximizing Business Retention

Ron Slee brings our skills for retention back to the forefront in “The Key Tool for Business Retention: Essential Tools for Business Retention.”

Building and maintaining strong customer loyalty is essential for your company’s sustainable growth. Success depends on keeping your customers engaged with your products and services rather than losing them to competitors. It requires dedicated effort across all dealer departments, from sales and customer service to parts and service teams—anyone who interacts with customers.

Key business retention tactics 

Here are several proven approaches to strengthen your retention rates:

Regular customer engagement

  • Maintain ongoing contact through email campaigns, and make sure anyone who hasn’t purchased in 9 to 12 weeks is contacted by phone.
  • Use past purchases to determine which products should be promoted when.
  • Identify industries that your company works with, and contact more that look just like your current customers.

Listen to customer input 

  • Conduct customer satisfaction surveys to identify any areas in your organization that may need to be improved. 
  • Respond to customers with suggestions or complaints about your operations or products.
  • Implement changes based on the feedback that you receive. 

Provide support after the sale 

  • Outstanding after sale support is important to improve customer retention.
  • Schedule follow up communications, provide maintenance support, share best practices, and recommend related products.
  • Customers stick with a dealer when they feel they can consistently rely on them for parts and service. 

Monitor essential metrics

  • Customer retention – How long you keep customers over a given period 
  • Purchase frequency – How regularly your customers purchase from you 
  • At risk customers – Customers that show signs of leaving you for the competition 
  • Customer lifetime value (CLV) – The estimated total revenue a business can expect from a single customer 
  • Types of purchases – What your customers are buying from you and which products are most popular

Two powerful retention tools

Among the many available strategies, two tools stand out as particularly effective for enhancing equipment dealer business retention: satisfaction surveys and email campaigns.

Customer satisfaction surveys 

Understanding customer needs and satisfaction levels is fundamental to improving retention. Surveys conducted by a third party, especially phone surveys, provide valuable unfiltered feedback about potential issues. Phone surveys achieve a 33% response rate, far exceeding the 2% response rate for email surveys, helping you identify concerns before customers leave you for the competition. Companies that actively respond to survey feedback can boost retention rates by up to 30%. Plus, customers whose issues are addressed become particularly loyal advocates.

Strategic email marketing 

The return on investment for email marketing campaigns can be remarkable. Equipment dealers working with our partner Winsby, for example, see annual ROI ranging from 208% to 10,205% – meaning customers receiving emails spend between $208 and $10,205 more than non-recipients for every $1 invested in email marketing. This exceptional performance largely stems from the ability of emails to boost purchase frequency and retention rates. Regular emails keep your brand top of mind, showcase your offerings, highlight service quality, and reinforce your value proposition. Higher purchase frequency typically correlates with stronger retention.

While satisfaction surveys and email marketing can serve as powerful retention tools, their effectiveness depends on proper implementation. Reach out to Winsby today to implement these strategies and begin improving your retention metrics and customer purchase frequency.

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Another Business Transition. This is the critical one…and we are missing it.

Today our Founder and Managing Member Ron Slee writes about adapting to our current realities in “Another Business Transition. This is the critical one…and we are missing it.”

I have had an interesting and extremely rewarding career in the equipment world. I never dreamt about working in this industry. It just happened. 

I was 22 years old, and it was a tough time to get a job in the data processing world. I wanted to work for IBM. I had a mathematics -physics education with minors in statistics and computer science. I made a choice on education that didn’t make a lot of sense, looking back. I was a generalist by nature and a teacher by aptitude. 

I was skiing north of Montreal after leaving a job working in a custodial role at a place called “Boys Farm and Training School.” It was started by my maternal great grandfather, and I wanted to see what it was all about. I had a group interview, kind of like a casting call, and got hired as a “control figure.” I had been a serious swimmer and had a physique then. I learned a lot at that work particularly in personality profiling as that is what they trained me to do. It was too much for me, working 7:00 AM to 11:00 PM daily and being on call overnight. I had one day off every two weeks. I needed a rest.

The VP Finance for the Caterpillar dealer in Quebec, John Swift, called my home looking for me. I had taught two of his children at university, so he knew me a bit. He asked me to come for an interview and see if there was mutual interest in an opening they were trying to fill. I got the job and was hired on a one-year contract to find and fix a problem in the business system that they had installed. Before the year was up, I was hired full time.

I spent ten years there and it was one of the most impactful ten years of my life. I was given the opportunity to get involved wherever they wanted to make changes and improve things. In other works, look at a system, determine how it could be performed in a different and better manner, create the change plan, and implement it. It was absolutely a perfect fit for what would keep me challenged. My work even today continues to be a perfect fit.

Currently we are developing a lifelong learning platform for people between the ages of 16 and 76. What I call Workforce Development. I still teach in the conventional manner, what I call the “Sage on the Stage,” but it is rare these days.

I started in March of 1969. That was 55 years ago. Suffice it to say I have seen a lot of change in my career. Some of it has been good, making performance better and improving customer satisfaction. Some of them not so good, economic changes, which caused pain.

Throughout that time, however, the business has been transaction driven. Process things. Orders, complaints, physical counts, monthly reporting etc.

During that time, we have experienced serious changes in prices. Inflation was causing some of it. Some of it is caused by dealers wanting to increase their revenue lines. The thing that was missing was data. Working in Canada, and Quebec, in the parts business we had to contend with foreign exchange, custom duties and taxes. That meant that a part number could have up to six different prices depending on its end use. Our customers were having fits with it as they had purchased parts that could have been six different prices. I was asked to look at it and see if I could produce a solution that was good for the dealer and also the customer. That was my first dive into data. 

I went through everything and created what I called “Matrix Pricing.” It was based on the price of the part. It aggregated all demand and put it into one “Bucket.” That way we “normalized” the distribution of partes sales across multiple duty and tax applications. I was able to use my mathematical statistics education for the first time. I have been data driven ever since.

The industry, however, has not become data driven, they are still transaction driven.

Over the years we have experienced many economic cycles. Each cycle has resulted in actions at the dealer level. Most of the action has been a combination of increasing prices and decreasing expenses. When I talk about decreasing expenses, we should never forget that personnel are the largest single expenses in a distribution channel. That to many of you will explain why I have been telling anyone who would listen that we have chosen profit over people in how we operate our business. We have reduced the number of people doing the work to maintain a reasonable net income. 

We were still a transaction driven world.

The results are quite clear. Price increases caused customers to look for other suppliers. Personnel reduction meant that customer service declined. That led to more and more of the same to survive. As we have seen many did not survive. As an example, today we have two Caterpillar dealers in Canada. When I started there were ten. You can look around and see the same thing in every geographical area and every product line in the capital goods industry.

Meanwhile we have had some serious changes in technology. We have also had some “Revolutionary Reformers.” That is what I have named the “disruptors.”

Jeff Bezos is an easy example. He saw a transaction business that had not changed in any meaningful way for a century. We brought the purchasing of books online. Then, however, he had data. He was wise enough to look at the data and change his business to be the supplier of anything and everything that a consumer wanted. He became the largest retailer in the world. I don’t want to forget Sam Walton. He changed distribution in very meaningful ways as well. He told his suppliers that they would be his only source for their products, but he had two conditions. They were never to let his shelf be empty and he would pay for their products when he got paid by the customer at check out.

The internet arrived in the late 1960’s and became rather ubiquitous with America Online in the 1970’s. Most of us have and continue to use the internet. That change and disruption was HUGE. Social media has caused all manner of turbulence in society. Companies like Google and Meta and Twitter and TikTok have caused much debate. No matter because it is here.

How have we in the equipment world adapted to this reality? Not very well. Let me ask a few questions if you think I am being too critical.

What percentage of your parts business comes in over the internet?

What percentage of your service work, field, or shop, has appointments created on the internet?

What percentage of your equipment sales are done over the internet like TrueCar?

What percentage of your rentals are transacted over the internet?

What percentage of your receivables are paid directly to your bank?

How did you do?

Let’s turn the corner and look at the parts business.

How many of you measure your parts availability as a percentage of fill? A pretty common metric. Why not supply 100% of the customer parts needs next day? That is a data driven question. NOT a transaction question.

Here are two other quite easy data questions.

  • What are the potential parts and service revenue for each of your customers? How can you answer that when you don’t even have accurate machine ownership? You can’t. 
  • What percentage of your customers who bought something from you in 2023 have not bought anything from you in 2024? Most of you don’t know.

Market coverage is typically done by geography. Most of you use an 80:20 rule in market coverage. Very few of your equipment sales associates will call on a customer who does not own any equipment for your brand. Why is that? I can go on and on.

The point I want to make to you is remarkably simple. Hire some people who have a statistics background and let them look around your data and see what they find. The first thing they will find is that your data is not exactly accurate. You typically don’t have any database management protocols of discipline. 

As Donald Rumsfeld is famous for saying “We don’t know what we don’t know.” Neither do you.

The time is now. 

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How Construction Equipment Dealers Can Succeed (Or Fail) Faster

Our new guest writers, Jordan Arsenault and Nick Mavrick bring big data to their first blog post for Learning Without Scars, “How Construction Equipment Dealers Can Succeed (Or Fail) Faster.” Don’t dig for data. Let data dig for you.

Big trouble: that’s how we are ending 2024, most economists agree. Inflation, investment bubbles, over-the-top government spending, technology disruption, dealer margin and market share compression and the exceptional market power of two major rental companies. How can your dealership thrive with more instability ahead? 

One may turn to Warren Buffet’s counsel:  “I don’t look to jump over seven-foot bars. I look around for one-foot bars that I can step over.”

In your construction equipment dealership, would you allocate capital differently if you knew how much revenue and profits were created by the top 10, or 20 percent, of your customers? What if you learned that 5% of your customers generated over 70% of revenue & profits? Or that your top customers’ life-time value was 5X or 10X larger than that of your average customer?

Consider the following construction equipment cases:

  • Major construction equipment service company:  23% of customers, 87% of revenue, each customer generates $43k annually, 5X greater than the next customer group.
  • Major equipment rental company:  3% of customers generate 62% of revenue and profits – only 15 customers per store, that each generate $250k annually 4X greater than the next customer group.
  • Major construction equipment dealer:  11% of customers, 83% of revenue and profits.

 

None of the above had been using the proportionality of their data for 80/20 capital allocation, to manage their salesforce, or in short – replicate what they are doing well, to do more of it – faster. They kept going by raising prices, cutting employee expenses, and taking incremental actions while remaining perilously close to a vicious doom cycle. Why?

  • While successful relative to their peers, they shared attributes that imperiled ability to replicate their successes by leveraging data:
  • Transaction driven, not data driven  day-to-day busyness, obfuscated strategic actions, for tactics.
  • Siloed data, and disparate systems:  DBS (dealer business system), CRM, Business Intelligence, data warehouses, ERP and more. They lacked a unified dataset.
  •  Dirty data:  garbled customer data was inconsistent by account; making it difficult to distinguish between decision-makers and influencers.
  • Tactically use of prospect databases and rarely used industry intelligence:  not linked to internal data.
  • Business Intelligence:  relegated to answering obscure ‘jeopardy’ like questions for their OEMs or ownership.
  • Territory management:  based on geography, rather than market opportunity goals. This resulted in an inability to rank salesperson performance, or more importantly evaluate share-of-wallet penetrations with high value customers.

 

For the solution, one may turn to Charlie Munger for advice:  “There is an old two-part rule that often works wonders in business, science, and elsewhere: take a simple, basic idea and take it very seriously.”

To solve data problems, BiltData.ai has constructed a Continuous Insights portal to transform a dealer’s data to quickly identify patterns and establish proportionality – which are referred to as the 80/20 rule. 

  • Data is cleansed, structured, and enriched to provide a unified hierarchy and dataset for strategic use.
  • Quick-decision dashboards for customers and prospects drive action focused on Best, Future Best and more, resulting in laser-like focus to gain and secure profitable business, faster.
  • Geographic dashboards address sales coverage deficiencies that were not previously visible, and rank sales performance. 
  • Smart leads help build market share faster by enabling multi-dimensional prospect insights, and visual filtering. This saves time by moving from cumbersome spreadsheets to one unified dataset, where action can be taken in 2-3 clicks.

The results: construction equipment companies can move quicker to take the most ‘profitable’ share, grow best customers, find the best prospects, grow share of wallet by upselling, launch new markets profitably and adopt new sales and pricing models

“In God we trust; all others bring data.” -W.  Edwards Deming

Relentlessly pursue data for your continued success!

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Jordan Arsenault is Board Chair of BiltData.ai. Jordan is the Board Chair of BiltData.ai. With an extensive career in sales management, Jordan is an expert in using data to accelerate revenue and ROI. She currently serves as Chief Strategy Officer for Southland Resources, a leading raw material energy producer.

Nick Mavrick is the CEO of Biltdata.ai. With decades of B2B data science expertise, BiltData.ai provides a tailored industry solution. We enable the construction equipment industry to get going with X-Ray vision for customer and prospect data. Nick is an expert in CRM and data mining, as the cornerstone to segmented marketing, strategy, operations and driving ROI. He has vast experience in supporting B2B sales teams including VOLVO Rents, NationsRent, multi-brand dealers and more.