Facts Vs. Feelings: Recruiting Technicians

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Facts Vs. Feelings: Recruiting Technicians

Guest writer Isaac Rollor highlights the importance of building relationships with your communications at your business in “Facts Vs. Feelings: Recruiting Technicians.”

I do not know the exact source of the statement “Facts don’t care about your feelings” but it’s a statement I have heard many times recently. This statement as I heard it was not applied directly to the heavy equipment industry, but I do feel it warrants some reflection. The heavy equipment industry is really invested in facts. Hard evidence. Data. Not a bad thing. In fact, it is a source of certainty that is lacking in many other industries. Technicians are one of the most factual focused working groups in our industry and rightfully so. To be successful, technicians must focus on facts pertaining to safety, quality of work, billing etc. Facts are important. The problem with facts is that facts alone do not cause someone to act. In my experience emotions cause action. 

My hypothesis. One reason technicians are not entering the heavy equipment workforce at a fast enough rate is because OEM’s and dealers are focused on facts during recruiting and rarely focused on emotion. Industry hardened professionals love facts because these facts have led them to remarkable success. Here is a splendid example, if a technician masters the repair manual’s process of replacing, diagnosing, and repairing a certain OEM’s machines they will be considered successful, receive promotions, and make more money. All they had to do was follow the facts, such as processes, procedures, torque specs etc. and they achieved success. When I speak with technicians who have 20-30 years logged repairing heavy equipment, I like to ask them why they started and stayed in the industry. The answer is usually rooted in emotion. This may be related to their family, or even their own internal desire but it is typically a love of something that moved them to become a technician and eventually become an expert technician, service manager etc. The feeling or emotion motivates someone to come to terms with the facts. 

When I hear recruiters speak to potential technicians and lead off with statics or data and facts about the industry/job I always cringe a little bit. Starting a career or even changing jobs within the industry is a crucial decision for most people. If you dig deep enough, you are highly likely to discover that this decision is rooted in emotion. An OEM or dealer competing for a scarce resource such as technicians should carefully examine the strategy being used to attract and retain top talent. Let’s make a quick comparison of facts-based messaging and feelings-based messaging. How would you respond if you were a capable technician just out of trade school and you were making a career decision based on the following job discussion with a recruiter?

Facts based job discussion:

Heavy vehicle and mobile equipment service technicians at ABC company typically do the following:

  • Consult equipment operating manuals, blueprints, and drawings.
  • Perform scheduled maintenance, such as cleaning and lubricating parts.
  • Diagnose and identify malfunctions, using computerized tools and equipment.
  • Inspect, repair, and replace defective or worn parts, such as bearings, pistons, and gears.
  • Overhaul and test major components, such as engines, hydraulic systems, and electrical systems
  • Disassemble and reassemble heavy equipment and components.
  • Travel to worksites to repair large equipment, such as cranes.
  • Maintain logs of equipment condition and work performed.

Heavy vehicles and mobile equipment are critical to many industrial activities, including construction and railroad transportation. Several types of equipment, such as tractors, cranes, and bulldozers, are used to haul materials, till land, lift beams, and dig earth to pave the way for development and construction.

Heavy vehicle and mobile equipment service technicians repair and maintain engines, hydraulic systems, transmissions, and electrical systems of agricultural, industrial, construction, and rail equipment. They ensure the performance and safety of fuel lines, brakes, and other systems.

These service technicians use diagnostic computers and equipment to identify problems and make adjustments or repairs. For example, they may use an oscilloscope to observe the signals produced by electronic components. Service technicians also use many different power and machine tools, including pneumatic wrenches, lathes, and welding equipment. A pneumatic tool, such as an impact wrench, is a tool powered by compressed air.

Service technicians also use many different hand tools, such as screwdrivers, pliers, and wrenches, to work on small parts and in hard-to-reach areas. They generally purchase these tools over the course of their careers, often investing thousands of dollars in their inventory.

After identifying malfunctioning equipment, service technicians repair, replace, and recalibrate components such as hydraulic pumps and spark plugs. Doing this may involve disassembling and reassembling major equipment or adjusting through an onboard computer program.

Feelings based job discussion:

Many heavy equipment technicians at ABC company report feeling a sense of freedom because they are responsible for their own service truck, tools, and schedule. How would it feel to have control over your own schedule and work experience? Is this something that is important to you?

Notice the difference? Facts based discussion leaves little room for tactical questioning of the candidate. To the contrary a feeling-based discussion can easily omit many of the hard facts and cut directly to the emotional reasoning for being interested in a technician position. The great part about leading with feelings is that facts can still be presented but these facts can now be hand-picked to support the feeling the technician wants to have.

Here is my challenge to you, lead with feelings instead of leading with facts. See how many times you can get your potential technicians to “feel” a certain way about the job. Once the feelings are identified use your facts to support their feelings and allow them to arrive at a career decision that they “feel” most comfortable with. I think the results may surprise you.

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Utilizing Three Key Sources of Information to Support the Product Support Business Growth

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Utilizing Three Key Sources of Information to Support the Product Support Business Growth

Guest writer Ron Wilson covers the data points and information we can gather inside and outside the dealership in his blog post, “Utilizing Three Key Sources of Information to Support the Product Support Business Growth.”

There are many data points and sources of information within and outside the dealership that can support growing the product support business of a dealership. Two areas reviewed below are examples of a source within the dealership and one from outside of the dealership. 

 

Abandoned Shopping Cart Analysis

 

We have all left items in our online shopping cart. This is no different with the customers utilizing the online part lookup and order systems with the various dealers.

 

The abandoned parts orders can provide a wealth of information:

  • Model, serial and arrangement number. This information is not always provided and may not always be correct, but when provided tells a story in itself.
  • The parts list provides an idea of the type of repair that is needed. For example, a parts list to rebuild an engine is valuable information for Product Support Sale Representative to have during a visit with a client and understanding the customer’s rebuild direction.
  • A model, serial number, and parts list abandoned by a component rebuild competitor is one of the most important bits of information a salesperson can receive.

 

Maintaining the Dealership’s Machine Population List is a Challenge. 

 

Many dealers and OEMs utilize the dealer’s machine population within the territory to identify parts and service opportunity. It’s an ongoing challenge to keep the various customers machine population current. One suggestion is to monitor the various auction sites that your customers may use when disposing of machines. Some of these sites will list not only a photo of the machine, but also the model and serial number. Run this serial number against the dealer’s machine population list to identify if a client is planning to sell the unit at auction. Notify the Sales/Rental and Product Support Sales Representatives and update the machine population. 

 

Here are a couple of examples:

Both of the machines above came from an auction company’s website showing the location and detailed information about a specific machine.

 

Identifying Missed Component Rebuild Opportunities 

 

Very often a customer may source component rebuilds and parts purchases from various vendors in addition to the dealership. Reviewing the service repair history of a customer can help identify to what level the customer is utilizing the dealership’s total service capabilities. 

 

Depending on the dealer’s business system it may be possible to determine:

  • Does the customer utilize field service and shop service areas?
  • What components are being rebuilt (more important not being rebuilt by the dealer)? It is not unusual for a customer to rebuild engines themselves (or use a competitor rebuild shop), but always send the transmission rebuilds to the dealer for rebuild. Hydraulic cylinders are often sent to various competitors.
  • What type of repair/rebuild is being done by the dealership?
  • Depending on the OEM some part numbers are extremely specific to a component and often to a specific model of machine.

 

Utilizing the above information can be particularly useful when developing marketing campaigns, recording lost sales, and identifying future business opportunities. The dealership can apply a more focused approach for product support offerings.

 

There is a tremendous about of information available within the dealerships business system, the challenge is utilizing the data to understand the current environment and the future direction. Combining data analysis and business expertise can lead to increased part and service business, as well as improved customer service and support.

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Filling the Experience Gap

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Filling the Experience Gap

Guest writer Jim Dettore blogs about how we can go about filling the experience gap for our technicians and employees.

In industries such as construction equipment dealerships, mining equipment, and gas compression, the role of service technicians and service management is crucial. These industries rely heavily on the expertise of their technical teams to maintain and repair equipment, minimize downtime, and ensure optimal performance. However, there is often a gap between the experience level of new hires and the requirements of the job. This is where quality, relevant training can make a significant difference.

Quality, relevant training can help bridge the gap between the knowledge and skills of new hires and the demands of the job. Here are some ways in which training can be beneficial for service technicians and service management in these industries:

  1. Technical skills development – Technical skills are essential for service technicians and service management in these industries. Quality training can help employees acquire the knowledge and skills needed to operate and maintain complex machinery. Additionally, training can help employees stay up to date with the latest technology and best practices, which is crucial in industries where technology is constantly evolving.
  2. Safety and compliance – Safety is a top priority in the construction equipment, mining equipment, and gas compression industries. Employees must be trained on safety procedures and compliance regulations to ensure that they are working in a safe and compliant manner. Quality training can help employees understand the importance of safety and compliance and provide them with the necessary knowledge and skills to maintain a safe work environment.
  3. Customer service – Service technicians and service management are often the face of the company when interacting with customers. Therefore, it is essential that employees are trained in customer service skills to ensure that they are representing the company in the best possible manner. Quality training can help employees develop interpersonal skills, communication skills, and problem-solving skills, which are all critical components of good customer service.
  4. Teamwork and collaboration – In industries such as construction equipment, mining equipment, and gas compression, teamwork and collaboration are essential. Quality training can help employees develop teamwork and collaboration skills, which can improve efficiency, reduce downtime, and increase productivity. Additionally, training can help employees understand the importance of teamwork and collaboration in achieving business goals.
  5. Career development – Training can provide employees with opportunities for career development and advancement. Quality training can help employees acquire new skills, knowledge, and certifications, which can lead to promotions and increased job responsibilities. Additionally, training can help employees stay engaged and motivated, which can lead to improved job satisfaction and retention.

In conclusion, quality, relevant training can help fill the employee experience level gap in service technicians and service management in the construction equipment, mining equipment, and gas compression industries. By providing employees with the necessary technical skills, safety and compliance knowledge, customer service skills, teamwork and collaboration skills, and career development opportunities, companies can ensure that their technical teams are well-equipped to meet the demands of the job and provide excellent service to customers.

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Critical Thinking Skills

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Critical Thinking Skills

Guest writer Jim Dettore brings the importance of critical thinking skills into the work we all do in our industry with today’s blog.

Heavy construction equipment plays a crucial role in various industries, including construction, mining, and agriculture. However, like any other mechanical device, these machines are susceptible to failure, leading to equipment downtime, costly repairs, and even safety hazards. Therefore, it’s essential to conduct root cause failure analysis to identify the underlying causes of equipment failure and take corrective action to prevent similar incidents in the future. This is where critical thinking skills come in.

Critical thinking skills are essential for analyzing complex problems and making informed decisions based on available evidence. The root cause failure analysis of heavy construction equipment failures requires a systematic and analytical approach to identify the contributing factors and develop effective solutions. Often, it can be summed up as the forensic analysis of metal destruction. In this blog, we will discuss some critical thinking skills that can help in conducting root cause failure analysis of heavy construction equipment failures.

  1. Data collection: Collecting relevant data is the first step in conducting root cause failure analysis. Critical thinking skills involve the ability to identify relevant data sources, gather information from various sources, and evaluate the quality and reliability of the data.
  2. Problem analysis: Once the data is collected, the next step is to analyze the problem systematically. This involves breaking down the problem into smaller parts, identifying the contributing factors, and determining the relationships between them. Critical thinking skills help in identifying patterns and trends, as well as evaluating the significance of the factors contributing to the equipment failure.
  3. Hypothesis testing: After identifying the contributing factors, critical thinking skills help in developing hypotheses to explain the problem. This involves creating a plausible explanation of how the equipment failure occurred and evaluating it against available evidence. Hypothesis testing requires the ability to assess the validity of the evidence and determine whether the hypothesis is consistent with the available data.
  4. Decision making: Once the hypotheses are evaluated, critical thinking skills help in making informed decisions based on available evidence. This involves evaluating the pros and cons of different solutions, considering the potential risks and benefits, and selecting the most appropriate course of action.
  5. Continuous improvement: Critical thinking skills also involve a willingness to learn from past failures and improve continuously. This involves conducting regular equipment maintenance, monitoring performance, and analyzing failures to identify ways to prevent similar incidents in the future.

In conclusion, critical thinking skills are essential for conducting root cause failure analysis of heavy construction equipment failures. They help in identifying relevant data sources, analyzing problems systematically, developing hypotheses, making informed decisions, and continuously improving equipment performance. By applying critical thinking skills, heavy construction equipment operators and maintenance personnel can prevent equipment failures, reduce downtime, and improve safety, productivity, and profitability.

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The Validity of 5-Star Google Reviews

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The Validity of 5-Star Google Reviews

Guest writer Roy Lapa walks us through the ins and outs of feedback. We have all seen reviews posted online, but how can we measure the validity of 5-star Google reviews?

Can you trust them? Yes, with some precautions. Google actively updates, examines, and penalizes most false or biased reviews. Nevertheless, despite their best efforts to curb these actions, this behavior persists, and customers and businesses alike experience the negative effects.

Google wants its reviews to reflect the real experiences and opinions of its users and not be the result of either swaying or other forms of incentive. If Google discovers that a company offered incentives in exchange for reviews, it has the right not only to remove those reviews but also to suspend the company’s account. Here are three recent encounters I have had: 

Hotel Reviews vs. Hotel Experience

We booked a hotel for employees going on a work trip to a new region based on Google reviews. After the trip, when we performed a post-event review, one of the strikingly negative comments revolved around the hotel experience. Descriptions by the employees who stayed at the hotel depicted a dramatically different encounter than what we read within the Google reviews. As we investigated deeper, we found what seemed to be a lot of reviews from people who did not appear to exist. Though we did not do a full forensic dive, we concluded that the business had a substantial number of reviews which were not authentic. 

Marketers Give Advice on Paid or Influenced Google Reviews

Let us start with a definition of marketing from the American Marketing Association: 

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. 

Although the word ‘value’ is overused and rarely assessed, I am positive that customers would not value Google reviews unless they provided a complete representation, without bias, of the business they were considering engaging with. Unfortunately, I recently discovered the opposite within the marketing agency industry, and it is heartbreaking to see because it harms all professional and ethical marketers. Marketing strategies which focus on obtaining genuine reviews are a fantastic approach; however, be wary if the marketing recommendation you receive for your business includes any indication of achieving 5-star reviews as the primary goal.

Financial Consulting Firm Requests 5-Star Google Reviews or No Review at All

When a powerful group tells its members they are required to act a certain way or else, this is clear positional power at play and full of bias. This firm has an exceptionally large following, but in this instance, it has, unfortunately, lost focus on one of its foundational values of being ethical. Discouraging open and critical yet true feedback leads to several major negatives that have the potential to become monsters later. Here are two to contemplate:

  1. Focusing solely on the outcome will result in a win-at-all-costs mentality. The obvious downfall here is in crossing the ethical line.
  2. Short term gains in Google rankings and attracting more customers will eventually lead to long term consequences, such as being blocked by Google, being found out by customers or prospects, harming your reputation, and sacrificing your values.

 5-Star Conclusion

  1. Build a preferred online reputation on solid ground with real and unbiased reviews. 
  2. Make the process of collecting all customer feedback effortless.
  3. Create a system which will quickly respond to and manage negative reviews. 
  4. Update the Google review, if you are able, to satisfy an unhappy customer’s negative review.
  5. Alert Google right away if you have reason to believe that the review is fake.
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The Technician Shortage

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The Technician Shortage

Guest writer Jim Dettore addresses a major concern amidst labor shortfalls: the technician shortage.

The construction equipment industry is facing a long-term significant challenge: a shortage of experienced service technicians. The demand for skilled technicians has grown exponentially in recent years as construction equipment becomes more advanced, complex, and specialized. Unfortunately, finding experienced technicians to fill the demand has become increasingly difficult.

 

The shortage of service technicians is primarily due to two reasons: aging workforce and lack of interest from younger generations. Many service technicians in the industry are close to retirement age, and as they leave the workforce, the demand for their replacements is higher than ever before. The younger generations are showing less interest in technical trades, leading to fewer young people pursuing careers in heavy equipment service.

 

The lack of experienced service technicians is causing significant challenges for the construction, mining, and gas compression companies as well. Many companies are forced to delay projects due to equipment downtime, leading to costly delays and lost revenue. Additionally, unskilled technicians may not be able to properly diagnose and repair equipment, leading to further equipment issues down the line.

 

The importance of ongoing training for service technicians cannot be overstated. As construction equipment becomes more advanced and complex, ongoing training is essential to stay up to date with the latest technologies, repair methods, and safety protocols. Training programs provide technicians with the skills and knowledge they need to diagnose and repair equipment effectively and efficiently. 

 

Teaching service technicians the fundamental skills of proper parts inspection have several advantages.  Parts salvage or replacement decisions made with knowledgeable confidence will benefit the dealership in several ways. The current parts supply chain shortage requires better, well-informed decisions to be made, instead of simply replacing a part that might fix the problem, especially if the machine sits idle while waiting for the new backordered part (that may not fix the problem) to arrive. It also has a significant effect on reducing troubleshooting times, and equipment downtime. Service rework and unnecessary callouts are also reduced. All of which results in improved customer satisfaction, customer loyalty, repeat business, and improved warranty recovery.

 

Construction equipment dealerships must take proactive measures to attract and retain skilled technicians. One way to do this is to offer competitive compensation packages that include benefits such as healthcare, retirement plans, and paid time off. Additionally, companies should provide ongoing high quality, effective training opportunities to their technicians to ensure they stay current on the latest technologies and repair methods. The ongoing training combined with excellent communication help newer technicians feel appreciated and cared about. Constant communication, continuing education in their respective fields, and recognition of achievements help today’s younger workforce feel appreciated and invested in, thus helping improving employee retention. 

 

In conclusion, the service technician shortage in the heavy equipment industry is a significant challenge that must be addressed. Ongoing training is essential to ensuring that technicians have the skills and knowledge they need to diagnose and repair equipment effectively and efficiently. Heavy equipment dealerships must take proactive measures to attract and retain skilled technicians to prevent costly delays and lost revenue due to equipment downtime.

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Why is calculating Absorption Rate so important for Equipment dealers?

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Why is calculating Absorption Rate so important for Equipment dealers?

Guest writer Tom Montgomery writes about absorption rates as a measurement tool in this week’s blog post, “Why is calculating Absorption Rate so important for Equipment dealers?” 

Absorption Rate Calculation has been a measurement tool used by equipment dealers since the 1960’s. It is still a valuable measurement today.

In my work with equipment dealers all over the world I have found that the dealers that I consider to be on “the leading edge” measure their absorption rate every month.

This measurement tool is driven by the senior management of the dealership – it is not to be taken lightly.  When senior management finds that the rate falls below their standards they immediate action to improve it.

Absorption Rate Calculation – here is the definition!

It is the percentage of dealership expenses absorbed by the gross profit generated from Parts and Service sales.

Sounds easy doesn’t it!?

Not so fast! 

Dealer’s accounting methods vary greatly.

One example is the way the cost of goods sold is calculated in the Parts department. There are some dealers that include the cost of freight in the cost of goods sold to determine gross profit in the Parts department.

Is this the correct method? Many dealer principals insist on including all costs associated with running a Parts department. I believe it is the dealer’s choice.  Most importantly, the dealer should be consistent in their measurements.

Another accounting variance among dealers is the calculation of Service gross profit. There are dealers that include all “benefits costs” in the calculation of cost of goods sold.

Again, if that is the choice made by the dealership then remain consistent every month.

Other dealers chose to account for this as an expense. What is the correct method?

The answer to that is found in another question.

What is the dealer trying to measure by calculating absorption rate?

The answer is, “Will the gross profit coming for the Parts and Service departments pay the expenses for the dealership”?

Some dealers might ask, “Are there any expenses that should be excluded in the calculation or is it all dealer expenses?”

Great question!

How should “interest expense” and “allocated expense” and “administration expenses” be treated”?

The dealer must be certain that interest, allocated and administration expenses are reasonable, controllable, and justifiable?

What does that mean?

Interest rate should be associated with accounts receivable and accounts payable (but exclude interest on mortgages).

Allocated and administration expenses should not exceed 10% of sales.

So, what is the target for Absorption Rates?

Is it 80%, 90% or 100%?

The answer is 100%!

Why 100%?

The dealers should want all expenses to be “absorbed” by the Parts and Service departments.

What advantage does the dealership gain if absorption rates are at 100% or greater?

  1. It allows the Sales department to be more competitive in the marketplace.
  2. There are numerous ways for a dealership to increase absorption percentage. The first thing that dealer principals may rely on to increase service absorption is to write more repair orders for higher amounts — sell more service. 
  3. Tweaking pay plans, training service writers, changing processes, and focusing on recalls make sense, but a great way to get a jump in absorption is to focus on your used equipment inventory. 
  4. Everyone in the equipment business already knows that used equipment sales generate more gross profit than new equipment sales, but sometimes they forget that the used equipment department should be the service department’s top customer. 
  5. That will start a sales cycle that will grow labor and parts sales and allow the sale of service contracts that increase future service absorption.
  6. Lastly, loyal service customers is a constant producer of labor hours and parts sales for the used equipment department. 
  7. It’s important to support the service department through your used equipment; it will make the equipment more saleable, road-ready, and at the end of the day, the extra money will not affect the gross profit but will affect the bottom line for the service department. 
  8. The dealership’s goal should be to recondition more equipment in less time, because getting the equipment in the dealer’s inventory sooner will increase sales and profit for all three departments (Parts, Sales and Service).
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OEM vs. Dealer Brand Identity: Are you frustrating your customers?

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OEM vs. Dealer Brand Identity: Are you frustrating your customers?

Guest writer Roy Lapa continues his blog series focused upon Brand Identity with “OEM vs. Dealer Brand Identity: Are you frustrating your customers?

As a follow-up to my original post, “Brand Identity = Measurable Customer Behaviours,“ I would like to quickly highlight a problem that could affect both dealers and original equipment manufacturers (OEMs). We work hard to make our brands stand out to our customers, and the more a dealer and an OEM can work together, the better. Although some archetypes are more inclined to work well together, every organization is different and typically embodies one dominant archetype along with components of several others. While various archetypes may clash, they can also function in complementary ways.

The goal is to make sure that the customer knows that the OEM-Dealer brand identity stands for: consistent, predictable, and measurable behaviour.

 If the OEM and dealer archetypes frequently contradict, the brand goal of consistent predictable behaviors may be more difficult to achieve. Depending on the circumstances and environment, the 12 Jungian archetypes can interplay in a variety of ways. However, the following combinations demonstrate both potential matches and mismatches.

Matching examples

The Sage and the Explorer complement one another nicely since they both value wisdom and knowledge. While the Explorer seeks knowledge through firsthand experience, the Sage seeks understanding through research and reflection. They can strengthen each other’s weaknesses and widen their customer engagement by working together.

The Caregiver and the Innocent, also complement each other effectively since they both value nurture, compassion, and empathy. The Innocent conveys a sense of clarity and optimism, whereas the Caregiver offers support and guidance for customers. They may foster a safe atmosphere for one another and for customers by working together.

Mismatched examples

The Ruler vs. the Rebel: The Ruler archetype is concerned with upholding order and control, whereas the Rebel archetype is all about breaking the rules and defying control. Because the Ruler wants to maintain the status quo and the Rebel wants to change it, these two archetypes might easily collide.

The Sage vs. the Innocent: The Sage is concerned with truth, wisdom, and understanding, while the Innocent is focused on simplicity, knowledge, and optimism. Because the Innocent is pleased with the world as it is and the Sage is constantly looking to learn more and understand the nuances of life, these two archetypes may clash.  

Without insinuating any relationship pros or cons, the below are some example OEM and corresponding Dealer brand identities. Advantages arise when the dealer and OEM give their best effort to make sure that their most important customer-focused behaviours are complimentary. The examples are based on simple online research and are only meant to be used for conversational purposes. 

Key takeaways:

  1. OEMs and dealers should align their customer-focused behaviours. 
  2. OEMs and dealers with compatible archetypes may find it easier to establish a consistent brand identity. 
  3. OEMs and dealers with potentially mismatched archetypes should agree on a regional brand identity to avoid customer frustration.

Note:

All brands, dealer names, and original equipment manufacturer (OEM) references are owned by the respective OEM entities or their affiliates. These terms are used by Active Focus Point for reference purposes only and are not intended to indicate affiliation with or approval by the entity. 

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Coaches Corner v.04.06.2023

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Coaches Corner v.04.06.2023

In Coaches Corner v.04.06.2023, guest writer and Coach Floyd Jerkins writes this week on the topic of Behavioral Sales Metrics for Coaching Equipment Industry Sales Teams.

Every dealership organization is at a different place in time with the diagnosis of their sales teams and processes. The size of complex and level of operational sophistication are factors. Many times, it’s a location issue more than overall company-wide so that requires custom solutions. So, maybe this article is timely and you’re ready to look deeper into how to make real progress in the sales department. 

Professional Sales Management and Salespeople

Great salespeople are great salespeople, and in the equipment industry it’s no different than other industries. There are particular aspects unique to every industry due to a product’s life cycle, style of customers and personalities, buying patterns, and market conditions. And the best salespeople know they have to understand these industry specific characteristics to succeed, but there is more. When you learn to sell, you can sell anything. Yea, I know, I know, but it’s true.

Being a professional sales manager or salesperson in the equipment industry isn’t for everyone. There are real superstars doing this work every day and many of them make it look easy. They have a natural and personal approach that gets the job done. Others have tried and failed. Many linger on with average performance. Yet, owners who sell often do not follow the system they expect their salespeople to follow or they have a perceived top producer that no one can touch. 

There are typically high and low performers when you have a large sales team. Improving the performance metrics of sales managers and salespeople can be challenging to establish what particular actions need to be taken.

Building a sales team of all superstars is a great plan, but not always realistic or practical. In my experience, sales management and sales teams usually have a mixture of age and talent with varying skill sets and competency levels.

A Sales Managers Rally Cry – To Sell More, Talk to More People

To sell more, talking to more people always seems to be at the top of the list of things to do. Still, if a salesperson talks to a lot of people and prices a lot of people but doesn’t have a good measured closing ratio, it makes me wonder how effective they are and whether they should be allowed to keep talking to your customers. When a sales manager influences the sales team with a whip and chain or talks more about the problems than the solutions, is that the most effective leadership style to use in today’s business climate? I don’t think so.

The traditional metrics for sales success include new and used margins, sales volume, new and used turns, and a mixture of others. To be an excellent asset manager, you must know these metrics and how to positively influence their outcomes.

Performance Metrics Created Before & After the Sale

Like many traditional metrics, margins, turns, and other sales department indicators are created after a unit is sold. The efficiency of your booking and accounting practices determines when the sale appears in a statement. That could be anywhere from one week to sixty days past when the actual sale was made. Once the numbers are current, you can assess what’s going on. If you’ve followed my articles about this, you know where I am headed.

Let me ask a few questions:

  1. Who do you make more money on, a repeat customer or a customer who has never done business with you or your company before?
  2. Who do you have the most fun working with, a repeat customer or someone who has never done business with you before?
  3. Who do you sell in less time, someone you don’t know or a customer who’s bought from you before?

Perhaps you took a few seconds and thought about your answers. I appreciate the effort. Now, consider your answers and what you know and don’t know.

“The goal is to coach performance in the areas that help salespeople become more effective with real-time data. Becoming more effective in sales and marketing your business requires a deep understanding of your customer base so you can focus the sales and marketing team on what matters the most.”

Behavioral Customer Segmentation

The old saying is you can’t improve something unless you measure it. One of the first principles of process improvement is as a process evolves make sure you are measuring the right things. 

You probably already know the customer by machine or product sold, sales volume, and parts and service sales, so tracking this kind of customer segmentation can reveal even more real time data. Even a basic CRM system can track these customer categories.

Total Customers

Customer Categories

  • New Customer- This customer has never been to, called, or emailed your business before.
  • Repeat Customer- This is a customer who has bought from you before. Many companies have “orphan owners.”
  • Referral Customer- This is a customer who another customer referred to your business or the salesperson.
  • New Business- This customer is someone you meet at the gas station or a social event. A brief conversation in almost any social situation generates new leads.

The sale is the end result of all the activities performed by a salesperson. By coaching performance on these sales activities that happen before and during the sales process, we can naturally increase a salespersons effectiveness. 

When you measure these you learn a lot about how your sales mix is made up, how effective sales and front-line people are in each category, and even how well your marketing is doing. It also speeds up the learning curves. If you don’t know these, you are at the end of the sales cycle making decisions. When you are looking at unit sales, you are best guessing how effective your sales and marketing efforts are. 

A Behavioral Sales Mix- BSM

Each salesperson should log every Customer Contact interaction each day. To get buy-in, a sales manager communicates with the sales team to create the “rules of logging” they’ll follow. For example, if the salesperson is at the parts counter talking with Joe Customer and he asks how much that used machine is, that should be logged. Each person inputting into the system should understand what the code means when they log it. GIGO- garbage in, garbage out. 

Salespeople shouldn’t be allowed to post at their discretion, and that’s part of the rules created in the early stages of implementation. You don’t allow your accounting staff to post credits however they like, nor do you allow technicians not to record their time. Salespeople should be required to a certain standard of recording their day-to-day activities. Its good business. 

It’s essential to know how many Closes to Face-to-Face Contacts there are in the same time period. This establishes one of the fundamental Closing Ratios for performance improvement. 

By tracking these customer categories and how many face-to-face contacts by salesperson and how many closes by salesperson, you are ready to create a new view of your sales mix. Stay tuned, next month’s article will be on the analysis of these metrics. 

Floyd can be reached at floydj@me.com or www.floydjerkinsexecutivecoaching.com.

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Mastering Nonconforming Material Management for a Leaner, Meaner Business

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Mastering Nonconforming Material Management for a Leaner, Meaner Business

Guest writer Sara Hanks offers practical tips on mastering nonconforming material management for a leader, meaner (but nicely!) business.

It is great to be back with another blog post. While the title might suggest that I’m advocating for a “meaner” business, I’m not encouraging cutthroat tactics. Instead, let’s explore how to master nonconforming material management and make your operation leaner and more efficient. 

As an operations or quality leader, improving the nonconforming material management process is essential to reduce waste, enhance efficiency, and prevent recurring defects. We’ll delve into three practical steps to accomplish these goals and showcase an example from my personal work experience. Managing the nonconforming material process in a timely manner will avoid costly consequences.

Segregate and review defective parts daily.

Start with establishing a visible area to segregate the defective parts, as this will prevent the defective parts from being used in production or in your service center. Review the parts in the segregated area on a regular basis. Daily reviews are ideal to keep the parts top of mind. 

While I was the quality engineer of an electric motor manufacturing company, there was an issue where a part failed due to an electrical issue during the final test. The motor was set aside to make room for production. A day or so later, another similar issue occurred, and a day or so after that an electrical issue occurred with a component that went into the motor. Eventually, we discovered the root cause of the issue – the wire that made the electrical parts that went into the motor had a defect. The defect could pass several tests and go undetected; piles of parts have accumulated. If we reviewed the issue regularly, the root cause would have been discovered sooner, saving a lot of rework costs.

Define ownership and measure cycle time.

There are four major steps to a nonconforming material management process: identify/segregate, disposition the fix, execute the disposition, and verify the completion. Each phase needs an owner. In the execution phase, different teams own the step based on the disposition. For example, scrapped parts or parts that need to be returned to the supplier are managed by materials, whereas parts that require rework should be managed by operations. 

Once it is clear who owns which step, measure each step of the process. If the process is managed in an IT system, there are date stamps recorded as parts move through the process. These can be used to create the measurement system. Set goals for each step. If you are not sure what goal to set, try a 10% improvement over an established baseline, which can be determined by measuring the data for 8-12 weeks.

With the electric motor issue, the lack of ownership of each step extended the time to resolve the issue. The purchasing team was responsible to send the motor out to be torn down, however, the parts did not ship for several weeks after the root cause was identified because they weren’t held accountable. The accumulated defective parts sat in inventory – remember these are nearly finished goods, not supplied parts, so the inventory impact was significant. Additionally, the customer order was finite. We left the repairs to the last minute and used overtime to ship the parts on time. Measuring the process by the owner would have prevented the unnecessary cost.

Implement a Continuous Improvement Framework

My favorite continuous improvement framework is the DMAIC process, or Define, Measure, Analyze, Improve, and Control. However, when it comes to continuous improvement for everyone in the organization, the DMAIC process may be too challenging to learn and adopt. A simpler, more accessible framework is the Plan-Do-Check-Act or PDCA framework. Here is a brief overview of the PDCA cycle: 

  • Plan – identify a problem that needs solving or an opportunity for improvement. Analyze what can be done, establish a goal and identify the steps needed to accomplish the work.
  • Do – implement the plan, on a small scale if possible.
  • Check – evaluate the results.
  • Act – Standardize effective solutions or iterate back through the cycle.

Encourage everyone to participate in PDCA projects. Create a reward system to promote engagement. Rewards can be simple, such as recognition during an all-company meeting, or celebrating with a small party. Company swag is good, especially if employees can wear it during work hours. Buying a jacket or a hat for completing a project is extremely low cost compared to the savings of the project. This approach helps in addressing the root cause of defective parts, which will impact the cost of quality over time.

In the electric motor example, we did identify a corrective action project to prevent a recurrence. In the wire manufacturing process, a preventive maintenance schedule was created to replace components likely to wear on a regular basis. The small cost of changing a roller is minute compared to the larger expense of reworking the finished product. I cannot remember if we celebrated with a pizza party or not, but in hindsight, if we didn’t, we should have!

Take inspiration from my electric motor example, where timely root cause analysis could have saved money and contained the issue. Don’t let nonconforming materials pile up and obscure underlying problems. Instead, tackle them head-on with proactive measures that involve the ENTIRE team. By doing so, you can avoid missed deliveries due to quality issues and foster a culture of continuous improvement.

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