Relationship Selling- A Tool for Improving Your Presentation

/in , /by

Relationship Selling- A Tool for Improving Your Presentation

Guest writer Floyd Jerkins joins us today for another article on relationship selling. This time viewing relationship selling as a tool for improving your presentation.

Since you are following my articles on Relationship Selling, by now you’re starting to get it that I believe in following a system. That doesn’t mean every sale made is templated. It does mean that the more times you can follow a system, your closing ratio goes up.

Practice the Fundamentals Before Engaging Customers

Feedback from master salespeople who do an honest evaluation of their sales strategies often mentions that reviewing the fundamentals before creating an advanced approach just makes sense. Why do professional NBA or NFL or any other professional team work on fundamentals at every practice? They practice on the sidelines, not on customers. They work on the fundamentals.

The Chair Salesperson

Let’s say you are selling chairs. You meet the customer in the aisle after giving them a few minutes to roam the store. You start with an opening line, Welcome to our store; how may I be of service? Of course, the answers could go a few different ways so let’s say they are looking for chairs. 

You are into the Qualifying stage of the sales process. Too many salespeople will start by sharing what chairs are for sale, how many they have, and where they are in the store. A professional furniture salesperson starts by asking questions about why they want a chair, what they have now, what different features they are looking for, etc. You build rapport through questions and showing a sincere interest in the customer. 

Through this stage, you’ve learned that your customer loves their grandchildren, has a bad lower back, likes to rock in a chair, and doesn’t like leather. Ok, great, now you have something to talk about that’s important to the customer.

What is important to the store manager is that inventory turns. What’s important to the salesperson who is on commission is that they sell a chair today. But none of what’s important to the store manager or the salesperson is valuable to the customer. 

In the presentation stage, what do you present about the chair that you’ve selected for the customer? You wouldn’t pick a leather chair that doesn’t rock just because it’s the one on sale or the one your manager told you to sell today, would you? You’d present the chair with the customers’ needs in mind, wouldn’t you? I hope the answer is yes!

Customer Expectations

During the first few steps in the sales process, the customer expects the salesperson to ask questions. It’s a normal process. By using this opportunity to explore, you learn about the buying motives, who the buyer and decision-makers are, how they want to pay for it, how much down payment, and just about anything else you want to know. If you are into the closing stage and asking the customer how much down payment they have, you are well on your way to being an average salesperson and will make an average income and live an average life. 

As you ask questions to learn, make notes. Don’t be afraid that you should remember everything. A good salesperson may talk with several people in person and over the phone every day. Good note-taking is an essential part of time management. I cover those subjects in other articles. 

Working Smart: Tools of the Trade

A professional technician who works on cars has a large toolbox with many drawers. Each drawer contains a tool that’s used for a certain purpose. A good tech won’t use a crescent wrench when they need a 5/8-line wrench. A great salesperson uses selling tools in the same way. There are tools of the trade that help to close more sales in less time. Use them well, and they will make you money and create a lifetime of customers. Don’t use them, and you will struggle with making sales and a significant income. 

In teaching sales and sales managers, I always tried to make it easy to learn new ideas. Now, this isn’t always easy, but using acronyms always helps with retention. 

The SPACED analogy is a tool. Here is how this works. 

Mr. Customer, you’ll notice that the chair rocks but it won’t tip over because of the extra flange on the backside of the platform. That’s a perfect safety feature to prevent you from overturning the chair when you’re rocking your grandchildren you mentioned. Will that feature become valuable to you?

Mr. Customer, you mentioned (while we were in the qualifying stage of the sales process) that you preferred cloth over leather. This particular chair has a cloth velour that is easily cleaned and won’t stain. The appearance of this will last for years and years. Does that type of feature interest you?

Mr. Customer, please notice the adjustable lumbar support in lower part of the seat. That has a wide range of adjustments to custom fit to a person’s backside. You mentioned you’ve had some back problems, does this type of feature sound important to you to improve comfort?

Ok, see how the spaced concept works? When you are in the qualifying stage asking questions, you want to learn what the hot buttons are. By keeping the spaced concept in mind, you pick these up and can use them during the presentation.

When you present your product through what you learned the customers wants or needs are, it’s like magic. You soon learn if you are on the right product. Now, pay attention, we’re not even talking about price here are we? If everything is right for the customer, the price is still important, but not the most important. You are building value.

Note that after every explanation of a feature I ask the customer a question to validate that the feature is what they wanted or that it is important to them. Why do this? What you don’t want to do is make an ineffective presentation by covering too much detail when the customer might not want it. You also want to make sure that you are getting buy in from the customer as you explain key features of your product or service before moving on to the next feature.

In closing…

By systemically asking these questions before moving on to the next feature, you are learning if you are on the right track or if you need to make a course correction with a different product. You are building value.

Did you enjoy this blog? Read more great blog posts here.
For our course lists, please click here.

Quality of Communication Channel Part 2

/in , /by

Quality of Communication Channel Part 2

Guest writer Ryszard Chciuk educates readers about service quality in his blog post on the quality of the communication channel.

Quality of Communication Channel Part 2

When writing about the quality of the communication channel, I mean the definition of service quality worked out by Parasuraman, Zeithaml, and Berry in 1985:

  • Service quality is the degree and direction of a discrepancy between customers’ service perceptions and expectations

To improve the quality, we have to close gaps causing the difference between customer expectations and his perception of service. The central gap is:

  • Not Knowing What Customer Expects

In the previous articles about communication channel quality, I presented my view on specification sheets, operator’s manuals, and social media. This time it is about a dealership blog, the interactive blog.

Several years ago, I attended a meeting with the key people from one of my country’s leading construction equipment dealers. We had an exciting discussion on the dealership advantages when the blog function is added to the website. I am summarizing here my thinking about that idea. 

I have checked some web pages of dealers representing the leading world machine manufacturers of machines for the construction industry. I also checked the top manufacturers’ websites. I bumped into only a few manufacturers’ blogs. Blogs’ content I have found on the local dealerships’ websites was mainly a copy of those. Is it possible that a specialist in the manufacturer’s headquarter knows the troubles of the local machine users? Yes, he knows machines, but can he build close relations with local customers through the blog he is running? 

The blog function included in the company website will not shift your marketing from the billboard alike into the engagement one (definitions by Mets Kramer) if it is done traditionally. What do I mean by the traditional way? After you click the BLOG button in the main website menu, you are directed to the billboard containing articles about subjects the dealer or a manufacturer wants visitors to learn about. Do those articles consist of answers to questions bothering potential or current users of construction machines? Yeah, perhaps the dealer thinks so… Is it the best way to practice engagement marketing in the digital dealership? I believe it is necessary to have an interactive blog.

The interactive, thus engaging, a blog is interactive when it has a function of comments. Only Volvo CE NA has a comments function activated among the ten top manufacturers. During the last four years, they published over 90 articles and received circa 70 visitors’ comments. For example, the article “Wheel Loader Operator Tips: How to Load Trucks with Added Efficiency and Productivity” is commented by readers: 

I am so happy I found your blog and I absolutely love your information about wheel loader operator tips how to load trucks with added efficiency and productivity! I liked and it is wonderful to know about so many things that are useful for all of us! Thanks a lot for this amazing blog!!

And another one:

Thank you very much for wheel loader operator tips how to load trucks with added efficiency and productivity, it’s difficult for me to get such kind of information most of the time always… I really hope I can work on your tips and it works for me too, I am happy to come across your article.

I know from my experience how difficult it is to keep the comments’ function activated. The most time-consuming task is blocking or deleting thousands of unwanted commercials, usually sent by bots. But after all, the primary and most important mission is to be in touch with visitors who leave comments. They can often be unpleasant, sometimes enthusiastic, and rarely initiate constructive discussion. But only interactions build solid relations and engagement. 

To be clear, I do not suggest authorizing anonymous visitors to write uncensored comments. 

There are blogs with the function of active comments, and visitors do not utilize them. It also concerns my blog. I published one hundred articles that were seen over one hundred thousand times, and as a response, I got only forty visitors’ comments. I am not very happy with that, but my goal is to share my experience, not monetize my work. And I wrote all articles because it was my desire, not of my visitors. The dealership’s blog should contain articles containing answers to customers’ problems presented on social media (I explained it here) or brought from construction sites by salespeople and aftersales representatives or technicians. Then blog readers will engage, I hope.

The number of manufacturers’ blogs is meager, and it is not easy to find them. The number of articles on existing blogs is not satisfactory. For example, Caterpillar presents only about thirty items on their Construction Blog. More articles they have in the section called Articles by Experts. In my opinion, those are not answers to questions customers are ashamed to ask. 

I am afraid construction equipment dealers neglect the idea of sustaining communication with their best agents – machine operators and another construction site influential personnel. Why do they not use the cheapest channel, i.e., social media and blogs?

How do you learn about customers’ perception of the quality of your sales and aftersales services? What do they think about the quality of your communication channel? Are you already genuinely subscribed to the idea of engagement marketing?

Did you enjoy this blog? Read more great blog posts here.
For our course lists, please click here.

A Force To Be Reckoned With

/in , /by

A Force To Be Reckoned With

Our new guest writer Dave Gordon is currently the Executive Director of the Independent Equipment Dealers Association where he has been on board for 18 months. His experience includes more than 35 years of leadership experience in strategy, sales, marketing and financial issues, as well as distribution development for manufacturers. Dave spent his early years at AED as the Director of Membership, then later became Vice President of Sales/CONDEX and served as the Publisher of AED’s monthly magazine Construction Equipment Distribution. Dave current lives in Westchester, his hometown where he grew up, just fifteen minutes west of the city of Chicago. In his first blog post for Learning Without Scars, Dave Gordon writes about a force to be reckoned with…

Taking a pass on your trade association? Here’s what you – and your team – are missing out on.

A long time ago in a place far away – queue the scrolling Star Wars intro – I was trying to recruit a construction equipment company on the East Coast to join the association I worked at for 30 years, Associated Equipment Distributors (AED). It was the early 1990s, before the advent of sophisticated CRM systems, emails, and e-newsletters – so, plugging away with all the “old tools” at my disposal, I’d been after this guy for some four months. 

I will say he was a formidable “opponent,” silent for long stretches and then, if I happened to catch him on the phone, quick with an objection to nearly every argument I presented. In the end, I believe the primary reason he finally joined was to put a stop to all my calls, notes, and mailed information! 

But here’s the thing: Once I convinced him to become a member, that dealer principal jumped in with both feet! He attended every meeting, he served as a director and eventually became chairman, the highest volunteer position. On several occasions, he told me his active participation had been one of the most rewarding business and personal experiences he ever had. The connections he had developed became lifelong friendships. 

I could tell literally dozens if not hundreds of similar stories – bringing business owners and their employees into the family of their industry’s trade association has been a chief hallmark of my career. Sometimes it took me well over a year to “win the fight,” so you can imagine the frustration when, once in a while, someone would drop their membership after just one dues-billing cycle! 

The fact is, while some owners prioritize and fully immerse themselves in all the benefits of membership, others succumb to their own busyness and give up before thinking it all the way through. Perhaps the No. 1 objection about associations I’ve heard over the years is this: “You guys are doing a great job, but I just don’t have the time to read anything or to attend meetings.”

And look, I get it – you’ve got a business to run and a bottom line to grow. But in my experience, that mindset is likely to backfire on you eventually. That view of associations overlooks one important thing, and in today’s labor market, it may be the most crucial consideration: your people. Association membership enables you to offer resources to your team that help grow them professionally, and that, my friend, will absolutely help grow your bottom line. Industry-specific education, webinars, conferences, reports and publications, along with networking events – these are the tools needed to grow and maintain a successful business. 

So, while you may initially feel the same overwhelm you get with the daily newspaper subscription that you just can’t keep up with, a better way to approach your association membership is like the all-you-can-eat buffet: You have to pace yourself, be discerning, and choose the opportunities that can help you with your specific business issues.

And remember, it’s not just about you. You definitely want to get as many members of your team involved as possible. Most corporate memberships allow your staff to take advantage of the full array of benefits, so my advice is: Get them all on the mailing list!

Coming together with other companies within your industry creates a world of opportunities you wouldn’t otherwise have access to on your own. The benefits of membership in a trade organization can be different for everybody, but here are four that could make a big difference for you. 

1. Training & Education

Training and education are mission critical to maintaining a competitive edge in any industry. Having the best and brightest employees is positively essential for growing your business. Investing in your employees helps retain them, and they’re likely to be far more productive. 

Most trade associations offer industry-specific seminars, workshops, and classes to help you learn and grow, with subjects ranging from sales to rentals to parts and service. Other training may include high-level topics for owners, CFOs and general managers.

2. Networking

Trade organizations offer a great way to connect with others in your industry whose businesses are like yours, and they face the same day-to-day problems you might be experiencing. Naturally, you probably don’t want to discuss strategic or operational issues with a neighboring competitor – the beauty of your association’s national membership is that you’ve got out-of-state “friends and family” to call upon, business peers who can share their experiences and either help you explore new ideas or connect you with someone they know who has had and solved the same problem.

3. Industry Trends

If there’s one thing that’s been constant throughout my 35 years in the construction equipment distribution industry, it’s change. Through the highs and lows of the economy, the roll-up of many dealers by the national rental companies, and the consolidation of many dealers, being a part of a trade association will keep you informed on all the emerging trends, economic data, and business tips to help you survive and thrive. 

4. Advocacy

Several trade associations lobby the government on behalf of their industries. Many of these issues can have a direct impact on your business, so joining forces with other members in the organization can certainly be more effective at the federal and state levels than going it alone. Even if you prefer not to have a direct, personal role, you’ll be kept up to date on what legislative issues are being argued on your behalf. 

At the end of day, belonging to an association isn’t a threat to your entrepreneurial spirit or your proprietary ways of running your business – instead, it’s an enhancement to you and your company. Association membership gives you what you probably can’t achieve on your own, multiplying available resources, fostering ideas, and cultivating relationships that enrich you and your employees professionally and personally.

If ever you’ve battled against the “fear of missing out,” now is the time lay down your weapons and feel it in full force! Because where associations are concerned, I cannot begin to count the competitive advantages missed by those who choose to tough it out on their own in these bizarre and uncertain economic times. May the force of association membership be with you! 

Did you enjoy this blog? Read more great blog posts here.
For our course lists, please click here.

 

Dedicate It To Rental

/in , /by

Dedicate It To Rental

Our new guest writer, Gary Stansberry, President of The Stansberry Firm, has over 20 years mergers and acquisitions experience within the rental industry with 135 transactions totaling over $1.2 billion in transaction value. As an executive with two publicly traded strategic acquirers, Mr. Stansberry served as a buyer’s representative sourcing, evaluating, negotiating, managing and closing transactions throughout the country. Since 2000, Mr. Stansberry has served as a middle market transaction advisor serving business owners, strategic and financial buyers in mergers and acquisitions, market value and operational analysis. In this, his first blog for Learning Without Scars, Gary writes about our time, and the fact that we need to dedicate it to rental.

Recent construction rental transactions include Illinois Truck & Equipment (Morris, IL), Toolshed Equipment Rental (Escondido, CA), Priority Rental (Philadelphia, NYC), B&M Equipment Rental (northern Florida) and We-Rent-It (six locations in central Texas).

Like many of the clients he serves, Gary is an entrepreneur to the core. Prior to his merger and acquisitions experience, Mr. Stansberry founded and sold two successful businesses including a construction equipment sales and rental business.  He has served as President, General Manager, Controller and Chief Financial Officer of several closely held firms including an auto parts distributer, a diversified oilfield services company and construction equipment sales and rental businesses. Gary is a Certified Public Accountant (non-practicing) and spent two years with a national public accounting firm. Gary holds a B.B.A. in Accounting from Texas Christian University.

Mr. Stansberry is a frequent contributor to various rental industry trade publications including Rental Equipment Register and Rental Management. In addition, he is often called upon as a featured speaker with various rental industry trade groups and software providers. Private equity firms, investors and high net worth individuals regularly seek Gary’s advice and expertise in evaluating investments and acquisitions within all aspects of the rental industry including construction equipment sales and rental, party/special event rentals and oilfield rentals and service.

Early in my career, I worked at an oilfield service company here in Texas.  Something I learned there that has always stuck with me is the sense of urgency and the responsiveness to customer needs that were instilled in all levels of the operations.  In the oilfield, “time is money”; keep large drilling rigs or large crews waiting on your services and you won’t be back on the next job.

Fast forward 10+ years when I joined Rental Service Corp. (RSC).  I came to RSC from an AED type dealer that had what I thought was an active rental department.  I thought we were in the “rental business”.  What I found at RSC was a much different sense of urgency mentality, similar to what I had experienced in the oilfield.  My thoughts were recently summed up by the head of the rental division of a large AED dealer.  As we pulled up to one of their operations, the rental executive motioned to the left where the dealership operations were based and said “Those guys move slow”, then to the right where the rental division was located and said “We move fast.”

I can hear the groans from the dealership management saying that’s an unfair judgement.  Maybe so, but I also think there will be some reluctant acknowledgment of truth to that.  Having been on both sides of the equation, I can tell you that, to truly run a successful rent-to-rent operation, it requires dedication to rental.  By dedication, I mean in every send of the word:

  • A dedicated workforce from mechanics, to rental counter personnel, rental salesman and rental management. I don’t want my shop foreman “triaging” equipment and personnel deciding on whether to work on a customer machine or a rental machine.  I don’t want my salesman spending hours on working on a deal to sell a 100,000 lb. excavator instead of the minutes it takes to quote a 3-month rental on a track loader.
  • A dedicated facility with its own rental counter, a shop and a yard. The rental counter is friendly to walk-ins, the yard is segregated by rental ready and machines waiting to be serviced.  Often, this arrangement can be handled with a shared facility, with separate entrances, with shop and yard space designated for rental.
  • A dedicated rental fleet. No blurry lines between new sales, used equipment or rental purchase.  These machines are dedicated to rent-to-rent and generally not for sale unless the rental machine can readily be replaced.  I am okay with dealer oriented selling rental fleet quicker than a rental-only operation.
  • A dedicated set of Key Performance Indicators (KPIs) strictly for the rental division. This may require a separate software system or some customization to your current system.  In rental, it is crucial to track dollar/financial utilization of the fleet, time/physical utilizations of the fleet, repairs and maintenance as % of rental revenues, among others.  There are also some sophisticated “add-on” data services such as Rouse Analytics that provides this key data compared to others in your market that may require specific software.

Some may ask why spend all this time and resources to establish or refine a rental division.  I would point to the following two factors as why rental should be an emphasis of your business:

  1. The Rental Market is Growing.  The American Rental Association, through its ARA Rentalytics™ service, has consistently touted 2022 to be a double-digit growth year for the construction and industrial rental segment.  As recently as February 2022, the ARA affirmed its guidance for 12.1% growth in 2022 over 2021, with additional growth of 6% in 2023.  There is the also notion that the combination of inflation, equipment availability and supply chain issues, in tandem with a labor shortage will cause more end users to rent equipment vs. buying equipment: i.e., an increase in rental penetration (equipment rented vs. owned by the end user).  According to the ARA, rental penetration in 2019 was 56.7% and dropped to 54.5% in 2020.  The last major shift in rental penetration was driven by the 2008 recession; according to the ARA rental penetration in the US was only 39.7% in 2005 steadily increasing from 2011 to the current level of 54.5%.  Some industry observers believe the current market factors could drive rental penetration several points higher and possibly as high as 60% within the next 24-36 months.
  1. Let’s talk margins. New equipment margins may only be 10%-15%. Used equipment margins may be 20%-25% and parts margins may be 30%-35%.  Depending on how you figure your rental margins, generally your true cost of sales (depreciation, repairs, etc.) run only 20%-30% resulting in margins on rentals of 70%+.

Rental is a predictable, recurring revenue stream.    Add in the fact it is a high margin, growing segment of a business that you are likely already in.  Ask yourself, given these margins, this growth, how should you spend your next hour?  My answer is to dedicate it to rental; you just may have to move a little quicker.

Did you enjoy this blog? Read more great blog posts here.
For our course lists, please click here.

 

 

 

 

Data Automation and AI Analytics

/in , , /by

Data Automation and AI Analytics

Today, we are proud to introduce a new guest writer. C. Stephen Clegg is a Managing Director at Winsby Inc. where he oversees the analytics division, Zintoro. He’s developed an AI model that shows exactly what your company’s strength and weaknesses are, based on your past three years of invoice data. The model is trained to predict where your revenues, customer retention, and purchase frequency are headed if nothing changes in your approach. It also provides the ROI on Winsby’s marketing programs, according to your customers’ purchases. In his debut blog for Learning Without Scars, he writes about data automation and AI analytics.

Data Automation and AI Analytics

Today, data automation and AI analytics is available for equipment dealers to easily service their
customers by identifying what defines the best customer service to drive profitable growth. The
days of opinions, intuition and guessing to make business decisions are in the past.
These automated and AI driven systems are affordable to almost every dealer of any size to
compile metrics into simple actionable real time reports and forecast the future. This approach
allows management and employees at every level to focus on what the customer needs and
expects while anticipating what resources will be required in the future. The ROI on these
programs is paid for many times over with reduced operating, sales, and marketing costs.
The equipment industry is extremely cyclical and seasonal. Most equipment dealers do not have
the tools, key metric reports and forecasting programs to take action and make intelligent
decisions in a timely manner. They often rely on subjective metrics that are not linked to
measurable operating and financial results. The lack of usable data causes management to be
reactive and always scrambling to solve the latest unanticipated problem.
Successful equipment dealers use AI automated systems and reports to monitor and solve their
major customer service and customer engagement issues which include: employee engagement
with customers, internal operating performance metrics, customer retention and engagement,
and identifying and closing sales opportunities.
If you do not have accurate operating and financial information, you will be unable to allocate
your time and resources effectively to the activities that will keep your dealership profitable and
support your future growth.
Programs such as Zintoro.com Artificial Intelligence (AI) Analytics shows you what you can
expect in your business over the next 12 months. It forecasts the number of transactions, the
number of active customers, and the expected revenues with an accuracy that exceeds 95%. It
also provides specific recommendations on how to improve your growth. This data can be
analyzed by department and by location, as well as overall.
The platform identifies customers that are at risk of being lost and tracks key metrics on a rolling
12-month basis, shows and tracks the key metrics that drive your company’s growth and
identifies leads for your sales reps.
By understanding your potential for growth and your current market position, the program
identifies the areas where you are falling short and where you excel, producing insights, backed
by data, into how to grow effectively and efficiently. The program is also able to identify what
tools are working and which customers are at risk of leaving, and it shows the markets and
industries you need to target to grow your business profitably.

The reports clearly identify sales reps, departments and customers that require attention, so you
have an easy-to-follow road map for growth using the key metrics and forecasts.

Some of the core key metrics reports used by successful equipment dealers include:
o Forecast and actual results for revenue, transactions, and active customers by
customer, department, branch and overall
o Sales retention leads for your sales reps to contact—customers in danger of being
lost
o Comparative rankings for branches and sales representatives
o Market Industry Analysis with the greatest opportunities
o ROI on sales and marketing programs

The following is an example of a Revenue ROI report for marketing programs, such as calling
prospects and customers and sending information to them, distributing emails, and conducting
customer satisfaction surveys, removing the guesswork from whether your marketing and sales
programs are working.

The equipment industry is a difficult business to operate. Zintoro.com, an AI analytics program,
allows you to plan and focus on building your business versus always struggling to react to
customer demands.

Did you enjoy this blog? Read more great blog posts here.
For our course lists, please click here.

Relationship Selling Metrics

/in , /by

Relationship Selling Metrics

Guest writer Floyd Jerkins continues to educate readers at Learning Without Scars about Relationship Selling with a look at your business’ metrics in this Friday’s blog post.

Relationship Selling Metrics – Face-to-Face and Write-ups

Operating a business requires a basic understanding of financial management. Knowing the numbers is important in making good decisions. If your expenses are too high or sales are dropping off you make changes. Do you know how many customers your sales team talks to every week? Many organizations don’t know the answer and are leaving thousands of dollars on the table for a competitor to get.

Ok, let me do a reality check. There are issues with starting to measure a sales team’s effectiveness. Typically, the measurements start with sales volume and other financial metrics. Make no mistake about it; I am a proponent of these. The challenge is to identify where the sales process can be improved before the close of the sale. When you can enhance salespeople’s actions from the start to the end of the sale, the closing ratio goes up significantly.

By now in your business life cycle, you have some sort of a CRM in place. Various tools on the market are either simple or as complex as you want. Getting your sales team to log each sales action properly is yet another challenge and a whole article all to itself. So, with my disclaimers in place, let’s explore.

Measuring a salesperson’s success by the total revenue they generate is only one part of the equation. If a salesperson is selling 5 million a year, but leaving 5 million on the table, really, how good are they?

First, to be successful in sales, you have to talk to a lot of people. You also have to give a price to make a sale. Simple, right? Here is my rationale for a few sales performance metrics to get us started. Each CRM, as well as your organization, may call them something different, so please read between the lines if you will.

  • Face-to-Face Contacts- This category measures how many face-to-face contacts a salesperson encounters on a day, week, and month. This could be a new prospect who has never been to your store or a previous owner who’s bought from you before or even a referral.
  • Sold- Meaning the product is sold and delivered. Paperwork is done, financing is approved, and the checks have cleared.
  • Write Up- Meaning that the salesperson quoted a price and then wrote the order. This doesn’t mean it’s closed, just that a written order was initiated.

Sample Questions About Performance

What percent of Face-to-Face to Sold do you think is a good number? 

In the article, Relationship Selling- How to Measure Sales Success, I outline the basics of measuring the types of customers most businesses have. The average closing ratio, many say is 20%. I think that’s a weak number and here’s why.

Long-standing businesses have repeat customers. What if your sales team has 100 Face-to-Face contacts in a month that are repeat customers? Do you think closing 20% is acceptable? I don’t. The salespersons selling process needs to be revised because they cost the business thousands of dollars. Factor in your marketing investment to get an ROI that’s not impressive.

Take each “unit” the salesperson sells and divide that by the total number of face-to-face contacts in a given time period. If you establish a salesperson has a 20% closing ratio, what if they could improve that 5%? A 5% increase would increase the “unit” sales. This is a “natural” increase to make more sales. It doesn’t cost you anything if you help your salesperson improve their effectiveness.

Your business should be closing at least 40% to 60% of your repeat customers. Without measuring, you have wishful thinking. 

What percent of Write-Ups to Face-to-Face contacts is a good number for an experienced salesperson?

Typically, a salesperson will share a price with a customer before they even qualify what the customer wants. This is generally because that’s one of the first questions a customer asks, “How much is it?” Salespeople feel obligated to answer every question vs. learning to control the sale through questions.

The rule of high volume and high margin sales is never price before you establish value. 

A salesperson who verbally prices, especially if they don’t establish value before pricing, will have a lower closing ratio compared to a salesperson who makes written quotes every time they price. Increase the number of professional write-ups, and you will close more sales. 

80% of all pricing should be in writing. 

How effective is an experienced salesperson that sells 30% of their previous customers? 

Let’s say you are measuring the type of customers your sales team is talking with. You know the % of each category. Every time a salesperson prices a customer and a sale is not made right then, the customer leaves the business.

Statistically, I know that most salespeople are not good with follow up. Nearly 7 out of 10 don’t follow up within 24 hours after they price a customer who doesn’t immediately buy. Part of this is because sales managers often focus their team in the wrong direction due to various financial or inventory pressures. The other part is they lack a system as well as the verbal strategies to service the customer. Many salespeople are great at selling the sales manager on why they shouldn’t call back, or they wait on the customer to “get back to them” as they artificially promised.

If this experienced salesperson is only selling 3 out of 10 customers, what is happening to the other 7? If you have a sales team of 10 with a 30% ratio, look how much is being lost due to an inefficient sales process.

Measuring allows you to know the realities of how to improve your sales team’s behaviors and maximize your marketing budget. 

Measuring tells you exactly where to influence the behaviors of your salesperson and sales team. 

Learning to be Effective Starts with Performance Sales Metrics

Talking to a measured number of prospects in a given period of time is just part of being successful in sales. There are only so many selling hours in a day, week, and month. Learning how to be effective with each contact starts the journey of successful time management.

By establishing value and knowing how to communicate that to a prospect, the closing ratio goes up dramatically, but so do the margins. A sales-driven organization takes time, energy, and the correct vision to have a highly competent team.

What is your sales team performance sales metrics? 

Did you enjoy this blog? Read more great blog posts here.
For our course lists, please click here.

Discounting

/in , /by

Discounting

Today, we are proud to introduce our new guest writer, Bill Pyles. His blog today is on the topic of discounting. After separating from the United States Marine Corps, Bill started a lifelong career in heavy equipment dealer product support. Starting as an apprentice technician, Bill worked his way up to the General Service Manager for a multi-state Cat dealer. Bill continued to serve in similar roles as General Manager of Product Support to VP of Service for multistate OEM dealers. Coming up thru the product support ranks gave Bill an invaluable education of customer relations, dealer product support and an understanding of the dealers most valuable resource, the product support team. 

After 47 years of service, Bill has retired, living in Florida with his wife Diana and golden retriever, Shelby. Bill & Diana spend their time with their two sons and five grandchildren.

Bill can be contacted at LinkedIn; www.linkedin.com/in/billpyles or wlp69ss@gmail.com

Discounting

Don’t Sell Yourself Short.

At one time during my career, I worked for a dealer with a very large and diverse rental fleet. The OEM we represented did not provide a full construction and paving line needed to support a large rental fleet, so we purchased new and used equipment from other dealers.

Now after being on the dealer side for many years, my role was now the customer with other equipment dealers and I thought I’d ask for the one thing many customers ask for, the dreaded, deadly discount.

During my career I’ve worked with a few very large OEM dealers who had customers on the international level. They purchased the largest sized equipment on the market. I had personal relationships with many professional purchasing agents who know little about the equipment but knew every trick in the book to secure discounts.

My involvement at the time was service (shop, field, rebuild) related and these large customers ran hundreds of thousands of dollars through our service departments. Back in the 70’s and 80’s many dealers were not using data to analyze customers buying, renting, parts purchasing for large, if any customers. When the data did become available, and available to all product support and sales management, it became painfully apparent the dealer, while moving millions of dollars through the dealership, overall profitability was minimal. Why? Each department, not wanting to upset the large customer trotted down the discount road. Service was busy discounting labor; parts was in a hurry to discount while the sales department was taking the skinniest deals possible. These larger customers consumed a lot of dealer time and dealer resources. Regular meetings to discuss equipment and or product support issues. Demanded a very high parts availability percentage, major components in inventory on hold for their use only, an on-site field tech within 4 hours of the machine down call, guaranteed machine availability with consequences, and generous dealer policy dollars when the warranty expired (but did not purchase the extended warranty).

Were they bad customers? Absolutely not. They were very organized, knew their costs and had highly trained and professional managers, especially the purchasing managers. They in fact were holding all the cards when it came to dealing with most equipment dealers.

Dealers were discounting in all areas of dealer support. While the revenues of the financials were outstanding, the margins and profitability were poor due to unmanaged discounting. But one lesson quickly learned, no matter the size of the customer account, discounting has the same negative impact.

Let’s look at what just a 10% discount in labor (the same concept works for parts) does to your profitability.

The known variables are your:

  • Current labor rate (sell)
  • The cost of the labor
  • The resulting gross margin (labor rate minus cost)
  • Your expenses, many are fixed
  • Your EBIT (Earnings Before Interest and Taxes)

You control the labor rate and the potential to discount it.

Your cost for the labor is the tech’s wage and I doubt if you’ll get the tech to agree to discount his wage! Subtract the cost from the sell and you have your gross margin and remember, labor sale dollars do not pay your costs and expenses, gross margin dollars do that!

Consider your expenses that the margin dollars must cover, uniforms, training, utilities, tooling, depreciation, rework, policy, vehicle maintenance, and many others. Several of these expenses remain fixed month after month and must be paid. Yes, training is a variable expense but I’m thinking you will not want to cut your training program to support discounts.

Knowing all the above let’s look at the discount impact.

 

Labor Rate at List 10% Discount   15% Discount
Labor Rate $150.00 Labor Rate $135.00   Labor Rate $127.50
Cost $30.00   Cost $30.00   Cost $30.00
Margin $120.00 80.0% Margin $105.00 77.8%   Margin $97.50 76.5%
Expenses $72.00 48.0% Expenses $72.00 53.3%   Expenses $72.00 56.5%
EBIT $48.00 32.0%   EBIT $33.00 24.4%   EBIT $25.50 20.0%
  EBIT Reduced 7.6%   EBIT Reduced 12.0%
EBIT Percent Reduced 23.6%   EBIT Percent Reduced 37.5%

 

A simple, everyday give away of one hour of labor at 10% reduces your margin by $15 to $105 or 77.8%, your expense dollars remain the same at $72 but now that $72 represents 53.3% of total sales and dropping your EBIT dollars to $33 or 24.4% effectively reducing profitability by 7.6% or a total of 23.6%. Ten percent off the top will cost you over 20% in your profitability.  And it only gets worse from there. You can run these numbers for one hour of labor, ten hours of labor or 100 hours of labor, the dollars will change but the percentages will remain the same. And now you must make it up somewhere else; do not dig the discount hole. I realize this is easier said than done.

Remember my story above working for a dealer with a large rental fleet of other dealers’ equipment? Whenever there was a repair on a piece of equipment, we did not have the tooling or training on, I’d send to the local dealer. I sent the machine to the local dealer and not a shade tree outfit. Why? I knew the shade tree outfit had lesser labor rates and would figure it out eventually, but the dealer had trained techs, proper tooling and OEM technical support if needed. I knew I’d get a good repair, faster turn around time and most importantly, a product support warranty I could count on. I’d call ahead to let the service manager know the machine was coming in, a description of the issue and a request for a written estimate as soon as possible. A day or so later the service manager or service writer would call and send over the estimate.

The estimate could have been well below what I was expecting, for example all the machine needed was a sensor and not the entire harness as our techs had determined. But no matter how high or low the estimate was I always said the same thing (I mixed up the words a bit not to be too predictable) YOUR KILLING ME!!  And almost immediately I would be offered a revision of the quote with some level of a discount. My expectations were the estimate I would be getting would be thought out, based on OEM time guides, the right amount of labor included along with any additional shop costs (consumables). Rarely did the person calling me try to explain the costs and justify the estimate. When a service manager or service writer immediately drops to a discount it may tell the customer that he or she just shot from the hip, or perhaps your tried to fat finger the estimate.

You are providing excellent product support to your customers. You pay dearly for OEM training. Your shop has the correct and very expensive tooling. You have the machine history and know where the weak issues are. My point is your customer knows this and therefore he’s calling you and not Sunstroke Tractor (a reference for some of the gray beards out there). He knows that Sunstroke will eventually look at his machine, have the wash rack guy throw parts at it until something works. Who knows if the repair is correct and will last, but that’s why Sunstroke is much less expensive then you the OEM dealer. My sincere apologies if there is a Sunstroke dealer; I’m sure this is not your Sunstroke dealer being referenced.

Promote your dealership, invite your customer into your shop and show him around. Be proud of your techs and the work they produce.

Is all discounting an absolute evil? You can show a discount on certain skill levels. For example, perhaps you have a lower undercarriage repair rate, but I’d think an entry or lower level (not fully trained) tech would be skilled in undercarriage R&I and therefore make less in wages as compared to a senior tech. Put together a killer PM program; again, lesser cost could relate to a lesser sell rate. Some dealers will reduce a rental fee if the machine is in the shop. Some dealers offer a discount on the invoice if paid within a certain number of days (do you know if your dealer does?)

Do not blame the customer for asking for a discount, it’s almost second nature. He is asking for the best price from the best dealer to get his machine back in service. Do not let him down and you’ll stop being asked for a discount.

Did you enjoy this blog? Read more great blog posts here.
For our course lists, please click here.

Business Friction

/in , /by

Business Friction

Friction is a fact of life. In our industry, friction calls engines to mind. Today, our guest writer Alex Kraft defines and explains friction in business.

I’ve always been interested in how words and terms find their way into common discourse, seemingly out of nowhere.  The last few years, the words ‘culture’, ‘friction’, and ‘AI’ (Artificial Intelligence) are constantly mentioned.  I’m not smart enough to break out ‘AI’ and culture is a bit played out at this point.  I wanted to dig a little deeper on friction, specifically what type of friction exists in the equipment dealer today.

What is ‘friction’ in business?  I typed that phrase into my Google machine, and this is what returned: “anything that prevents or dissuades customers from buying your products or services”.  I was reminded of a great Bill Belichick quote the other day that made me think of friction in business.  Belichick was addressing the team after a key loss to a rival and his message was, “you can’t win until you keep from losing”.  The parallel that I see between what Coach Belichick professes and friction is that they are self-inflicted.

In football, teams prevent themselves from winning by turning the ball over, committing penalties, or mental lapses forgetting to cover certain players, dropping passes etc.  Equipment dealers prevent themselves from winning in a variety of ways.  The first example can be a bad experience with a company’s website.  How does your website look on a mobile phone, where 70% of all traffic views web pages?  What can a customer do on your website? Can they get pricing?  Can they schedule a service or buy parts?  If your website just has online forms (do you fill out forms on websites?) or ties to an OEM page that lists machine specifications, is it advancing your brand or generating interest in your company?  Another practice that I’m sure keeps dealers from winning is the lack of pricing transparency online.  The industry has struggled with this for eternity.  I started as an equipment salesperson in 2004.  I’ve competed against all the major brands.  I’ve had customers show me hard copy quotes from all my competitors.  Yet, when I look online at dealer’s websites and their online listings on sites like Machinery Trader, the pricing displayed is not true market pricing (I’m being polite here). What is the purpose of showing pricing online if it isn’t actionable?  If customers stumble onto your site, how many are turned off and don’t inquire?

The last example that I’ll explore concerning friction in equipment sales is the prospecting/quoting process.  Dealers have outside sales teams that are taught to cold call jobsites and customer offices.  Talk about friction. If a customer needs pricing or information, they must call a salesperson.  What if I don’t know who my [insert brand] salesperson is?  Friction.  Most dealers don’t list their salespeople on their website with contact information. Friction.  If I’m a customer and I want to compare quotes, now I call multiple salespeople? Friction. What if there’s been a change in sales reps? Friction.  If I miraculously get someone on the phone, do they have the answer right there for me?  Most likely, no.  They must call me back.  Friction.  Ok, it’s been a few days, but I have my price.  Is it your best price?  No, it’s negotiation time.  Friction.  Best case, everything has gone well, you’ve breezed past all these hurdles, now it’s time for that sales contract and finance application process.  I’m sure all your documentation is electronic?  Friction.

The basis of friction in parts and service is the effort required for customers to get anything done.  Online parts ordering is still in its infancy and many dealers/OEMs don’t even have it yet today.  This leads to customers calling a landline, hoping to get someone to speak with to order the correct parts. Reporting a service issue is similar- call a landline and hope to get someone on the phone (how often do you get right through?).  Maybe some customers text your local dispatcher.  What happens when that person is out sick, on vacation, at lunch, or leaves?  If you believe I’m exaggerating, call the phone numbers listed on your website to put yourself in your customers shoes.  I’d wager that you won’t be pleased with the findings.  After the initial conversation, what is your communication like with the customer regarding status of technicians and estimates for the repair?  Many dealers still don’t provide estimates before working on the machine.  Invoicing the customer for work performed when they have zero expectation for what the repair cost is a perfect recipe for customer dissatisfaction.  Not to mention how long it typically takes to invoice the customer.  All these facets add up and can make customers ask themselves, ‘do I want to do business with this dealer again?’

Circling back to Coach Belichick’s quote, what I’ve described here is all within a dealer’s control.  Nothing mentioned above has anything to do with your competition.  I’m afraid that for years equipment dealers run through these processes and think to themselves, ‘well, but our competition is the same and we aren’t any worse’. If that’s the case, imagine what kind of employees you can recruit with that slogan and what your sales pitch is to customers!  I encourage leaders to look within your departments and using another Belichick term, self-scout.  The tendency has always been, look at our top 10 customers and see what their experience is like.  This is a flawed approach because their experience is not the reality for the other 98% of your customer base.  The goal should be figuring out how to offer those 98% the same level of A+ service the top accounts enjoy.   We are in a different time today and there are many tools available that can help dealers solve legacy issues.  If you take all the possible reasons for customers to say ‘No’ off the table, you may just end up with a growing piece of your competition’s market share.  Ask yourself, when was the last time the New England Patriots gave a game away?

Did you enjoy this blog? Read more great blog posts here.
For our course lists, please click here.

 

 

 

 

 

 

Holistic Management

/in , /by

Holistic Management

Guest writer Floyd Jerkins writes this week about the ins and outs of Holistic Management, and all the ways it sets a company apart from others.

Holistic Management: Who Are the Real Kings of the Business?

We’ve all gone into a business to buy something and experienced the sales staff that was energetic and full of promises, only to find what happens after the sale isn’t quite the same. One department blames the other, and there’s confusion about exactly what to do. We’ve all been there. The question I have is, who are the real kings of the business?

Holistic management practices set a company apart from those who are not managing this way. Fundamentally, how do you get all the departments to work in unison for a common goal? How can we align these departments and divisions to create peak financial and operating performance while also generating high levels of customer satisfaction and repeat and referral business?

What’s So Unique About You?

Organizational development takes on many shapes based on the business model or industry. Each industry has unique characteristics with how they sell their products to generate revenue. There are thousands of family-owned multi-generational businesses driving our economy. Many times, industries’ overlap and have common organizational traits despite the notion that they are unique. They share so many of these traits that it creates a pathway of learning.

Startups and small, closely-held companies create policies, procedures, and methods of operations differently from companies with fifty or more employees. Typically, in smaller companies, the owner or founder is actively involved. Their knowledge and experience are put to the test every day as they attempt to scale their business. If they come from a sales background, the business takes on a sales mindset, although other structural components are needed for the whole company to thrive.

Nothing Happens Until Something Sells

If you don’t sell something, no one has a job, right? I’m sure you’ve heard that before. I contend that salespeople who are allowed unique privileges to make a sale can easily cause havoc in other departments. I’ve been in hundreds of businesses over my years. Too often, an owner supported a salesperson telling the customer something to make the sale even though they have no clue how they will honor that commitment and keep everyone in the chain happy. There are hundreds of examples, but let me get back to my points.

Many “chronic” organizational illnesses are associated with a front-end business regardless of what market segment you’re in. Each business model has specific characteristics that help it grow or die.

With owners or executives coming from sales, other departments often suffer by not getting the proper attention to invest in people and resources. Too many times, sales meetings don’t include leaders from other departments. Policies are made without consideration of the impact through the entire company.

Executives who create a holistic culture know that everything in the day-to-day flow of operations is hinged together. Instead of fixing one problem and making five others, they think and plan with an overall company’s view.

Are the sins of the sales department masking the ability of other departments to be successful?

Are Salespeople Really the Kings of the Business?

You would think with so many sales-driven leaders that the sales departments would perform perfectly. Leaders who come from the sales side of the business many times will struggle to influence other departments. If you ask many, they will say they have a great sales department, just look at my volume and margins. However, as I address in other articles, these are not the only predictors of success and often are put in front of a conversation to mask a sales department’s real sins.

Holistic Thinking

Executives and leaders have to be bought-in to improve overall operations. If they aren’t, then the fish can rot at the head first because you can’t get to peak profits by a pen stroke.

For an organization to achieve high levels of customer satisfaction, they require knowledge-based workers. Through these people, you earn the right to have a repeat and referral business that sustains your organization through a cyclical market’s ups and downs.

You can easily win a customer through the sales department, but where you keep and then retain the customer is through all the other touches and servicing points your business offers.

If a business owner tells me they are selling a boatload of their product but are losing money in another department, it is a sure sign they are probably not leading with a holistic mindset. They are headed towards the business of the past.

Did you enjoy this blog? Read more great blog posts here.
For our course lists, please click here.

Why Customer Satisfaction Surveys Are Important For Equipment Dealers

/in , /by

Why Customer Satisfaction Surveys Are Important for Equipment Dealers

Our new guest writer, Debbie Frakes, is the Managing Director at Winsby Inc. where she has been helping Business to Business (B2B) companies grow for over fifteen years. What works is constantly evolving, but Winsby is always testing new concepts to determine the most efficient and most cost-effective ways of generating business. Today she shares why customer surveys are important for equipment dealers.

The best way to improve your heavy equipment dealership is to understand what you are currently doing well, what is satisfactory but could use improvement, and what areas need to change in order to retain more customers. The easiest way to gain this information is through customer satisfaction surveys obtained by phone. A phone call assures that they are being thoughtful in their responses, rather than clicking through an email survey without reading the questions carefully. Plus, you receive excellent feedback about what went wrong and what went right in recent transactions. It’s important, too, to ask specific questions relevant to the type of purchase that was made—parts, service, new or used equipment, and rentals. You will have insights on how customers perceive your business and where you need to improve.

How phone surveys improve your service for heavy equipment

  • Increase your customer retention by 30% – 40%
  • Identify any problems quickly
  • Show your customers that you want to know what they think

If you’re wondering whether your dealership should conduct customer satisfaction surveys, take a look at the numbers. For dealers that conduct surveys regularly, compared to those who don’t, customer retention rates are about 30% to 40% higher. The reason is simple: those dealers receiving feedback on a regular basis can improve every part of their business, from heavy equipment service to sales to rentals to parts, because they discover what is wrong with their business, and they can react quickly.

With phone surveys your company can solve problem areas and issues before your customers take their business elsewhere, because they quickly become aware of the problems. If customers have issues with your services or process consistently, most of them will just leave without saying anything. When called for feedback on the most recent transaction, customers invariably are generous with compliments, which employees appreciate, and give honest reactions to any subpar performances, with details.

Why are phone surveys more reliable?

The feedback in customer satisfaction surveys should be obtained by phone, because customers typically provide more reliable answers, compared to email surveys. At Winsby, our team will usually reach a customer over the phone on every third call. And then once we are talking to them, about 97% agree to take the phone survey. This rate is much better than responses for email surveys, for which a good response rate is 2% of recipients. The other benefit of phone surveys is that they are interactive; your customers can fully explain any issues and the caller can ask follow up questions. For email surveys, we really aren’t sure whether they even read the questions!

It is more effective to use a third party to handle the surveys rather than someone from your dealership. The reason is that most customers are more honest with an outside person and will be more comfortable explaining problems to them instead of an in-house employee or someone they have worked with before.

How phone surveys work

The first step in developing a survey for an equipment dealer’s customers is to develop an effective calling script. Ask relevant questions covering what your customers care about and what is most important in your business. Key areas for dealers are typically heavy equipment service capabilities and availability, parts turnaround time, rental equipment availability, and new machine inventory.

Once you have your script, it’s important to speak with about 10% of the customers who were invoiced during the prior month. Record all the responses and follow up on any negative responses or negative scores immediately. Any departments or employees that are complimented need to hear the positive feedback. And any departments or employees that are named in negative comments should be told details as soon as possible. It is always better to contact the customer and apologize. Ask what you can do to make it right. Invariably, those customers are grateful that you cared enough to contact them and correct what the problems were, and they become extremely loyal customers. Had you not known about the problem, though, you would have probably lost them as customers.

How does your dealership benefit?

Customer satisfaction phone surveys make it possible to improve every aspect of your business, from heavy equipment service to parts to rentals to sales. These surveys help you understand what your customers think about you and your processes. The information you gain will allow you to fix problems fast and prevent any negative word of mouth or posting of online reviews.

Winsby compiles the 1 – 5 star scores and publishes one overall rating online, along with the individual scores and comments, providing feedback from actual, verified customers. Many of the online review forums, like Google, allow fake reviews to be posted from people who are not even your customers, and they make it difficult to have them removed. The compiled scores that Winsby sees for the equipment dealers are invariably over 4 stars. The reason is simple: anyone who is surveying their customers regularly cares deeply about how their customers are treated . . . and any problems are corrected quickly at the dealership. The result is retention of your customers increases by 30% to 40%.

Did you enjoy this blog? Read more great blog posts here.
For our course lists, please click here.

 

.