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Dedicate It To Rental

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.

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Data Automation and AI Analytics

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.

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Relationship Selling Metrics

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? 

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Discounting

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.

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Business Friction

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?

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Holistic Management

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.

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Why Customer Satisfaction Surveys Are Important For Equipment Dealers

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%.

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Incident Commander

Incident Commander

Our new guest writer David Jensen is the owner/owner/principal consultant of Johnny Creek Consulting LLC located in New Mexico, USA.   Experience includes, 20 years a consultant of Personalysis Corporation; an executive consulting firm. A senior level consultant having attained a Vice President title with the company. He has worked with multiple Fortune 100 companies in various consulting capacities and on a wide range of projects. In his role as a consultant, Jensen works with all levels of teams and individuals, including CEOs of several major organizations. He shares this experience with readers tonight in his first blog for Learning Without Scars: Incident Commander.
Prior to joining Personalysis Corporation, He worked for the US Forest Service and then joined the US Department of Labor where he was a bureau chief responsible for organizational analysis. He next served as a consultant to Martin-Marietta and then moved to Sara Lee Corporation where he was the Director of Employee Relations for the company for over 10 years.
David has taught at both Idaho State University and Boise State University. 
Jensen is a graduate of Idaho State University where he holds both an undergraduate and master’s degree in psychology. His emphasis of study was organizational psychology with his master’s thesis being Proxemic, The Importance of Personal Space.
David has been a featured speaker at national conventions and seminars. His ideas on leadership, teamwork and organizational effectiveness have been well received by diverse audiences.

“ASSUMING Incident Commander (IC)”
Observations from Rural New Mexico

The dispatcher states your assigned call number and asks if you will be “assuming IC.” If the answer is yes; you are thrust into the role of the leader. You now move from the role of a volunteer firefighter to Incident Commander (IC). The moment will challenge what you think you know about leadership. It is now without question, trial by fire. There is no room for half-hearted commitment. So how does a fulltime cowboy step off their horse and step into the driver seat of the command truck. What do they need to know? How is that knowledge different from a president who is responsible for multi-national private enterprise? As it turns out, not so different. Leading a successful business requires the same basic knowledge and skill that a well trained and experienced Incident Commander brings to the fire line. 

Fire training requires that an Incident Commander master five fundamental leadership activities: 

  • Command 
  • Operations
  • Planning
  • Logistics 
  • Finance. 

1.  Command

When you accept the position of President of the company or Incident Commander, you are accountable for the enterprise outcomes. That does not mean that all decision making is retained at the President or Incident Commander level. A notable exception is safety. Safe practices must be always priority number one of any leader. An Incident Commander trained to delegate appropriate authority and decision making to all levels of the fire line down to the individual volunteer firefighter. A hallmark of any successful enterprise is that the individual in command insures employees are engaged and their efforts are recognized. Incident Commanders trained seek opportunities to enhance self-esteem through praise and to empathize with volunteers doing what is often a thankless job. 

2.  Operations 

The key to successful fire line operations is clear effective in-person and radio communication with the line bosses. The communications provide realistic and measurable goals for the operation and define how it is to be executed. Line bosses feedback progress against the objectives until you achieve fire containment. Successful operations within any organization are based on a system of metrics and management feedback. It is the President or Incident Commander responsibility to ensure that this operational feedback loop exists. It is the responsibility of all participants to contribute to the feedback. Every volunteer firefighter understands that it is their responsibility to question communications when they are unclear or unsafe. 

3.  Planning 

An Incident Commander train to develop incident action plans and to conduct an after-action review that can lead to improved outcomes. On an active fire line, the objectives will be influenced by a number of factors such as weather, terrain and type of vegetation which are beyond control of the IC. It is President or Incident Commanders responsibility to insure that tactical and strategic plans developed and revised in response to changing external conditions. Learning from experience and not repeating a costly error is key to any successful enterprise. 

4.  Logistics 

On a fire line the availability of resources on the ground and in the air will determine how the effort will accomplish the operational goals and objectives. It is the President or Incident Commander knowledge of available resources and how they might best deploy that will contribute to the success of the action plans that drives operational success. Fire containment will not move at pace without linking logistics, planning and operations together. In business, it is the President commitment that ensures that shop floor knowledge connects logistics, planning and operations. 

5.  Finance

The leader of an enterprise must be accountable to a stakeholder. The stakeholder may be an owner, a shareholder, or a taxpayer. Whatever form, an assessment of cost and risk is essential. On a fire line all assets are not equal. Decisions must made based on what is at risk. Structure protection is far greater value than grassland. In a business, the President must direct capital towards what offers the best return on investment. Leading a complicated and successful business is an ongoing incident without the fire and the heat! If you are on fire line of a major incident or in the hot seat of a major multi-national private enterprise, to have mastered the five fundamental leadership activities can put you on path to success.

David Jensen MS
Johnny Creek Consulting LLC (Principle)
HR/ Executive Coach
Part-Time cattle rancher
Full time volunteer firefighter

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You Only Have One Flashlight

You Only Have One Flashlight

Guest writer Sonya Law shares the importance of honing your focus and discovering your purpose. You only have one flashlight, and you need to be particular about where you shine that light!

What you FOCUS on grows.

When we focus on PURPOSEFUL work that we feel connected to it’s POWERFUL.

“Find clarity on what is your passion, focus on what gives you joy, it will bring you closer to your purpose, then align your life and work with it…” Sonya Law

Driven employees take ownership!

We know that feeling when we can’t wait to get out of bed and get working, we are energized by our work-day not the other way around. Commonly though most employees are out of step with what they enjoy.  

We have all been asked to do things in our job that we don’t agree with but because of our position and responsibility we carry out the task.  In Human Resources this is very common particularly in restructuring and redundancy situations.  Tasks that leave us questioning why we do the work we do? Creates a feeling of emotional dissonance and we feel burnt out, broken and overwhelmed instead.

This isn’t always the case, when we carry out these tasks with humility, care and professionalism we create trust, respect and genuine connection with employees.

Why is this important? Because as leaders we spend a lot of time and money directing, delegating and managing the performance of others and what we need is driven employees to take ownership.

This is a journey of focusing on work that gives us joy and aligning ourselves with it! 

Happy employees are fulfilled employees!

When we align our life with work that we enjoy we experience fulfillment. Our purpose is a cross section of work that we are good at and that we enjoy.  As an activity we can reflect on our career to gain clarity on what work we enjoy.  

This inquiry asks 3 questions:

  1. What do you want for self, family and the world (greater good)?
  2. What is the problem you are trying to solve in society?
  3. What do you CARE about?

Over the last 30 years I have talked with thousands of people about their career and they talk a lot about not feeling connected to their work and wanting something that makes them feel fulfilled and part of something bigger than themselves.

Because as we know from Maslow’s Hierarchy of needs, once we have satisfied our desire for food, shelter and love, we want to experience self-actualization, to live our best lives and work is a big part of our life!
Leader as Coach – what is their role!

As leaders, we lean into the role of leader as coach and engage with our people in new ways.

When, we are given the privilege of a position in leadership it is a great responsibility, our IMPACT has a ripple effect.  

As leaders we need to:

  1. BE clear on our PURPOSE
  2. ENABLE others to find theirs
  3. CONNECT people with work that is engaging and empowering.

What are the attributes of a leader as coach?

  1. Lean in, listen and learn – BE curious
  2. Understand – BE empathetic
  3. Connect and build relationships with their people – BE RELATIONAL.

Purpose is number one in the TALENT game!

Best Practice in Employee Value Proposition (EVP) in human resources and staffing is connecting people with their purpose.  Organizations who focus on the following will retain and attract and develop top talent.

  •  Purpose – to engage employees in work that is purposeful that they enjoy.
  • Autonomy – trust employees to decide when, where and how work gets done.
  • Cultural alignment – provide a sense of belonging, they feel they have found their tribe.
  • Psychological safety – understand people want to maintain emotional well-being and positive mental health.
  • Connection and Community – want time with family, partners, pet’s and be connected to the community in which they live. 

Purpose focuses us on what we are good at and what we enjoy! 

Purpose is a cross section of both what we are good at and what we enjoy.  So how do we know when we are connected with our purpose at work?

  1. Our values are ALIGNED
  2. Our work makes a DIFFERENCE
  3. It doesn’t feel like work, more like FLOW or PLAY
  4. We SHOW up as ourselves
  5. We have increased ENERGY and vibrancy
  6. We deliver VALUE to our stakeholders, employees and customers
  7. We DO life, it does not DO us!

“We only have one flashlight and when we focus on PUPOSEFUL work that we feel connected to its POWERFUL”.

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AgilitiONE

AgilitiONE

Alex Weaver’s career in the industry spans several decades. His initial job in the industry was with an independent used equipment – used parts company, White Tractor Parts in Blue Springs, MO. After several years of ground floor, learning the business, including how to chain a tractor to a trailer, he went to work as Assistant Used Equipment Manager for The Whayne Supply Company, Caterpillar dealer for Kentucky, in Louisville, KY.  Later, promoted to Eastern Region Sales Manager. In 1979 he went to work for Crane and Tractor of Dallas, another independent used equipment, used parts dealer. 

In 1988 He relocated to Charlotte, NC to work for the Caterpillar Dealer, Carolina Tractor.  Initially holding the position of Product Support Sales Manager, later serving as General Parts Manager and VP of Heavy Equipment Sales. In 2002 Alex began work with Caterpillar, Inc, and relocated to Peoria, IL. Here he served as Sales Manager for the Eastern Region of Caterpillar’s Redistribution Company, CRSI, Inc, moving to the Reman Group, and later to the Caterpillar Used Equipment Sales, Inc before retiring in 2014. 

With over 40 years of experience in the industry. As a retirement project, Alex and a partner created the concept for agilitiONE, including manually researching every company listed in our search engine/database. The great influencer working with all these companies, in various positions and segments, were the customers. The customers shared what they did, how they did it and how as a supplier you could help them do it. A great education in market wants and needs.

Imagine all Your Information Needs at Your Fingertips

Have you ever wondered why?  Why there is no single source that lists all suppliers to the construction equipment industry?  There will be soon.  A fast, easy to use industry- specific search engine, or directory.  Search for providers of new / used / and rental equipment.  Search for providers of parts and attachments.  Plus, service – providers, such as insurance, heavy hauling, software, business services, marketing, and consulting.  Filter searches by brand, New, Used, condition, distribution source by brand, and zip code location.  Search all industry parts providers in North America. Would you believe there are over 13,000 such suppliers / providers in our database?

agilitiONE was created by a team of construction equipment businessmen.  Their background in the industry includes senior level management / leadership roles at both manufacturer and dealer organizations.  Through extensive work in the field with construction equipment customers, they’ve gained a strong appreciation for the contractors’ challenges and needs.  It is with this background that agilitiONE addresses those needs.

The agilitiONE website is the first true, industry-wide, product – wide, online platform / marketplace built solely for contractors to easily locate and purchase all job-related requirements.  At attractive prices.  All using a single IOS or Android app.   Machines, rentals, parts, and services.  Users of agilitiONE will find many new sources and viable options for all of their many needs.

agilitiONE is an online platform / marketplace where contractors and equipment owners will find multiple, new sources for the products, parts, and services they routinely buy, rent, and utilize.  At the same time, industry suppliers can expand their sales reach by attracting an ever-growing larger clientele.  And, manufacturers can further promote their brands, support their distribution, and collectively increase sales.  agilitiONE is unique; there’s nothing like it in the industry!

Why is an industry specific search engine important?  What is the benefit?  Easy.  You get your specific result faster and easier.  Have you noticed that with the existing search engines, your answer may be down in a search results page or pages down?  For instance, search for a turbocharger for a Volvo MTC85C skid steer loader.  If you search by zip code, or within 100 miles of your zip code, you may get results for turbochargers for Volvo automobiles or Volvo Trucks.  The search is interesting because Volvo is out of the skid steer business.  The MTC85C was built for Volvo by JCB.  The engine is Perkins, now owned by Caterpillar.  But all you want is an exchange, rebuilt turbo.  In agilitiONE a search for “turbocharger” returned 23 providers.  Only 23 results, not thousands of non-search related results, that don’t apply to your search.  A search on Google, also using “turbocharger”, turned up 64,000,000 results.  Because our search engine is industry specific, our database only contains providers for construction equipment or related rebuilders.

How do you find all of the providers of Safety Equipment, that focus on the Construction Industry?  A search of agilitiONE returned 109 providers that can be filtered by zip code.

Again, Google returned millions of providers.  Our goal is “fast and easy” access to information.

In today’s work world, small contractors are accepting work further from their home base.  Home base is comfortable.  Providers are known.  But contractors are also bidding more work further from home base.  If there is a minor breakdown, how do you find the nearest hydraulic repair shop?  Or if a contractor needs to rent a small excavator to finish a job.  What provider is close to the work?

We know and understand the challenges of daily operations.  agilitiONE will provide quick and easy information search related solutions for all contractors.

About Industry Services:  Categories – Aerial Information/Data – Asset Appraisal – Asset Inspection – Associations/Trade/Industry – Auction – Builders/Commercial – Business Services – Certification Agencies – Construction – Consultancies’ – Contractor – Engineering – Financial Services – Financing – Freight/Trucking/Delivery – Governmental Agency – Individual Consultants – Insurance – Land Survey – Logistics – Manufacturers’ Representative Firm – Marketing – Oil Analysis – Opinion Survey – Project Management – Publishers/Publications – Safety – Software – Training/Education – Warranty – Drone Services – 3-D Printing

Our search engine is currently under construction. But it is coming soon.  A lot of information in one portal. We hope you are curious. Will keep you posted on Start Up date.  Questions?  Email traction@agiliiti1.com.

Alex Weaver

Co-Founder / AgilitiONE

Alex Weaver’s career in the industry spans several decades.  Experience with Used Equipment / Used Parts Dealers, 2 – Caterpillar Dealers and Caterpillar.

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