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The Evolution of Business Owners

The Evolution of Business Owners

Change is just one inevitability in life. Guest writer Floyd Jerkins walks us through just one change in his piece on the evolution of business owners.

It is quite rare for a dealership to be able to adequately plan succession in the ranks of their mid-management staff. So often, a manager must be replaced in quick order. In that instance, should you look for a replacement within your ranks, or should you go outside to find a suitable replacement? What are the critical skill sets that predict success? What kind of training will the new manager need to have a reasonable chance for longevity in the position and the potential for career growth?  

The problem is that these decisions are often made in haste. A good parts salesperson certainly will be a good parts manager, right? It only makes sense that an outstanding technician who knows your products and your customers will be a natural as the next service manager. However, making this most obvious choice in many instances has led to an unfortunate professional and personal lack of fit that has hurt the dealership and an outstanding employee.

If these issues arise at the mid-level management, what is the big picture view of the dealership owner? Where is the career path of a dealer principal? Can an owner be quickly replaced? How does the owner become better educated and identify the right resources for their personal learning pathway? What are the skill sets that predict success?

The Evolution of Owners’ Skill Sets

With one store doing $10M in sales, the competencies for an owner typically require them to be able to change a tire, handle bookkeeping, sell a piece of equipment and maybe even stock the soda machine. They probably do all the hiring and firing. They have to wear several hats. 

Many owners of single-store operations come from a sales background. Where do they learn to sell? In my experience, these owners hardly ever take a professional selling course or become constant readers of sales-related material. They learn on the job and through trial and error. The issues this causes in the day-to-day operations is a whole other topic of discussion. 

Developing a business that has $1M sales per employee with revenue from $50M to over a $1Billon requires different skill sets. The knowledge, skills, and attitude must improve to be adequately prepared for what is yet to come. As an owner expands their operation, the plan of getting personal education should grow as well. 

Owners Learning Pathway During the Stages of Consolidation 

We know that with consolidation in any market, the organizations continue to grow larger. Will all of them follow this model? The answer to that is no. Every market has movers and shakers while still supporting the smaller operations. But make no mistake, consolidation reshapes local and regional markets. I call it Shark or Bait. When owners are not proactive; they are often forced to make hard decisions before they might be ready. 

Once the organization achieves a certain size and scale, the business becomes less about what industry you’re in and more about adapting to the best practices highlighted by successful companies. This requires the owner to have a new vision and different skill sets. 

There still seems to be a lengthy discussion going on about whether or not hard skills are more or less important than soft skills. I’ve said for years that what has been commonly called soft skills are now hard skills. You can’t ignore them because they are a fundamental part of leading a company and for your teams of champions to achieve peak performance. 

The key to enduring success lies within the people who deliver the day-to-day operations. They must be in harmony with the policies, procedures, and methods of operations to reach peak performance. The owner or owner group is still setting the pace and controlling many of the businesses’ outcomes with their decisions every day. With an operation of 30, you can meet with everyone and change a policy in almost a day. With over 300 employees, policy changes must be carefully thought out and creating an implementation plan is critical or it could take months and months to become reality. 

Business Owners Are People, Too

Each business owner is unique with strengths and weaknesses, just like everyone else. Just because they own the company doesn’t automatically give them all the necessary skills to be an effective leader. Instead of trial by fire, business owners can develop a method to go through a learning pathway that will provide the foundation for success. Assessing their own competencies isn’t something that comes naturally. Commonly outside influencers are needed to affect real change. 

  • Learning from your peers is an excellent method. These working sessions are normally financial discussions that can reveal many operational issues and hopefully the best practices to learn from. Taking these ideas back and implementing them is another story in itself. Often, an owner may be uncomfortable bringing out certain subjects or need in-depth or more customized information. That’s where one-on-one coaching becomes extremely valuable. 
  • A challenge many businesses owners experience is that sometimes the ego gets in the way or needs to get out of the way. Leading by ego is a sure way to disassemble a great organization and push people away. Success often fuels the ego, and it becomes the master. I’ve helped many leaders learn how to tame this trait and use their natural talents. Ego is a tool to use, but not to have it become our master. 
  • Personal education requires a pathway so you invest time learning what you need to learn. Time is precious. If you don’t have this plan, then you are “wondering” and “wandering” with your time and energy. You should know how you learn best, is it visual, auditory or kinesthetic? Knowing yourself allows for the most impact to be made and having some fun while you do it. 
  • There are numerous trade publications that are required reading, but you shouldn’t limit yourself to this one area. Industry-specific material should be accompanied with broader-based business material, listening to podcasts, online webinars, and attending in person events. 
  • There is so much material available and through various mediums that you must be careful about what information you allow into your brain. Too much of the wrong information will easily steer you away from what matters the most. Verify the sources of the material and vet the author. There is a lot of junk out there today with people making sound bites sound like in-depth knowledge. 
  • You can get so involved in running the business that it just doesn’t seem like you can take time away to learn. Sure, time management and effective delegation strategies are part of the solution, but there is more to the whole equation. The reality is that you can’t afford not to take the time to get formal and informal education. Knowledge is power and is the stimulus to building an enduring organization. 

What is your learning pathway? Once this is prescribed, then you have focused learning that brings about the most substantive changes. 

Self-Evaluation Can Lead to Happiness and a Dynamic Lifestyle

Be honest with yourself about what you’re good at. Listen to others about who you are vs. who you think you are. There are numerous “outside-in” assessments and methods to evaluate your knowledge, skills, and attitudes. “Find what you are good at and hire the rest.” There are just some skill sets that you can’t master and knowing this is powerful. Set the ego aside so once you hire them, don’t micromanage. Get out of their way and let them do what you hired them to do. 

Finally, be sure to put yourself into a position to have some fun. If what you do in the company isn’t generating that fun factor, change your role. One of the privileges of owning a business is that you can change your role to something that is a better fit for where you are in age, business acumen, and above all, the desire to live a dynamic life. Remember, there is a life after owning a business. 

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Introducing Our Colleague Alex Kraft

Introducing our Colleague Alex Kraft

Our new guest writer Alex Kraft Started as an equipment salesperson for Flagler Construction Equipment (Volvo heavy dealer in Florida) in 2004.  He worked in various positions at Flagler, ultimately serving as Chief Operating Officer from 2017 to early 2020 when Flagler was sold to Alta Equipment Company. Alex started Heave in July 2020. We at Learning Without Scars are happy to be introducing our new colleague, Alex Kraft.

For new(er) companies, the inevitable question is, ‘what do you do?’. In the simplest sense, Heave connects buyers/renters of heavy equipment with dealer sales reps.

I started my career as a heavy equipment salesperson in Miami. My manager handed me that ‘UCC’ report that showed the customers who had previously bought equipment in my territory for the prior three years. I attended a few brief product training sessions and was put in the field.  The old phrase ‘you eat what you kill’ is accurate. Dealers rely on their sales teams to be the marketing department, as there are very few (if any) “leads” provided to salespeople. Days can be lonely and involve a ton of driving.  It’s common for heavy equipment salespeople to drive 45k-50k miles annually. Everyone develops a common route through their territory, start at the furthest point and hit every jobsite/customer office on the way back home. Most dealerships will give their reps a target for customer calls or visits per day. Some expect 8 calls per day, for other dealers it may be 12-15 per day. If your revenue numbers lag your peers, the typical advice is, ‘well, make more customer calls!’. The truth is, most calls aren’t productive since they are rarely scheduled:  the customer is busy, the customer isn’t there, or the customer doesn’t need any equipment at that time. Yet this is how the industry continues to operate.

I was amazed that still in 2020, customers had to call sales reps every time they wanted to rent or buy a machine. I’ve seen an equipment manager order Uber Eats for lunch, then call 4 different sales reps and leave a voicemail message asking for rental rates and availability. Therefore, customers are typically waiting for information. Heave exists to solve this problem. We are an aggregator website, in the mold of Lending Tree or Thumbtack. Customers come to www.heave.co and specify what they want to rent or purchase. For example, a customer this morning posted a request for quotes to buy a new 11,000-13,500 lb. canopy mini excavator in Princeton, Texas. Every dealer sales rep that has Collin County, Texas received a text message alert for this opportunity. Sales reps can quote this deal directly from their phone. Customers receive notice upon quote submittal, and they can view the quotes all in one place.

One key feature of the Heave platform is how the communication is handled. We understand that customers come to Heave because they want an easier experience that they can control.  Therefore, we allow the customer to dictate the next step. Customers choose which sales reps to release their contact information to once they view the quotes. The customer clicks ‘contact sales rep’ and the salesperson receives a text with the customer’s full name, phone number, and email address. They can communicate offline to address any questions or finalize the deal.

Our initial focus since launch in May 2021 was to build a platform where customers begin their equipment search.  The long-term plan for Heave is to continue adding services so customers don’t have to visit multiple places for each part of the transaction, simplifying the entire process. This past fall we partnered with Mazo Capital Solutions to offer equipment financing on our site.  Next, we see an opportunity to find partners to show our customers instant freight and warranty quotes alongside their machine quotes. What used to take customers or dealers multiple calls, can be brought into one place on www.heave.co in seconds.

In my opinion, one part that is glossed over when discussing technology solutions is what it frees up suppliers to do. Everyone is rightly focused on their product and what it solves, but technology can free up supplier employees to focus their effort on true customer value add activities. For example, as I highlighted above, how much of a salesperson’s time is wasted everyday driving? Those empty miles could be better served proposing fleet solutions or analyzing telematics reports for their key customers. What value is added by taking parts orders over the phone and entering that order into a business system? With an ecommerce parts solution, parts employees could be repurposed to either manage stock levels better, run parts to technicians (reducing repair times), or deliver parts to customers. Predictive analytics could dramatically help service departments prevent catastrophic failures and better help prioritize their technician’s time. To me, that’s what embracing technology can unlock for equipment dealers- what are the menial tasks that eat up our employee’s time, and how can we utilize certain tools to provide a better customer experience?

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Incentives

Incentives

Tonight brings us another guest post from Steve Day. The former Vice President of Tractor and Equipment, Steve is discussing incentives, and how they can drive your growth in your business.

Incentives Can Drive Growth

For the majority of my career, I believed that a paycheck was a pretty good incentive for doing your job. When I worked for a manufacturer, I often got suggestions from my employees that we should offer incentives directly to our distributor employees to direct their activities more in the direction we wanted them heading. I always considered this a gross intrusion into the distributors business. As time went on, I did grow to like the idea of manufacturer incentives to distributor employees (paid through the distributor) to drive distributor employee training in areas of products and systems. Cash, trips, awards, peer recognition, all seemed to have a positive impact on employee capabilities.

When I made the move to distribution, I fell back on my old beliefs that a paycheck was appropriate compensation. I was convinced to try some experiments in incentives by some of my managers and we made some tentative tiny steps in some products. I have always been a big believer in unintended consequences so we put some safeguards in place. The results were both stunning and quite a wakeup call for me. The incentives drove growth, profitability and job satisfaction for the employees who participated.

We started out paying incentives to Parts Counter people and additional incentives to Product Support sales people. We quickly added incentives for other employees and we watched our growth in the incentivized items skyrocket.

Some of the lessons we learned were as follows:

  1. Pick commodity parts for your Counter and Product Support Sales. Your competition is often Walmart and NAPA and this is a real growth area.
  2. If you want to incentivize Service then look to rebuild opportunities and add-ons sold when a project is started.
  3. Incentives will tell you who your best employees are quicker than anything else I can come up with. Measure people on bonuses paid. Make sure you take the size of the market the employee is operating in into account.
  4. Make it easy on the managers and the employees. You have systems that can easily take care of all the administrative work. I have seen paperwork become a roadblock. Manufacturers love to get huge amounts of paperwork for most of their programs and many people opt out because of it.
  5. This will drive your inventory group crazy. You can’t base future sales on history when you offer incentives. Have way more inventory than you think you will need. It won’t be enough. Nothing screws this up like running out of inventory.
  6. Since you are going to be buying more and being a bigger customer- get a better price. Get a much better price. This will fund the incentives and increase profits at the same time.
  7. Let people know where they stand in company sales. Competition is fun and can push people to be very creative in a positive way.
  8. Incentives are a great way to help your employees understand what the company values and it will help them direct their activities in very positive ways.

Incentives that are properly directed will change your company. Your Part’s Department will become very customer service directed and your Counter will become a sales machine. Your Service Department will seek our more profitable work that can be planned. You will inevitably make some personnel changes but this usually ends up with getting people into spots more suited to their skills.  Employees operating at the highest level will make a great living for themselves and their families while they make the company much more profitable. They will also become much more difficult for you competitors to hire.

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The Transition from an Equipment Dealership to a Technology Platform

The Transition from an Equipment Dealership to a Technology Platform

Our new guest writer Alex Kraft Started as an equipment salesperson for Flagler Construction Equipment (Volvo heavy dealer in Florida) in 2004.  He worked in various positions at Flagler, ultimately serving as Chief Operating Officer from 2017 to early 2020 when Flagler was sold to Alta Equipment Company. Tonight he brings his expertise to our readers in his blog post on the transition from an equipment dealership to a technology platform.

Alex Kraft knows all about that transition. Alex started Heave in July 2020. Heave is an equipment platform.  Customers come to Heave and post an equipment need, our technology connects them with dealer salespeople, providing them multiple quotes in 1 place.  No more chasing salespeople down, getting voicemail, and waiting for calls back.  We love being brand agnostic and 100% focused on getting customers information that they need, quickly and with a lot less effort than they’ve had to put in traditionally.

The heavy equipment dealership/rental house couldn’t be more opposite from the “start-up” world.  But my dealership experience has helped me understand what is so special about the start-up environment. I started as a heavy equipment salesperson at 24 years old. It was my first “real job.” I didn’t know much about the industry before I started my career. As a young salesperson, I did my best to try and shadow some of the more successful vets, as well as pay attention to how the overall operation ran. It doesn’t take long to understand that “this is the way it’s always been done” is a mantra that is adhered to. The dollars are huge, brand names have been established, and dealers have protected territories. When you’re younger, you naturally ask a lot of questions: ‘why do we do it this way?’ and ‘has anyone thought to _____?’  Equipment dealers, and companies in general, are full of naysayers who love to tell you the three reasons why something won’t work. I’ve worked with tons of those people. There are those that probably would say I was that person at one time. It leads to constant stasis as no new ideas are introduced. You live in a world where it feels like the culture is, ‘let’s not screw this up’ as opposed to ‘let’s get this accomplished.’

When I took the risk of starting my own company, I had an idea based on my industry experience. We were now a start-up. One major difference off the bat: there are no bad ideas.  Everything is a test. It’s incredibly liberating because nothing stays the same. Our team’s internal conversations usually start with, ‘we tried this for 30 days, this is what really worked well, this is where things fell off….’.  We make a tweak and do another experiment. We’d fix that issue, then something else arises. We go through the same process all over again. I understand that this can seem exhausting for some, or for others who like structure it sounds like a nightmare, but for me it became such an energizing experience. I thought back to the times in my early career and realized how draining it can be to have teammates who are always shooting things down. Yet you sit in a customer meeting, and they tell you it’s your last chance because the people change, but nothing ever seems to change at your dealership.

With a start-up, it’s very empowering to work in a climate where it’s ok to be wrong, where it’s almost expected. When an idea doesn’t pan out, it’s because we tried it and have data that tells us it didn’t work. But also, what comes out of it are nuggets that we can apply to get a little bit better. Over time, those little incremental tweaks and improvements lead to a viable successful project. This entire process is what helped our young company figure out our niche and get traction with a new product in this market. If we were stubborn and had I shot down all my team’s ideas (since I was the only one with industry experience), we’d probably have folded up the tent and I’d be talking about what could have been. This is also what leads to great optimism because you become comfortable with the unknown, since your company is in a constant experimentation mode.

The point I want to get across in this post is to encourage dealer leaders to remember that they don’t have all the answers. And that’s ok. I may be wrong, but it seems like everyone is fearful of ‘digital’ and ‘technology’ because they represent new ways in an ‘old school’ industry. You may be the market leader right now and feel that you have the most to lose if you make some missteps trying something new. Technology can be a great equalizer for some other companies who aren’t afraid of embracing different ideas. Borrow a page from the start-up culture, and experiment in certain areas. Engage your teams and try something new, whether it’s in sales, rental, parts, or service. There is a large knowledge base in the market, so you all have team members with a great deal of experience. Start on a small scale, whether it’s selecting only one location as a test or a small sample size of customers. You don’t have to try a pilot across the entire company (actually I would discourage that since it may not be manageable). Give your employees the confidence that it’s their idea, it’s all in the interests of the company getting better, and they can be wrong! Let the results speak. Maybe it doesn’t get the intended result. That’s ok, at least you tried something different, and you know. The funny thing is, I bet your customers will be appreciative, because they respect your company trying to improve, and I bet your people will have some tweaks to the original idea that will get what you’re looking for. You will probably see a new energy among your employees as well, as they feel more connected to the company and in control of their destiny.

I don’t know Ron Slee that well yet, but I’d imagine that ‘Learning Without Scars’ is emblematic of trying something and messing it up, leaving a scar to remember.  When I think more about it, with my athletic background, we always learned more from losses than our wins. Yet, in business, it seems most companies are ultra-conservative and are trying to avoid mistakes. It is encouraging to see more industry specific content available on sites like this, as the dealership world has always been under the radar. Now the next step is to do something with this information and act.  All your customers will benefit.

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Go Live Success!

Go Live Success!

Tonight, guest writer Christ Kohart shares the ins and outs of how to succeed at ERP in Go Live Success. 

How to Succeed at ERP despite what you’ve read!

Time to upgrade your dealer business system (ERP)? In a continuing series, this question was recently asked of you. If you answered ‘Yes’ or ‘Maybe,’ the following information is for you.  Approached wisely and thoughtfully by both the dealership and the ERP provider, an ERP upgrade will reap the rewards starting with day one. This article will share one of the best practices that delivered positive experiences for those well-prepared dealerships (and for their business partners). The dealership that provided the bullets below had a successful go-live and continues to thrive on its ERP.

Here are a few improvements experienced shortly after going live on the new ERP:

  • Increased accuracy
  • Ability to track your dealerships share of customers spend
  • Instant, real-time reporting
  • Financially close an accounting period within two business days
  • Simplified transaction structure
  • Immediate updates to global data from all areas of the solution

How were these results apparent so quickly? Preparation, research, planning, establishing metrics, training, and execution. As with anything we approach, properly planned new endeavors have a much higher chance of success than when planning was only at a high level. This article will look at the importance of reviewing processes you use throughout the dealership and then the subsequent implementation of standard processes throughout your dealership.

At this dealership, during the early stages of transformation (before committing to a specific ERP), there was extreme pushback from staff regarding the number of processes requiring review and standardization. There is still the thought process in our industry that “we’ve been successful for decades doing it this way, why change?” I’m going to continue those out who do not standardize processes now, whether or not the dealership is considering digital transformation. Why? If you do not embrace standard processes throughout the dealership, you are not creating consistent, repeatable (and reliably reportable) results. This same dealership demonstrated the fortitude to thoroughly review 300 processes across all business areas (Accounting, Sales & CRM, Rental, Product Support).   At the start, many processes had not been standardized between departments (such as purchasing) and locations (“every branch has their individual way of doing it”). At the end of this endeavor, the dealership had created a solid purchasing and purchase approval process and standardized operational processes across their branch network. The first result realized before selecting an ERP:  The dealership had the documentation necessary to establish metrics used during the ERP selection process. The second result:  The dealership solved their difficulty in capturing and correctly categorizing purchases, whether for internal consumption, resale on a work order (how many times have you received an invoice for outside work & materials long after a work order was closed and invoiced without the charges?), or components that should have been capitalized vs. expensed when installed on prime products?

Let’s address each bullet point and how cleaning up and standardizing their processes affected the outcome after going live:

  • Increased accuracy. By creating standards (processes), every manager and staff member creates and enters information in the same format. If your staff doesn’t format correctly, the entry will not be accepted until corrected. You are now reporting on clean, accurate and identically formatted data from all sources.
  • Ability to track your dealership’s share of customer spend. Suppose your machine ownership database is accurate (I will save that for a future article). Your employees follow an established process for tracking all sales and activities by equipment (asset). In that case, your ERP can produce a report based on product support sales by specific equipment and customer based on operating hours vs. sales. Telematics can further enhance this activity, and I’ll reserve this topic for the future. The bottom line is that you will gain the insight necessary to increase your product support sales to your customers.
  • Instant, real-time reporting. Since ERP’s run in real-time, the overnight batch functions required to update different modules within the business system disappears. A couple of examples: Once a rental contract is created, the status of a rental asset instantly changes from available to reserved; once it’s on rent, status changes from reserved to on-rent. When you close a work order, it updates A/R and is available for review within service history.
  • Financially close an accounting period within two business days. You deployed standardized purchasing processes: when goods are received, they are on the books whether or not you have received the vendor’s invoice. In Service, work orders or individual segments close the day after the completion of work, and labor hours are entered and posted each day. Closing periods become more of a final review. The ERP either automatically creates reports or advises management when the period is closed and allows them to create their custom reports.
  • Simplified transaction structure. Everyone undertakes the same activity the same way, and fewer steps lead to greater efficiency and fewer mistakes. It also allows personnel to cover/take over other activities as a standard process guide is available. Many ERPs will enable you to upload your process documents directly in the program help files.
  • Immediate updates to global data from all areas of the solution. Since you have deployed ERP, information entered in one area updates all pertinent information system-wide. Your CRM connects to Sales, Rental, Product Support, and Accounting instantly. For example, suppose a PSSR makes a customer visit and discovers they are unhappy with a recent rental billing. The PSSR can enter this information in CRM. The responsible rental sales representative, branch rental manager, accounting department, and anyone within the dealership who needs to know are notified instantly. This is all driven by a standard process that drives activity within CRM and, if you deploy it, workflow.

While only one of many steps, it’s incredible how vital the “boring” process becomes when running your business. It’s imperative to undertake this review if you want to have excellent odds to succeed when you go live.

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The Digital Dealership – Where Are We Now?

The Digital Dealership – Where we are now?

Guest writer Mets Kramer updates us on where we are now in this continuation of his series on The Digital Dealership.

Next week, at the AED Summit in Orlando, I’ll be presenting the Digital Dealership concept in the education series.  During the hour we’ll have a chance to dive more deeply into some of the topics I’ve presented over the past year. Even more exciting, we’ll get to have open discussion.

The Digital Dealership will focus on the transformative impact of information, expectations and the new channels of engagement with customers and your audience.

Over the past 2 decades we’ve seen a massive shift in the business models of many different industries. We’ve also seen the impact of a changing demographics as new generations come into the working world and as the world of digital communication broadens. The result is a growing gap between the old approach to business, and the younger generations. The old approach to business was built by the older generations who are also, frequently the most senior managers.  The newer generations, who are often the buyers, have their own expectations on how they want to carry out business. This collision of generation, technology and expectation creates both the most significant opportunity to differentiate and grow, and the highest risk to existing dealerships. In the past decade alone, we have seen major retailers and corporations lose decades or even a century’s foothold in their industry. Gone are companies like Borders and Blockbuster, and JCPenney almost joined them. Numerous others have simply failed to keep up and been relegated to the margins. Each of these companies failed to react to clear changes in the industry and buyer expectations, while their competitors did.

There are clear differences between the companies that failed or succeeded. Those that succeeded have several things in common. First, they saw the change in the market and buyer’s expectations and changed their business model to address these changing conditions. Second each of these companies started to understand the importance of information to their business and learned how to apply it. Finally, these companies applied these first 2 points to their entire business, they didn’t make it a bolt on to their existing business, which remained operating in the old way.

The first point is probably the hardest to grasp as it’s a combination of 2 inputs each effecting the other to produce an exponential rate of change in buyer expectations. In today’s business world we have 3-4 generations comprising our teams. With some of the last Baby Boomers still in the work force and often in the most senior positions, Gen X is now well placed throughout organizations, the Millennials are getting a strong foot hold in decision making and now Gen Z is entering the workplace. All this means we have some people who started in the corporate world before any computers existed and, at the same time, we have new entries into the business who have only known a world with smartphones and internet. How these different generations see the realm of possibilities couldn’t be farther apart. I’ll admit, I’m in the generation that thinks if the internet goes down, in a store, they should switch to handwritten bills and take cash, but that makes me old.  Some people have never seen this type of POS terminal, it’s completely foreign, so they would avoid a store that still uses it. Furthermore, our youngest generations have always been able to find the information they needed, when ever they wanted. When they wanted something, they can order it from their phone. This collision of generational experience gap and changing expectations will drive the fastest change in business to business buying and business process we have ever seen. Change we’re already seeing in other industries.

Information has both contributed to the prediction of change and the resetting of expectations in all areas of commerce. Many of the most admired and referenced companies in our world have been the best at applying information and technology to their business, vaulting them over competitors, or blasting from obscurity to relevance. Information, and more importantly the analysis and application of information, has allowed organizations to foresee changes in the business. They have fine tuned their operations to trim waste and better apply capital.   Furthermore, the analysis has driven action and change. Change in how companies engage with their customers and meet their customers’ growing expectations. While personal relationships and partnership remain a cornerstone of any business relationship, the expectation for partnership now includes deeper integration and focus on improving the transactional efficiencies. Information has inspired a massive improvement in understanding the drivers in a buyer’s decision making. It has highlighted the small differences in presentation and product definition that impact sales. The best competitors have combined this insight with a growing database of customer data to capture increases in total sales and market share.

When the acceleration of changing expectations come together with information, we see the genetics of the best of the best organizations. Those “Most Admired”. These organizations have used the information they are collecting daily to see the growing rate of change coming from new generations, and new expectations fueled by technology, social media and digital systems.  They apply this analysis to all aspects of the business, changing the structure of the organization.  In some industries we’ve seen long standing businesses either change or be replaced by new entrants who understand what a modern organization need to be. For dealers in our industry, both mainline OEM and independents, it’s no longer adequate to meet these changes with partial measures. Your website can no longer be a billboard, your social media engagement can’t just be advertising, your parts department can’t remain a “call for availability” or a “call to place an order” department. Your sales department won’t survive on “call for details”.   The growing rate of changing expectations is your opportunity to succeed.

Each one of you have no doubt worked with family-owned contractors that saw a change in generational management. The original owner handing the business to their children came not just with a change of faces but came with changes in the approach to business relationships, focus of the business and new expectations on your role and how to be a partner.

The Digital dealership looks at all these items in more details. We will also look at actions any dealer can take to assess the impact of these changes in their business. We will look at what actions can be taken to implement new approaches to the business and remain a leading competitor in the field.

If you’re going to AED, I look forward to seeing you in the Digital Dealership session, and if you’re not, I’ll continue to develop the details in this blog series.

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The 5th Element

The 5th Element

Our guest blog post, The 5th Element, has been written by a new guest to our website: Patrick Fisher. Over the past two decades Patrick Fisher has been primarily focused on distribution development of large complex agriculture and construction equipment dealerships.   Patrick was the Vice President, from March 2013 – October 2021, of Sonsray Machinery, Inc. with P & L responsibilities for Construction Equipment locations with Sales and Service Area (SSA) of 15+ locations within five contiguous states on the west coast.   Patrick was the former Vice President, until March 2013, of the Construction Division at Titan Machinery, Inc. with P & L responsibilities for Construction Equipment locations with Sales and Service Area (SSA) of 40+ locations within eleven contiguous states in U.S. While in this role he successfully developed and launched Titan Rentals, a Rent-to-Rent business unit within the construction stores. Mr. Fisher also served as Director of Operations for Titan Machinery responsible for all parts and service operations for all of the Titan Machinery locations.

 He was additionally Planting and Seeding Platform Engineering Manager for CNH Global until May 2003. Prior to joining CaseIH in 1996, Patrick was an automation engineer for Hutchinson Technology. 

Patrick continues to spend time with his family farm near Bismarck, ND to ensure his two sons learn and appreciate good work ethics. Mr. Fisher has a Bachelors in Industrial Engineering from NDSU and an MBA from the University of Mary in Fargo, North Dakota. He was a member of the Case Construction Dealer Advisory Board (6+ years), the American Rental Association, and the Association of Equipment Dealers. Patrick has a proven track record of business growth execution. Patrick’s hobbies include hunting, fishing, and flying.

THE 5th ELEMENT OF AN EQUIPMENT DEALERSHIP: PREDICTIVE MACHINE DATA ANALYTICS

 Equipment dealerships have evolved through the years to not only include equipment sales.   Parts, Service, and Rental sales have proven to be critical success factors increasing expense absorption to ensure profitability especially during these days of supplier equipment shortages.  The next evolution of equipment dealerships is the 5th element: predictive machine failure analytics.

Today’s customers have access to more information about their operations and equipment than ever, yet most dealers wait for the phone to ring to help solve a customer issue. All machines are the same, if not they will be the same within the next design cycle of that manufacturer. The equipment is designed and built by engineers and production employees that went to the same schools using the same steel, plastic, and electrical components. All equipment is the same, the only differentiation is customer support. As a dealer you can no longer survive with a reactive customer support culture. How do you shift your customer support culture to the 5th element using the technology that is readily available to the industry?

The average dealer installs 40% of the parts they sell. I do not foresee a time in which all parts sold by a branded dealership will be installed by trained technicians. However, I do think by changing the culture of the dealership service support from reactionary to predictive machine failure you should be installing 60%+ of the parts sold by trained technicians. Increasing parts sales installed by technicians by 5% would increase the typical dealerships pretax net income by 20%. A 10% increase in parts installed would increase pretax income by nearly 40% for the typical dealership. How do you convince customers to buy your labor experience when buying parts? This is something that we all have struggled with through the years. The simple answer is you don’t, unless you provide predictive failure analysis support. When a customer is standing at the parts counter or on the phone talking with a parts counter associate asking about the pricing and availability of parts, they have made the decision to install the parts themselves. This decision could have been based on prior experience, timeframe to repair, pricing or many other reasons. Machines are breaking down, your dealership is selling the parts to repair the machines, however over 50% of the parts are not being installed by your dealership. How do you change this?

Today’s technology is impressive and underutilized by the typical equipment dealership. Most manufacturers offer telematics on new equipment that is tied into the CAN bus of the machine that reports alarms, usage, and position through either cellular or GPS transmissions. These can be monitored remotely to help support the customer, however after the free trial period supplied by the manufacturer, most customers do not renew their subscription because of the lack of perceived value. Most dealerships do not have processes or people in place to support remote monitoring. The primary issue with today’s telemetric systems is that they are priority to the manufacturer not the customer. Customers are looking for a one stop solution for machine uptime. The current telemetric solutions can help provide limited predictive machine failure by monitoring changes in reporting of the machine alarms.

The missing piece of the puzzle for a true machine telematics predictive failure analysis is real time oil condition and fuel condition reporting. There are solutions available today that can be added to machines that provide real time reporting of oil and fuel condition. These solutions are relatively inexpensive and can provide timely reporting of changes in oil and fuel. These systems coupled with the manufactures CAN bus telemetric solutions have the ability to provide your dealership with a predictive failure analysis solution for your customers. Customers understand that machines breakdown, however they tend to breakdown at the most inconvenient time, when they need it to work. If you are able to remotely monitor CAN bus alarms as well as real-time oil and fuel condition changes your dealership could provide predictive machine failure analysis to your customer. This would allow the customer to schedule repairs with your dealership. Scheduled repairs can be planned and are more likely to be scheduled with the dealership for repairs.

Most customers currently do not renew their telemetric subscription after the manufacture supplied free trial period because of last of perceived value. This is a function of your dealership to bring perceived value to the customer. Technology is evolving every day and will continue be a critical part of machine sales/service cycle going forward. All equipment manufactures spent excessive engineering resources to ensure engine emissions compliance over the past 10 plus years. Now the focus is technology development. This 5th element of a dealership: Predictive Machine Data Analytics will be the primary equipment distribution game changer in the next 10 years. Will your dealership embrace this technology as an integral part of service culture?

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The Digital Dealership, Your Audience: Operations, Part 3

The Digital Dealership, Your Audience: Operations, Part 3

Guest writer Mets Kramer continues to explore all aspects of your audience in the digital dealership with Operations. This is Part 3 of his series.

In the last blogs about The Digital Dealership, we looked at the concept of your “audience”, and how an information driven dealership applies information to addressing your intended audience.  The term, Audience, has become more popular in modern digital marketing platforms, but the concept is not new.  Even with old style billboards which line the side of highways, the Audience has always been the people driving down the road.

A focus on your intended Audience makes a lot of sense when thinking about email campaigns, marketing or social media, but it’s equally valid when looking at day to day operations. Audience consists of the customers and the people who work for our customers. The Audience consists of owners, managers, site supers, maintenance people and even, accounting. Each one of these segments are part of an audience that largely consists of people already doing business with your dealership.

This Audience already knows who your dealership is, but also know more about this audience segment than your prospects and the unknown audience. Knowing your audience means you have information about the contacts. It means you can connect with and forward them more detailed information to enhance your connection and grow in engagement.

Let’s look at an example, related to something we’ve looked at before: your website.

The first thing you should consider is, “If I know the customers who visit my website, why are they there?” Each one of your customer contacts have a purpose of why they visit your website.  If they are in service or maintenance, they likely need service help or parts; if they are supervisors or managers, they likely need equipment; if they are in accounting, they need ecommerce.

Just like we often have multiple entrances to our physical dealership, we should also provide our Audience with the same accessibility to the online dealership. Either use specific URLs, for example, “parts.mysuccessfuldealership.com”, or alternatively, and more effectively, recognize returning site visitors and automatically take them to the last place they went, or where they most frequently go. This uses the information you know about the customer and improves the ease of doing business.

Considering your audience and applying information happens in the dealership operations side too. Many dealers already do this when merchandizing. You place products in the parts department targeting a known audience segment, typically technicians. Since this assumption is generally correct, items they need are likely to sell. The Digital Dealership is about collecting and using information, enabling a customized or granular interaction.

For example, imagine a customer or a technician comes in to buy parts. Do you collect their contact information and confirm their role? Do you provide information based on the provided machine serial number on maintenance requirements, parts needed for maintenance on indicators from telematics about potential issues? If not, do you email the customer’s service manager that a technician came in and additional items might be required. If the pickup is by a small contractor and the owner comes in, providing this information creates numerous additional opportunities. Collecting small pieces of information about each transaction creates the opportunity for a customized and more valuable experience. And who doesn’t want that!

In the early 2000s, when most manufacturers were bringing their online parts systems to market, it was immediately recognized that parts sales through online systems were around 10% higher than instore sales. Users went in to find the new pump they needed, but because a diagram was shown of related parts or a list of seals and fasteners was provided, the users also selected and purchased those items. If you have purchased on Amazon, you’ve no doubt seen the “Customers also Bought” section. This is an example of using information learned from past activities to help customers and increase sales.

Collecting information on known contacts, can also provide other opportunities to target messages to your Audience. Most dealers know if their customers are large or small and who are the recipients of invoices. Knowing this should change the additional items on the invoice. If invoices go to your Accounting or AP@mycustomer.com, then include messaging on finance related items like ecommerce options, financial payment integration or similar options. For small customers, when invoices go to the owner, include information on equipment replacement, service needs on their fleet and the like.

In each of these cases, the Digital Dealership collects information on the who they are interacting with to grow the knowledge base and develop actionable information. It applies this information to each transaction or interaction with their customer, throughout the operation. The Digital Dealership places information at the right place and at the right time for team members to make decisions and provide value to the customer.

In 2018, I did my first presentation at AED. It was called “A Granular, Data Driven Approach to Strategic Sales”. We looked at how placing customer equipment data, plus live market pricing data or operating cost information, in the hands of the sales rep which changed the relationship of Sales Rep to Trusted Advisor, giving the Dealership a permanent seat at the table. Arriving at a customer site with valuable and actionable information opened access to the customer much faster than hats and lunches. The presentation also provided a model for using customer transaction and fleet data to predict replacement equipment sales. More importantly, this data provided a much more accurate sales opportunity forecast and inventory model.

The common phase, “You do 80% of your sales with 20% of your customers”, means 80% of your customers likely don’t hear from you enough or experience enough value to keep them from going elsewhere with each purchase. Applying valuable information about your Audience throughout your dealership operation can change that.

This year, I’ll be presenting at AED again on the whole Digital Dealership concept. If you are interested in the idea of “A granular data driven approach to strategic sales”, I’m available to present this idea or other Digital Dealership aspects at your next sales meeting to help your team think like a Digital Dealer.

Mets.kramer@strategicevolutions.ca

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If You Don’t Know Where You’re Going

If You Don’t Know Where You’re Going

In tonight’s blog post, guest writer Caroline Slee-Poulos shares the importance of planning in “If You Don’t Know Where You’re Going.”

 

I promise you I’m not trying to make a reference to “Alice in Wonderland.” Although the title of this post is part of a quote from the story by Lewis Carroll, Yogi Berra had his own ending to the quote: “If you don’t know where you’re going you might end up someplace else.”

I think that most of us like to be able to see the path ahead of us: personally and professionally. When it comes to the professional aspects, I have found that quite a few people overlook education.

Of course, for several years, the only focus on education was a large push for every child to attend a 4 year university program after secondary school. I like to think that we know a bit better now – education is never “one size fits all” – but only time will tell. When the 4 year program was the focus, career training, employee development, and trades were pushed to the side. This was a short-sighted approach, at best.

Those of you who have already taken a class or assessment with us know that we are focused on functional education: giving you rich content in bite-sized pieces, leaving you room for the full schedule each of you live everyday.

In my last post I wrote about learning objectives, as it helps to know what you will get from a particular class or program of study. For this post, I have some thoughts on goals.

Ron has mentioned more than once that many high school graduates think of their graduation as the opportunity to put school behind them. That should never mean that we have left learning behind, though.

In that vein, I would encourage you all to make a list of your professional goals:

  • where do you see yourself in 1 year? 5? 10?
  • do you have a pathway to reach those 1, 5, and 10 year goals?
  • does your employer have goals for you or your role within the company?
  • do you know what those goals are?
  • what is your area of greatest strength?
  • what is your area of greatest struggle?

Write down your answers to these questions. Take some time to consider where it is that you are going. Education, training, and mentorship are all tools that can help you get there.

With a new year ahead of us, I would urge you to start executing plans towards those goals. Ron always says that “the time is now.” He is absolutely right. Now is the time to shift from ideas to reality.

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Quality of Communication Channel – Specification Sheets

Quality of Communication Channel – Specification Sheets

In tonight’s post, our guest writer Ryszard Chciuk shares with readers all of the ins and outs of the quality of the the communication channel, especially as pertains to the availability of the machine specification sheets. Please read on to learn more about how these deeply impact your service quality.

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

It is depressing that this relatively straightforward definition has not been widespread in our industry for almost forty years. And we would better not excuse ourselves that customers’ expectations are more and more demanding.

To improve the quality, we have to close gaps causing the discrepancy between customer expectation and his perception of service. The most important is the main gap:

Not Knowing What the Customer Expects

I assume you are on the way to becoming a digital dealership. If you do not know it, please search for “digital dealership” on the blog. I am afraid that most of you think you know what to publish on your website. However, if you want to provide excellent service to your customers, you have to diminish the gaps; you have to listen attentively to your customers about what information they would like to find there.

Surveys, focus groups, and research reports have many shortcomings. For example, they are expensive and rarely give you a complete picture of what your customers think of your services. It is because we usually do not ask interviewers about what we do not know. There is a newer approach called social listening — analyzing what customers say on social media. This perhaps will be cheaper and provide more reliable information. However, intelligent analysis of natural language content is still a difficult task for artificial intelligence. So, are you sure you know what your customers expect?

In this article, I am showing my point of view on the availability of machine specification sheets on a dealer website. This is a very straightforward piece of information. You can think it is about not-so-important nuts and bolts but be careful. I am sure it is not. I know it from my experience and a “social listening” using my own, not artificial intelligence.

Manufacturers’ decisions often cause problems with providing machine users with a decent level of communication channel quality. That is an obstacle to having engaged customers. For example, manufacturers decide about canceling information on technical specifications and the performance of older models of their machines. Almost on the day of the presentation of a new model, the previous model spec sheet is hidden or deleted from the website. It concerns both a manufacturer and a dealer website.

That behavior is astonishing. After all, this is against our customers using previous models and also against a dealer. I mean, a positive and trustful change in the specifications could prompt a clever customer to replace an older model with a new one, right now, not next year. Thus, he would get better performance, and a dealer would sell a machine. However, buyers must believe what a manufacturer wrote in a new model’s brochure because an old specification sheet is not available for comparison. Let’s see what a top manufacturer says about the significant differences to the previous model:

  1. up to 25% less fuel consumption
  2. up to 20% lower maintenance cost
  3. up to 45% more operating efficiency

Imagine that I am a potential buyer of a new or a used machine. I know that “up to” means the difference starting from 0%. During my over twenty years of work for a construction company, I used to be very impolite to many salespeople using that trick in face-to-face communication. Here, I will not comment on this kind of marketing information. However, I would ask very politely:

  1. What was the previous model fuel consumption? Please, do not answer that it was up to 33% higher than the new one. From the marketing point of view, the higher figure sounds even more attractive, but the value of information is the same. In practice, it is null.
  2. What was the maintenance cost of the previous model? I cannot believe they managed to reduce it by 20%. That is such an outstanding achievement, they should explain it in detail! Did they get rid of any filters or service tasks? Did they reduce the capacity of oil tanks? Did they increase intervals of service jobs?
  3. What was the previous machine model operating efficiency? 45% more is fantastic! Competitors knocked down! But how was it measured?

I am making fun of the information contained in a new machine model specification sheet, but the usability of the previous specification sheet was almost the same. And we have no chance to find it on a dealer website.

As a potential buyer of a used machine, I have more questions for a dealer. Why are you showing me the door? You have some older equipment in your yard. Do you want to sell any? Are you not interested in selling spare parts and service labor for the previous models?

Let’s discuss an example. When I was very young and worked for a construction company, I looked for a crawler excavator for our new pipeline project. It had to be a used machine. Critical parameters were:

  1. digging depth not less than X1
  2. loading height of bucket with teeth not less than X2
  3. lifting capacity at ground level at maximum reach not less than X3
  4. operating weight divided by ground contact area must be lower than X4 (due to soft ground).

And of course, in case we decided to buy, I wanted to know the shipping dimensions.

Today, to make exercising a bit easier, I would look only for used machines made by Caterpillar, Komatsu, or Volvo. That is because only these manufacturers have decent service abilities in the vicinity of my project.

The market for second-hand machines is vast. How to choose the most appropriate model from a long list? I need access to information comprising the mentioned four parameters (plus shipping dimensions). Surprise! I could not find essential information concerning previous models on any website, including the biggest portals for used machines.

I could find them in Caterpillar Performance Handbook or Komatsu Specifications and Application Handbook but are they available online? That is just a rhetorical question. And I have never seen that kind of publication for the rest of the market.

What annoyed me the most during my research? I found the website “The World’s Leading Source of Technical Specifications.” They say they collected spec sheets of thousands of machine models made by over 1000 manufacturers. Paid access to that information is only for manufacturers and their dealers. O, oops!

That is a pure example of billboard-type marketing, or even worse. How can a dealership entirely shift to engagement marketing?

I do not criticize manufacturers or dealers. They are allowed to behave that way by their meek and mild customers. In the world of the Digital Dealership all of the information has to be current and relevant.

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