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The Bucket Game: Navigating the Pitfalls in Service Management

The Bucket Game: Navigating the Pitfalls in Service Management

Guest writer Jim Dettore walks us through the ways in which we use different metaphorical buckets to juggle our financial reporting in, “The Bucket Game: Navigating the Pitfalls in Service Management.”

In the complex world of service management, the “Bucket Game” has become an all-too-familiar practice. This game, often played by service managers, involves the shuffling of hours from one job to another across different accounts on the profit and loss (P&L) statement. While it might seem like a harmless balancing act, the implications run deeper, often masking underlying issues and hindering the pursuit of a truly high-performing service operation.

Understanding the Bucket Game

At its core, the Bucket Game is about reallocating hours from one job to another within the P&L statement. For instance, if a particular job takes longer than expected, a manager might move hours from a more profitable job to cover the overrun. This practice creates an illusion of efficiency and profitability, but in reality, it does not affect the bottom line. The total hours and costs remain the same; they’re just distributed differently.

The Illusion of Profitability

The primary allure of the Bucket Game is the appearance it creates. By shifting hours around, a service manager can make a particular job look more profitable than it actually is. This can be particularly tempting in environments where performance is measured strictly by the profitability of individual jobs.

 

Masking the Real Issues

The significant downside of this practice is that it conceals the actual problems that occur during the job. Issues like inefficiency, lack of skill, or process defects remain hidden under the guise of redistributed hours. This lack of transparency prevents the organization from identifying and addressing the root causes of inefficiencies.

The Impact on the Bottom Line

Although the Bucket Game can temporarily improve the appearance of individual job profitability, it does not change the overall financial outcome. The total hours worked, and the costs incurred remain the same. The real danger lies in the false sense of security it provides, potentially leading to poor decision-making based on inaccurate data.

Best Practices to Avoid the Bucket Game

To foster a high-performing service operation, transparency and honesty in reporting are crucial. Here are some best practices:

  1. Emphasize Accurate Reporting: Encourage a culture where accurate time reporting is valued over the perceived profitability of individual jobs. This honesty allows for a clearer understanding of where improvements are needed.
  2. Focus on Process Improvement: Instead of masking inefficiencies, identify and address them head-on. Continuous process improvement should be a priority, with a focus on training, better planning, and resource allocation.
  3. Implement Robust Tracking Systems: Use technology to track time and expenses accurately. This can help in identifying trends and problem areas more efficiently.
  4. Encourage Open Communication: Create an environment where employees feel comfortable discussing challenges and inefficiencies without fear of retribution. This openness can lead to more effective problem-solving.
  5. Align Incentives with Overall Performance: Instead of incentivizing managers based on the profitability of individual jobs, align their incentives with the overall performance of the service department or the company. This approach encourages a more holistic view of success.
  6. Regular Audits and Reviews: Conduct regular audits and reviews of job performance. This helps in keeping track of the actual vs. reported performance and deters the practice of hour shifting.
  7. Customer Feedback Integration: Include customer feedback in the performance evaluation. Sometimes, customer satisfaction can be a more accurate indicator of job performance than internal financial metrics.
  8. Leadership by Example: Leadership should set the tone by prioritizing ethical practices and transparency. This top-down approach can significantly influence the organizational culture.

Conclusion

While the Bucket Game might offer short-term benefits in the appearance of individual job profitability, it ultimately hinders the growth and efficiency of a service operation. By embracing transparency, focusing on genuine process improvement, and aligning incentives with overall performance, organizations can avoid the pitfalls of this deceptive practice and stride towards a truly high-performing operation. Remember, the goal is not just to look successful, but to be successful.

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Utilization of Business Tools: Understanding and Growing the Dealer’s Hydraulic Business

Utilization of Business Tools: Understanding and Growing the Dealer’s Hydraulic Business

Guest writer Ron Wilson continues his study of the hydraulics side of our industry in this week’s guest blog, “Utilization of Business Tools: Understanding and Growing the Dealer’s Hydraulic Business.”

Customer and industry surveys can play a significant role in identifying and developing growth opportunities in the product support business. The following is an example of how survey information can help shape the hydraulic rebuild/repair business within a dealership.

 

Three examples of survey information:

  • Industry studies & research
  • Study the local market to evaluate the current state by using customer input.
  • Dive into the historical parts & service sales activities to support finding and identify new opportunities.

 

Industry Studies and Research

 

There are many professional trade associations that conduct ongoing studies. An example relating to the hydraulic industry is the information from National Fluid Power Association (NFPA) https://nfpahub.com/stats/market-trends/. This organization provides some free information from their website, and a deeper dive can be obtained through membership status. For example, the information below provides the dollar volume trend in fluid power shipments over the past several years. A deeper dive into more specific hydraulic markets is available from the website such as mobile hydraulic components.

Studying the Local Market

 

Comparing the local market to the national market brings a clearer view of the opportunities and areas to focus on to obtain a deeper understanding of the potential.

 

Designing the Survey of the Local Market is an important starting point.

 

The initial questions of why we are doing the study and what is the intent of the outcome.

 

  • Objective- Define the objective of the survey:
    •  Are we gathering feedback on existing programs/services?
    • Identifying new offerings opportunities
    • Identifying areas for improving current programs/services

 

Below is an example of the customer responses from three surveys conducted between 2018-2023. This allows us to determine changes in the market and customer expectations:

 

  • Ranking 1 & 2 shows the area of high importance to the customer, while 5 & 6 shows the less important. The scale was in a range of 1-10 (1 being of most importance).
  • Changes in the market can be seen in Pick Up & Delivery and Availability of Exchange. Both areas have become of higher importance over the three surveys, while Warranty, Loyalty, Local Support/Convenience, and Performed by Dealer being of less importance.
  • Without the survey we may have selected focus areas that can be costly and not as important to the customer and overlook areas that are of importance to the customer.

  • Develop the structure of the questions. 

Are we trying to identify the: 

  • Satisfaction with current services 
  • Areas needing improvement.
  • Additional services to be added to current offerings. 
  • Overall experience and suggestions with our company and with competitors

 

The information below provides examples comparing rebuild quality and pricing of the common hydraulic components. A key element shown below is the customers feel the rebuild quality is about the same as the competitors, but the pricing is considerably higher.

The above information can lead to discussions and modifications to address these two critical areas of quality of rebuilds and pricing.

 

Utilizing multiple channels to obtain survey responses can provide a broader reach of responses. 

 

A combination of the following can provide a broader view, but requires a little more management of the information going out to the customer and coming back in: 

 

  • Email (SurveyMonkey is a great tool with some limitations based on subscription level)
  • Website/social media
  • One on One visits and interviews (focus groups can be useful in this space as well)
  • Internal data showing data points from an historical view.

 

Analyzing and leveraging the results of the survey is really the important part of effort. We are looking to: 

 

  • Identify trends.
  • Segment results 
  • Prioritize Opportunities and Timelines.

The example below identifies the rebuild seal kits that have been purchased over the counter by customers, which can help identify rebuild opportunities for the dealer’s hydraulic shop. For example, a continued growth in the sales of part number A1000 may provide an opportunity to provide exchange lean cylinder for motor graders, or a rebuild program with a firm rebuild price.

The results of the questions below show the customer’s preferred pricing method. In this case Firm Quote is the preferred pricing method in all examples. If our shop only provides Time & Material pricing and our competitors provide Firm Quote, we will most likely gain business by changing our pricing strategy.

The example below shows the level of interest the customers have in utilizing the dealer’s exchange offerings, and the internal use of dealer exchange by the Service Department. 

The question below relating to Warranty Coverage may be a surprise. Usually, we think of longer warranties as a sales tool/incentive, but in some cases longer warranties may not be a key driver in growing the business. In the case below 180 days warranty is the most preferred by a wide margin. Anything below and over 180 days may not provide as much perceived value based on the customer’s input.

Implement Change based on the results of the survey information will take some time and focus:

  • Translate survey finding into actionable insights will involve:
    • Sharing the survey results with the various internal stakeholders such as:
      • Parts Department
      • Service Department
      • Product Support Sales Representatives 
      • Leadership team
    • Action plans and timelines are critical at this point. It may not be possible to implement everything at once but start with a critical few and roll the other items out within a defined time.
  • Communicate the survey results to the customers sharing the changes/improvements being implemented based on their feedback. 

Hopefully the above example shows how the use of external information, local market analysis, customer surveys, along internal historical data can provide direction, focus, and information to grow and manage your product support business.

Disclaimer- The data shown are not actual results, but modified results of an actual study.

 

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The Indispensable Role of Mentors…

The Indispensable Role of Mentors…

Guest writer Jim Dettore writes about the importance of mentorship in the heavy equipment and industrial engine trades with this weeks guest blog, “The Indispensable Role of Mentors…”

Introduction:

In the intricate and demanding world of heavy equipment and industrial engine trades, the guidance of a seasoned mentor is not just a luxury—it’s a necessity. From troubleshooting complex machinery to navigating the nuances of customer relations, mentors play a pivotal role in shaping the careers of professionals in this field. In this blog post, I’ll delve into the importance of mentors, the pros, and cons of tribal knowledge, and share personal insights from my journey, where mentors have significantly influenced various aspects of my professional life.

The Essence of Mentorship in the Trades:

Mentorship in the heavy equipment and industrial engine sectors is more than just learning the ropes. It’s an immersive experience that combines technical expertise with real-world wisdom. Mentors in these fields offer invaluable insights that textbooks or formal education often overlook. This hands-on knowledge is crucial in a sector where precision and expertise can mean the difference between success and costly failures.

Pros and Cons of Tribal Knowledge:

Tribal knowledge – the unwritten, experience-based knowledge passed down through generations – is a double-edged sword in the heavy equipment and industrial engine trades.

Pros:

  • It provides practical, time-tested solutions.
  • Enhances understanding of unique, machine-specific quirks.
  • Fosters a sense of community and continuity within the trade.

Cons:

  • Risk of perpetuating outdated or inefficient practices.
  • Lack of standardization can lead to inconsistency in work quality.
  • Potential loss of valuable knowledge if not formally documented.

Impact of a Good Mentor:

A good mentor does more than impart technical skills; they shape your approach to challenges and problem-solving. My personal journey is a testament to this. I’ve been fortunate to have mentors who have broadened my understanding in various domains:

  • Troubleshooting: Learning to diagnose and resolve issues swiftly and efficiently.
  • Customer Skills: Developing the ability to manage expectations and build trust with clients.
  • Business Management: Gaining insights into effective business operations and decision-making.
  • Finances: Understanding the financial aspects of running a business in the trade.
  • Sales: Acquiring techniques for successful selling and customer retention.
  • Product Support: Learning the importance of after-sales support and customer service.

Each mentor brought a unique perspective, contributing to a well-rounded skill set that goes beyond technical expertise. Certainly! 

Lifelong Learning and Becoming a Mentor:

Even now, at the age of fifty-eight, my learning journey is far from over. The beauty of being in the heavy equipment and industrial engine trades is that there is always something new to discover, and I am fortunate to still have mentors who continue to enlighten me with fresh perspectives and knowledge. This ongoing process of learning is not just enriching; it’s a powerful reminder that growth and development have no age limit.

My experience has come full circle, as I now find myself in the role of a mentor to several individuals. Being a mentor is incredibly rewarding and a responsibility I take seriously. It allows me to give back to the industries that have given me so much, shaping the next generation of professionals. I strive to provide them with the same level of guidance and support that I received throughout my career.

This role reversal from mentee to mentor is a unique journey. It has taught me the importance of patience, the value of sharing experiences, and the satisfaction of seeing others grow and succeed. My goal as a mentor is not just to teach technical skills but to instill a mindset of continuous learning and adaptability, which are crucial in our ever-evolving field.

In essence, mentorship in the heavy equipment and industrial engine trades is a cycle of knowledge and experience that keeps turning, from one generation to the next. Whether we are learning or teaching, each of us plays a pivotal role in nurturing this cycle, ensuring the longevity and advancement of our trade.

Conclusion:

In the world of heavy equipment and industrial engine trades, mentors are the unsung heroes. They not only impart technical knowledge but also guide you through the maze of industry-specific challenges. While tribal knowledge has its place, it’s the structured guidance and diverse experiences offered by mentors that truly forge a successful career in this field. My journey, enriched by multiple mentors, stands as a testament to the transformative power of mentorship. It underscores the importance of fostering and valuing these relationships for anyone aspiring to grow in this dynamic and challenging industry.

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How to Measure Sales Performance Unlocking Success: A Guide to Effectively Track and Boost Your Sales Reps’ Performance

How to Measure Sales Performance – Unlocking Success: A Guide to Effectively Track and Boost Your Sales Reps’ Performance 

Guest writers Debbie Frakes and Steve Clegg return this week in, “How to Measure Sales Performance – Unlocking Success: A Guide to Effectively Track and Boost Your Sales Reps’ Performance.”

In the dynamic world of equipment sales, your sales reps are the driving force behind your success. They not only steer potential leads to becoming valued customers but also play a pivotal role in nurturing existing client relationships. Without a high performing sales team, your business risks stagnation and having customers leave for competitors.

It is essential to employ robust strategies for tracking and improving the sales performance of your representatives. This blog will guide you through the process, emphasizing the significance of regular performance analysis and introducing the effectiveness of Zintoro.com to guide actions that result in improving sales.

Complete a Sales Performance Analysis

To ensure your sales reps consistently meet their goals, conducting a comprehensive sales performance analysis is imperative. This involves tracking key metrics such as:

  • Conversion Rates—Measure how effectively leads are turning into customers.
  • Appointment Setting Rates—Evaluate the efficiency of securing meetings with potential clients and existing customers to capture more of their transaction.
  • Customer Retention Rates—Assess how well your reps are maintaining relationships with existing customers and building these relationships by expanding the products and service purchased.
  • Customer Purchase Frequency and Consistency—Understand the frequency at which customers make purchases and the impact of weekly and monthly purchases.
  • Overall Revenue and Gross Margin—Gauge the contribution of each rep to the company’s revenue and profits.

Setting realistic goals for these metrics is an important part of this process. With regular analysis you can track progress and identify areas for improvement. Zintoro forecasts expected sales with a >95% accuracy which provides realistic expectations for branches and sales territories. 

Why it Matters for Your Dealership

Sales rep tracking is not just about metrics; it’s about the success and sustainability of your dealership. By regularly monitoring performance, focusing on customers that are at risk of being lost, managers can quickly identify underperforming reps and take corrective actions. Recognizing critical Zintoro sales metrics helps in setting benchmarks for the team, providing insights into individual achievements or shortcomings.

Without tracking sales performance and customer engagement, you risk being in the dark about your team’s accomplishments or any underlying issues. Early detection of performance problems allows for timely corrections, action plans, and issue resolution, preventing customer loss.

Implement a Zintoro Sales Performance Analysis

Enter Zintoro.com — your comprehensive solution for an exact understanding of how well your reps are meeting their goals. With Zintoro’s sales performance analysis, you can:

  • Identify Shortcomings—Recognize areas where reps are falling short and gain insights into the root causes.
  • Comparison Insights—Let your sales reps compare their performance with others, fostering healthy competition and motivation.
  • Strategic Actions—Zintoro not only provides insights but suggests actionable steps to enhance customer engagement, retention, and overall growth.

Zintoro’s suggested actions pinpoint precisely what needs to be done to elevate sales performance with real growth both in upturns and industry downturns. If you’re ready to embark on a journey of tracking and improving sales performance, or if you have questions about the most important sales metrics, contact Zintoro today.

Unlock the potential of your sales team with Zintoro.com — where insights meet action for unparalleled growth.

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Are Cybersecurity Vulnerabilities Haunting Your Dealership?

Are Cybersecurity Vulnerabilities Haunting Your Dealership?

Kevin Landers is the President of rocketwise – an IT and Cyber Security firm based out of Knoxville, TN. He and his team support equipment and commercial truck dealers across North America. He makes his initial blog post for Learning Without Scars with, “Are Cybersecurity Vulnerabilities Haunting Your Dealership?”

Kevin possesses the unique ability to understand, and explain in non-threatening and non-technical ways how technology, business and team members work with, and sometimes, against each other. He has an innate ability to understand how technology works at the basic conceptual level and how it interacts with hardware, software, networking, people and business processes. A rare combination in today’s technology arena. 

He puts these abilities to work daily to make dealerships better by enabling them to deliver extraordinary service with rocketwise’s “Dealer Ally Success Platform”.

Kevin lives in Tennesse with his bride Summer, and their two sons – Caleb and Isaiah.

Let’s delve into a topic that’s crucial for dealerships like yours – cybersecurity. While you might not have old skeletons hidden away, there’s a good chance that cybersecurity vulnerabilities are lurking in the shadows, just waiting to cause trouble. You can’t address what you can’t see, which is why it’s time to shed light on these hidden dangers. This will empower you to take initiative-taking measures to safeguard your dealership from potential cyber threats. Here are some of the most common cybersecurity challenges faced by dealerships:

Outdated Software: The Neglected Nightmare

We understand that updating software can be a hassle, but running outdated software is akin to leaving the dealership doors wide open for hackers. When software vendors release updates, they often include crucial security patches that plug vulnerabilities. Don’t let outdated software haunt your dealership’s digital presence. Keep everything up to date to fortify your online defenses.

Weak Passwords: The Gateway for Cyber Intruders

If your passwords are weak, it’s like handing over the keys to your dealership to cybercriminals. Using predictable passwords like “123456” or “password” is a big security no-no. Instead, establish robust and unique passwords for all accounts and devices. Consider a mix of upper and lowercase letters, numbers, and special characters. Password managers can be invaluable for generating and securely storing complex passwords. As a dealership owner, set guidelines for creating strong passwords and employ software to enforce this policy.

Unsecured Wi-Fi: The Vulnerable Entry Point

Imagine a scenario where a cybercriminal lurks in a parked vehicle, exploiting your dealership’s unsecured Wi-Fi network. Terrifying, right? Unsecured Wi-Fi can serve as an entry point for hackers to intercept sensitive data. Ensure your Wi-Fi is password-protected and use WPA2 or WPA3 encryption for an added layer of security. For critical dealership operations, consider implementing a virtual private network (VPN) to shield your data from prying eyes.

Lack of Employee Training: The Risk of Ignorance

Your employees can either be your dealership’s strongest defense or its weakest link. Employee errors contribute to approximately 88% of data breaches. Without proper cybersecurity training, your staff might unknowingly fall prey to phishing scams or inadvertently expose sensitive information. Regularly educate your team on cybersecurity best practices, including recognizing phishing emails, avoiding suspicious websites, and using secure file-sharing methods.

No Data Backups: The Catastrophic Loss

Imagine waking up to find your dealership’s data vanishing into the digital abyss. Without backups, this nightmare can become a reality due to hardware failures, ransomware attacks, or unforeseen disasters. Embrace the 3-2-1 rule: maintain at least three copies of your data, stored on two different media types, with one copy stored securely offsite. Regularly evaluate your backups to ensure they are functional and dependable.

No Multi-Factor Authentication (MFA): The Risky Gamble

Relying solely on passwords for account protection is a risky gamble, much like having a screen door at the entrance of your dealership. Implementing MFA adds an extra layer of security, requiring users to provide additional authentication factors, such as a one-time code or passkey. This significantly bolsters your account security and makes it challenging for cyber attackers to breach your dealership’s defenses.

Disregarding Mobile Security: The Vulnerable Phones

Mobile devices have become indispensable tools for dealership operations, but they can also be vulnerable to security risks. Ensure that all company-issued devices have passcodes or biometric locks enabled. Consider implementing mobile device management (MDM) solutions to enforce security policies, remotely wipe data, and ensure devices remain up to date.

Shadow IT: The Unwanted Surprise

Shadow IT refers to the use of unauthorized applications within your dealership. While it may seem harmless when employees use convenient online tools, these unvetted applications can pose significant security risks. Establish clear policies for software and services usage within your dealership and conduct regular audits to identify any lurking shadow IT.

Incident Response Plan: Preparedness for the Unexpected

Even with all precautions in place, security incidents can still occur. Without an incident response plan, your dealership could be left scrambling. Develop a comprehensive incident response plan that outlines how your team will detect, respond to, and recover from security incidents. Regularly evaluate and update the plan to ensure its effectiveness.

Don’t let cybersecurity vulnerabilities haunt your dealership. We can assist you in identifying and addressing potential threats, ensuring a robust security posture that protects your business. Reach out to us today to schedule a cybersecurity assessment. Your dealership’s security is our top priority.

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Proactive Inventory Management Can Make Or Break You

Proactive Inventory Management Can Make Or Break You

Our new guest writer Jay Lucas makes his debut today with his blog post, “Proactive Inventory Management Can Make Or Break You.” Jay has been in the recruiting industry since 1995, beginning his career with a multi-national technical & engineering staffing company.  Later he started his own recruiting firm supporting a variety of industries and clients in Texas.  In 2018 he acquired Jordan-Sitter Associates (founded 1978), a well-established heavy equipment recruiting firm specializing in helping manufacturers and dealers of heavy equipment, as well as equipment rental and remanufacturing companies.  Jay’s predecessors were all retired heavy equipment executives looking for an opportunity to leverage their industry knowledge and networks in retirement.  With more than 40 years recruiting in the industry, Jay brings a deep expertise in recruiting process and technology that couples well with JSA’s deep roots in the heavy equipment industry.  JSA is a divisional brand of Reputable Recruiting, LLC, an assembly of specialized recruiting brands.  The name Reputable Recruiting was established because of our consistent performance and growing collection of Google and Online 5-Star Reviews.

We’ve been recruiting heavy equipment talent since 1978, so we are no stranger to executing searches across a broad spectrum of jobs. Our clients are OEMs, dealers, independent rental companies, and re-manufacturers with a wide spectrum of product applications. It has been said, “Sales sells the first, and Service sells the rest.” I’d argue that it’s hard to have a high-performing service organization if your parts organization isn’t functioning at a high level. If you have a superior product, exceptional sales team, and talented service crew, but you can’t get the parts needed to support the equipment then your path will likely lead to unhappy customers and eventually customer churn.

There are a couple of facets related to parts operations that I’m referring to. The first is the spare parts operations (sometimes referred to as service parts operations) at the manufacturer. This job is largely a supply chain position with a heavy planning and analytics function. Unlike production parts planning, which supports the production of whole goods, spare parts planning has a level of complexity due to the difficulty in knowing exactly when a part will fail. In addition, OEMs carry parts for equipment models that are no longer in production, further complicating the parts planning/supply chain. That said, there are several data points that can be useful in helping manufacturers set their stock levels and re-order points.

Telematics, warranty, and historical demand are key data points to determining the assumptions needed to effectively stock spare parts to ensure an industry-acceptable fill rate (95%+). While telematics data is helpful in stocking spare parts for preventative maintenance, warranty data is helpful in providing insights into specific parts failures and the underlying root cause. As an example, understanding that a machine’s undercarriage can be impacted by soil conditions/types can help planners adjust the expected life of a part by region. Sandy soils are hard on an undercarriage, so the life expectancy of the related parts may be shorter in specific areas. Warranty data may also prove that product design, part design, or part quality could be the cause of premature failure. In addition to telematics and warranty data, lead times have made inventory planning a moving target (as evidenced since Covid), so frequent tweaking of the inventory planning models is necessary to address these challenges.

Dealer agreements with parts stocking expectations can also be a contributor to ensuring machine up-time (and customer satisfaction). Suffice it to say, a strong spare parts operation at an OEM will leverage all the data points needed to help improve spare parts availability, machine up-time and ensure good dealer and customer satisfaction.

On the other side of the equation is the dealer parts operation. This position does have some planning elements to ensure proper inventory levels but also includes high levels of sales and support given the direct relationship with the customer. That said, if the OEM is struggling to keep parts in stock there will be a likely trickle-down effect. Strong communication between the OEM and the dealers is essential to ensuring the dealer parts operation runs smoothly.

As mentioned earlier, if sales sell the first and service sells the rest, you must be sure that your OEM and Dealer parts operations are working well together and sharing the necessary information to keep the spare parts inventory flowing and fill rates at an acceptable level.

If you are having a heavy equipment parts supply issue and need to evaluate making staffing changes in your parts operation, give us a call. We can leverage our extensive database of contacts and a world-class blend of recruiting technology and experience to find you the talent you need. We are so sure of our performance, we guarantee it!

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Why Your Geographic Market Matters

Why Your Geographic Market Matters

Guest writers Debbie Frakes and Steve Clegg write about why your geographic market matters, and how this concept directly impacts your business.

Why Geographic Market Matters for Your Business

When it comes to whether someone will work with a company or not, there are a wide variety of factors that come into play. Many of those factors are things you can control, like your parts availability, quality of customer service, and how effective your technicians are. But there are some other factors that are not in your control. For equipment dealers, one of those is your geographic market. 

What is an equipment dealer’s geographic market? 

Distance for geographic market is one of the most important business metrics for your dealership. It measures the number of miles and travel time that a customer will travel in order to work with you or buy products from you. The geographic market for a business can vary, based on the industry, market, or region that a company is located in. But if distance is a factor for your business, like it is for equipment dealers, then a customer is very unlikely to do business with you if you’re beyond that distance. 

In order to learn what the distance for geographic market is for your dealership, you must understand where your current customers are coming from. After knowing how far away from you most of your customers are, you’ll be able to recognize patterns, see if there are any outliers, and know how important a factor distance is for building your customer base. 

Why distance for geographic market matters for you

If a prospect is beyond the maximum range people are willing to travel to work with you, then it will be extremely difficult, if not impossible, to turn them into a customer. In general, most equipment dealers have a maximum service area within a 60-mile radius. The reason for this limit is that with a greater distance than that, it’s too difficult for your field service trucks to respond quickly enough to an emergency service situation. 

Geographic market is one of the most important business metrics for you to pay attention to, because if a customer is beyond that 60-mile range, you don’t want to expend any resources going after them. You should use this metric to focus your marketing and sales strategy on targeting people who are within your maximum distance and, therefore, more likely to work with you. 

How to use geographic market to your advantage 

Although you can’t control how far your dealership is from any given customer, you can use knowledge of geographic market, like other business metrics, to make your marketing and sales efforts more effective. You should only be targeting prospects within your dealer’s range, because they have a much greater potential for your business. 

Over the long term, this type of geographic targeting will save your dealership money, help you tailor your marketing and sales messaging, and allow you to become highly skilled at serving customers in your specific area. All these activities are conducive to your long-term growth and success. 

If you want to understand your dealership’s geographic market and other key business metrics for your operation, then we recommend conducting a market analysis through our partner, Zintoro. It will determine how large your potential market is and exactly what the distance is for your maximum reach. This analysis will help guide your business strategy and keep you from wasting resources.

Schedule a Zintoro market analysis today. 

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Is It Always Reasonable to Follow Through?

Is It Always Reasonable to Follow Through?

Guest writer Sara Hanks explores the Say/Do ratio in business with “Is It Always Reasonable to Follow Through?”

The concept of the Say / Do Ratio, a principle I learned during my time at GE, stands as a beacon of accountability and reliability. It’s simple yet profound: if you commit to something, you own its completion. As a manager, I expect that when I assign work to an employee, it will be acted upon. If issues arise, the employee will reach out with questions or concerns. It is a culture of accountability and in many ways, I appreciate it.

But what happens when tasks veer off course or don’t pan out as expected? What if the level of effort has no payback or the work becomes obsolete? This is where the real challenge lies, and where the Say / Do Ratio is truly tested.

I recall a period where I was committed to sending a weekly report, a task that involved about three hours of meticulous data scrubbing and preparation every week. For approximately 1.5 years, this report was a thorn in my routine, until GE launched a simplification initiative. During this period, all tasks were scrutinized to determine their necessity. To my relief, this report was classified as non-essential and shelved, freeing up valuable time. This experience opened my eyes to the practicality of reassessing commitments.

Shelving non-value add tasks was easy when it was part of a major initiative. However, most of us don’t find ourselves in an environment when pushing back or stopping work is a usual activity. When faced with tasks that aren’t progressing as planned, it’s crucial to adapt. Here are some strategies that can help:

  • Set Realistic Expectations Early: If you sense uncertainty, communicate it upfront. It’s not about being pessimistic but about being transparent. For example, imagine you’re leading a project to implement a new software system. Early on, you realize integration might be more complex than anticipated. Instead of keeping quiet, you inform your team and stakeholders, setting the stage for more flexible timelines and reducing the pressure of unrealistic expectations.
  • Implement Mini-Deadlines: Regularly assess progress. If a task continues to be uncertain or problematic, it’s a sign to reevaluate. Let’s say you’re working on a marketing campaign with a three-month deadline. To ensure progress, you set monthly check-ins to evaluate the campaign’s development. In the first month, you notice some strategies are not yielding expected results, allowing you to pivot quickly rather than waiting for the final deadline.
  • Engage with Stakeholders: Schedule check-ins to discuss progress and challenges. Tailor your communication to their interests and concerns, ensuring transparency and collaboration. After a quick update, I jump into the discussion with the concerns and seek guidance from the stakeholders during the meeting. 
  • Explore Alternative Solutions: If the original plan isn’t working, don’t hesitate to seek different approaches to achieve the same goal. In general, sharing issues without offering a potential solution should be frowned upon. Before proposing a stop or a pivot with a project or a task, brainstorm other ideas. 
  • Know When to Stop: When a task seems futile, identify a stakeholder likely to support discontinuing the effort. Create an ally with the stakeholder, and then discuss it with the larger group.

Recently, these strategies proved effective during a project to build a prediction model for reliability improvements. Despite the model being built, it required substantial manual effort and offered results like the original estimates. Recognizing this, we decided to discontinue the model. First, we reviewed the challenge with the head of engineering to get support. Then we produced an updated estimate as an alternative. During the review with the remaining stakeholders, we agreed to move forward with the recommendation, rather than spend time continuing the model. This decision, though tough, was a practical application of reassessing our approach and realizing when to stop – a testament to the effectiveness of the strategies outlined above.

The Say / Do Ratio is not just about fulfilling commitments but also about smartly navigating through them, especially when situations change. It’s about balancing determination with flexibility and practicality. This approach not only ensures productivity and efficiency but also fosters a work culture of accountability, with adaptability.

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How to Improve Customer Retention

How to Improve Customer Retention

Guest writers Debbie Frakes and Stephen Clegg analyze the key measure of business success in this week’s blog post, “How to Improve Customer Retention.”

Customer retention is crucial for the success of every company. It describes the percentage of customers who purchased within the last 12 months who also purchased within the prior 12 months—13 to 24 months ago. Poor customer retention means that you aren’t keeping customers over the long term and people are not committed to working with you. The result is that you must devote resources continually toward acquiring new customers, taking up valuable time and money. 

Maintaining strong customer retention is important for two primary reasons. The first is that it’s significantly more expensive to sell to a new customer than to an existing one. The second is that the longer a customer works with you, the more they buy from you and the more valuable they become to you. 

The question is, how can you improve your customer retention? 

Understand why customers leave you. 

The primary reasons that customer will leave you are these:

  • You’re mismanaging their expectations and not keeping them informed on the status of their orders. 
  • There is a change in contacts for either the customer or for you. 
  • Your employees aren’t adequately trained or knowledgeable about your products and services or they lack the information system support and tools required to be responsive.

Despite what you may think, price is not at the top of the list when it comes to reasons that customers leave your company to purchase from a competitor. Once you understand why people may stop working with you, you can take steps to prevent them from leaving to buy from competitors. 

How Zintoro helps you retain more customers. 

Zintoro provides the data and insights to recognize at risk customers, while our partner Winsby gives you the tools to significantly improve your customer retention. 

Offer great customer service – In order to deliver top notch customer service, you must understand expectations and be responsive to questions and concerns. Zintoro uses Winsby Inc.’s customer satisfaction and benchmark survey programs to find out what your customers’ expectations are and to determine if there are any issues they are having. Your team can then act on this information and keep at risk customers from leaving you. 

Provide a personalized customer experience – Our AI system tracks each of your customers to identify their next purchase, what industry, and market they are in, and whether they are at risk of being lost. Armed with that information, your sales team can personalize customer interactions and tailor offers and recommendations to meet their specific needs. Our partner Winsby will keep your master lists up to date with the correct contacts, phone numbers, and email addresses. 

Develop strong relationships through consistent communication – Zintoro helps you contact and communicate with customers in several ways. First, you can use purchase history data to identify people who have not purchased in their usual time period, then reach out to ask about their needs. Second, you can distribute highly effective emails through Winsby. Customers who receive Winsby emails typically purchase two to three times more often than those who don’t. Third, Zintoro works with most CRM systems to integrate analytics data with your sales and marketing data, helping streamline customer communication. 

Use customer feedback to take action – Implementing Winsby’s customer satisfaction surveys is a great first step, but you must actually act on the information and feedback you receive. Utilize the insights from the surveys to improve your sales process, products, and other aspects of your business before at-risk customers leave you. 

Recognize the signs of at-risk customers – Zintoro tracks the frequency, consistency, and types of purchases, so you can know who your at-risk customers are. Your sales team can then use that information and reach out to those customers, ask about their needs, and even provide a special offer or other incentive to encourage them to stay with you.

Take steps now to improve your customer retention. 

Increasing your retention rate is an ongoing process that should be started as soon as possible. Building lasting relationships with customers is crucial for the long-term viability of your company because it makes them more valuable to you and it takes fewer resources to sell to them. Zintoro gives you the information and tools required to retain customers and boost your sales. 

Schedule a Zintoro demo to find out how to boost your customer retention, track, and accurately forecast business performance, and to determine the ROI for your marketing and customer satisfaction efforts.

 

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Warranty as a Cost Center?

Warranty as a Cost Center?

Guest writer Chris Kohart takes a look at the warranty department in “Warranty as a Cost Center?”

Many equipment dealers view warranties as a goodwill cost center; why don’t we view this highly visible service we provide as not only a goodwill builder but also as a source of revenue or at least a break-even? Our OEMs have set us up to take warranty on the chin, but does it have to be this way? There are plenty of reasons to say no – read on.

A few eons ago, when I became the dealership’s product support manager, one of the first significant financial sinkholes I wanted to solve was curing the dealership’s annual six-figure warranty write-off (loss). The belief within the dealership was that it was a cost of doing business. In addition to staunching this loss, I wanted our dealership to highlight the significant value-add we provided to our customers that was not being positioned in our favor.

  • First question:  How many customers know the value add your warranty service provides? (at my dealership, the internal management’s consensus was, “It doesn’t matter, they expect it to be fixed for free under warranty”). If you’re not maximizing this extraordinarily costly and valuable benefit you offer your customers, it’s time to rethink your strategy. 
  • Second question:  Do you invoice every warranty repair to the customer at prevailing retail charge out rates showing a warranty discount at the end, bringing their cost to $0.00? That’s an impactful selling tool; once we started sending these no-charge invoices to our customers (I could write another article or three on the gyrations we went through to make our business system support that), we began to get feedback from customers as they had no idea of the additional value our dealership offered.  

Here’s an example of an invoice for a minor repair on a leaking hydraulic line:

 

DESCRIPTION QTY UNIT EXTENSION
Tube, hydraulic feed 1.00  $685.98  $685.98 
O Ring 4.00  $16.20  $64.80 
Hydraulic oil per gallon 4.00  $5.00  $20.00 
Inbound air freight 1.00  $218.90  $218.90 
Parts Total $989.68 
Field Labor per hour 3.00  $180.00  $540.00 
Travel Labor per hour 5.00  $180.00  $900.00 
Labor Total $1,440.00 
Mileage charge per mile 50.00  $1.75  $87.50 
Tolls 1.00  $45.00  $45.00 
Supplies & Materials $115.20 
Invoice Sub – Total $2,677.38 
Less OEM warranty coverage ($934.11)
Dealer Courtesy credit     ($1,743.27)
NET DUE FROM CUSTOMER $0.00 

It is pretty interesting when this is presented to a customer. They see a net total of $2,677.38 and owe the dealer $0.00. It’s a powerful selling tool for whole goods and your dealership’s product support operations. So, we’ve shown our good customers that as a dealership, we absorb 66% of this fully covered warranty repair while the OEM only covers 34%. Start reinforcing this huge dealership advantage before your OEMs encroach directly in your trading area as we get deeper into the “no-maintenance” electric construction equipment era (more to come later).

Now, let’s go a little deeper into this work order and review our actual P&L:

 

DESCRIPTION RETAIL

EXTENSION

   Actual Dealer Cost OEM Allowance Profit (Loss) Comments
Tube, hydraulic feed $685.98    $583.08  $437.31  ($145.77) Stock order discount is listed less 25% & 15%
O Ring $64.80    $41.31  $41.31  $0.00 
Hydraulic oil per gallon $20.00    $16.00  $0.00  ($16.00) OEM does not pay for fluids
Inbound air freight $218.90    $218.90  $0.00  ($218.90) OEM does not pay for freight
Parts Total $989.68    $859.29  $478.62  ($380.67)
 
Field Labor per hour $540.00    $324.00  $432.00  $108.00  OEM reimbursement rate is 80% of charge-out
Travel Labor per hour $900.00    $540.00  $0.00  ($540.00) OEM doesn’t pay travel time
Labor Total $1,440.00    $864.00  $432.00  ($432.00)
 
Mileage charge per mile $87.50    $87.50  $0.00  ($87.50)
Tolls $45.00    $45.00  $0.00  ($45.00)
Supplies & Materials $115.20    $115.20  $0.00  ($115.20)
 
Invoice Sub – Total $2,677.38    $1,970.99  $910.62  ($1,060.37)

In our example, this basic, simple warranty repair cost our dealership $1,060.37, and we lost $700 in profit opportunity. Where does your dealership book this cost today? (our dealership booked it as a new “OEM” expense). It’s not hard to see how this balloons over a fiscal year to be a six-figure write-off for many dealers.  How do we solve this dilemma? More thoughts to come in a subsequent article.

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