Parts Ponderings v1.1

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The parts business has become a rather predictable and unexciting business hasn’t it? If you go into a major metropolitan area anywhere in the world and visit the equipment dealerships you will find a sameness that is rather boring.

How can we break this mold? Well I think we need to ask the employees and the customer what they think as everyone of you knows. What they ask for we should deliver.

However, let’s tell down the walls of the box and look to the convenience issue for customer in dealing with you. Typically they have stopped coming into the dealership. They use the phone. Why is that?

I think along with the convenience to them of not having to fight the traffic from their job to the dealer we have taught them that there is nothing to gain by coming into the store. They don’t get any better service do they? In fact we will leave a counter person to answer the phone. So we treat the customer who came to our store to a lower level of service. We don’t have an exciting waiting area or instore merchandise nicely laid out for them to browse through while they wait.

Altho0ugh it might be radical to many of you I think we should open parts stores. Let’s call them the EPS here (Equipment Parts Store). Choose a location that is central to the customer machine population. Or close to the job sites, perhaps even on the job site. Perhaps have an employee on the customer job site itself. Let’s take the store to the market directly. Who was it that ordained that the only parts store we have is in the main dealership building? Why don’t we have a whole series of stores all around the territory? After all the bearing houses do that. The hose and fittings suppliers do that. The hardware and supplies suppliers even take their product right to the customer shops and technicians. Who told is that we couldn’t have more stores?  Perhaps it is just stale thinking or maybe it is not thinking at all. Let’s start being more of a convenience to our marketplace and to the customers within it. The time is now.

Parts Ponderings v1.0

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This is the first of a weekly commentary on the operational, sales and customer service aspects of a parts business in the equipment business.

I want to start with the most important people in your business, your heroes; these are the men and women who serve your customers every day.  They struggle with the tools we provide them from the business systems to the telephone systems in a department that is like the equipment we sell today with little or no differentiation from the other dealers in the market with whom you compete. We have all become a “oneness.”

We have taken to heart the drive of TQM or CQI from the 80’s and we have improved the processes ad nauseum. To the point that now we are process junkies and not particularly interested in changing anything for fear it will all fall apart.

What is the joy of working in that environment? How can we continue to attract and retain the talented people that we need to do the work? This will become a very large problem in the not too distant future.

I have just completed two wonderful books on this very subject. One is by Gary Hamel called What Matters Now and the other is by Clayton Christenden called How Will You Measure Your Life. Interested people should read them both.

I am interested in how we can make our work magical as in Apple. How we can provide customers with experiences that they want to experience more of in their work? But that is a trick question isn’t it? It isn’t up to us if we truly think about it. It6 is about those wonderful men and women doing the job now. They know what is needed if only we would free them from the shackles of the processes in which we have them locked. But that is too scary for the moment. Not a wise thing to put off. We need to start making people want to come work for us above everyone else. We want an interview to be an event like at Southwest Airlines where it is like a casting call. Yes we can do that too. Think about your parts store and them go visit an apples store and note the differences. That is where we need to be. The time is now.

Proactive Parts Programs

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For some time I have pushed to turn the parts department into a sales force. In many cases this is a terrifying thought. The counter and telephone sales personnel are scared to make outbound phone calls. However, there is another device you can use to see if they can sell or not. Sell boot or safety shoe laces. Every customer has the need for boot or safety shoe laces so it would be any easy sell. To make it easier sell the laces for $1.00. The customer would not have any logical reason to say no at that price – even if they didn’t need a new pair at that particular moment. Try it and see if your team can sell. The time is now.

Data Mining – the last time we spoke

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One of the advantages you have is your data and your information. It is a shame not to use it. With a good VoIP  and good data one of the first things I would show on the screen, as the phone rings, is the purchase history of the customer. What is the business volume this year, this year to date, last year, last year to date, transaction size this year, transaction size last year, number of contacts by you to the customer, number of contacts from the customer to you. Date of last sales transaction by category and date of last contact with you. Do you think you could do something if you had that type of information each and every time that either the customer called you or you called the customer? The time is now…

Proactive Parts Programs

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So let’s start the week properly.

For your parts business. Each and every customer phone call or customer counter visit we should be asking two questions. Every time.

  1. What is the machine model and serial number for this parts order?
  2. Who is doing the work for you?

With the model and serial number we can update the machine population records which we will discuss later and with the answer on who is doing the work for you we will know more about our competition. The time is now…

The Parts Business

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In doing background work for my monthly CED column I noticed some interesting facts about Genuine Parts.

Genuine Parts is the parent of NAPA the parts specialist in the automotive replacement business. From my perspective they also mirror the construction equipment marketplace. Over the past four years Genuine Parts has seen through 2008 and 2009 declines in profit of 2% and 14% respectively. In the years 2010 and 2011 they returned to profit growth of 20% and 19% respectively. Analysts are predicting another year of double digit growth for 2012.

How do individual dealers in North America compare? I think we have some work to do to regain our footing. The time is now.

June Management Training

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The Balanced Scorecard

If you design your Dealership from the customer perspective you will win.

In the management training we offer through Quest, Learning Centers, Inc. we offer varying levels of management development. In our Unit II classes for both Parts and Service we use the Balanced Scorecard as one of the main pillars of the learning.

The Balanced Scorecard has been around as a business tool since the 1990’s and was developed at Harvard Business School. It became very prominent as a management tool in the Heavy Equipment Industry late in the 90’s and early in the 00’s. We introduced our version in the late 90’s and have updated it twice since. Our approach is slightly different than the method taught at Harvard in that we start from the customer focus rather than the financial focus they use academically.

I believe that your employees will work harder to satisfy a customer need than they will to satisfy a management need – I very strongly believe this to be true. As a result of this belief I start the Balanced Scorecard discussion from the perspective of what does the customer need or want. Not what WE think they want but what they factually want to receive from dealerships.

We obtain this information from surveys and customer interviews. I usually suggest that dealers initiate a “Voice of the Customer” program that will ask customers the same question for one week and do this once a month. Each time a customer is communicating with an employee they are asked a question, the same question all week long. The question could be related to a special program or hours of service, it is dependent exclusively on what the dealership wants to know. At the end of the week the answers are compiled and you will have a list of five or ten most common answers to your question. Then you have something to work with on developing solutions to the needs of your customer.

If you know the needs and wants of your customers then will know what you need to excel at in your business. That is the second step in the Balanced Scorecard – Internal Excellence. The customer tells you what they want and then you need to design the solutions. This is the internal excellence portion of the Scorecard and it covers processes, forms, methods and whatever is required to excel at the internal process that will satisfy the customer need. This is the beginning of wonderful solutions for your customers and satisfaction for your employees because there will need to be additional steps in the Scorecard to satisfy the internal excellence requirements. This is the Third Step in the Balanced Scorecard – Innovation.

If you know what you need to excel at internally then you will know what tools, technology and training is required to excel. This is your investment in the business. Providing the training for your employees and the tooling and technology required so that they can satisfy the customer needs and wants by excelling at what they do.

It is reasonably simple isn’t it? If you do this; ask for customer input on their needs and wants, from those needs determine how you can excel, and importantly what training, technology, and tools you need to provide to your employees.

If you do this you will achieve all the growth and profits you want. That is part of the curriculum in Unit II. Your Parts and Service Management should not miss this important class and learn, amongst the other important learning subjects, how to stay ahead of the competition. The time is now.          

Books in the Bin

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Hi I will be writing a seeries of books in the coming years on subjects near and dear to my heart.

Several of you have commented that books would be more of interest than a monetized blog.

parts

  1. instore selling
  2. inventory management
  3. warehouse layouts and design
  4. backorder analysis
  5. pricing as a marketing tool
  6. purchasing
  7. metrics and dashboards
  8. instore merchanidising
  9. call centers
  10. the internet as a tool for a parts department
  11. teleselling
  12. technology as a process foundation

 

Service

  1. shop floor management
  2. field service
  3. flat rate systems
  4. service administration
  5. job flow and scheduling
  6. the internet as a tool for a service department
  7. inspection programs
  8. maintenenace programs
  9. service sales programs
  10. pricing and standard charges
  11. metrics and dashboards
  12. technology as a process foundation

 

Product Support Selling

  1. parts and service Selling is a science not an art
  2. territory management
  3. territory theory and design
  4. commission and compensation systems
  5. customer business management for parts and service

 

Marketing

  1. business development for parts and service
  2. market segmentation
  3. customer retention

 

management

  1. the balanced scorecard as a management tool
  2. activity-based management for parts and service
  3. personnel leadership

Selling Skills Part Four

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The first last time we talked about the six steps in selling we identified them all. The last time we communicated was on the first step – research. Let’s dig a little deeper into the second one.

  1. Objectives

Well after having completed all the research on each customer in their assigned territory the sales professional is now ready for the next step. That is setting objectives for each and every one of their customers for each and every commodity of parts as well as each and every service program offered.

This also involves some research. The parts purchases should follow the opportunity calculated for each customer based on the machine population, hours of work per year and the application. This is also true for the service programs.

When reviewing the customer purchases against the opportunity for each account the sales professional will identify where there are parts or service programs that the customer does not purchase at the levels that the opportunity presents. This is normally an indication that competition has penetrated this customer for some of their products or services. The diligent salesmen determines who gets the business and who the customer likes about this supplier and develops a plan to combat that competitive advantage.

This leads the sales professional to have a specific series of objectives for each customer which will allow them to have a purpose for each call. This purpose is to save the customer money, improve machine availability of some other tangible benefit to the customer. Having a purpose for each call and objectives to strive to achieve makes a difference in the success of sales personnel. The time is now…..

Selling Skills Part Three

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Last time we talked about the six steps in selling. Let’s dig a little deeper into the first one.

  1. Research

Within research there are three more points to cover.

a)      The Customer

b)      The Products of Service

c)       The relationship.

Customer: For researching the customer we need to know everything and anything that might be significant. In the Capital Goods Industries this means specifically the equipment that the customer owns. The make model and serial number of every piece of equipment; the hours of use of each unit and the applications; any special attachments or configurations on each unit. This is what determines the opportunity. The consumption of parts and service is dependent on the hours of use and the application.

Then we need to have a complete customer profile; family circumstances and birthdays and anniversaries, hobbies, etc. A company profile; in what industries they work (SIC codes); type of business, years in business, number of employees, influential, etc.

The Products or Services: This is the full features and benefits area. This has become a lost art for many people in sales. I think this is extremely important. It allows you to separate yourself from the competition. It allows you to sell value if you have this knowledge. I also think it is important knowledge such that you will be able to “position” your offering rather than making a presentation which can become stale and sound canned.

The Relationship: This is the purchase history of the customer with your company. What they buy and what they don’t buy. How the purchases relates to the potential – this for both parts and service.

With these three stages completed in Research we can move onto the second step in the sales process. Good sales people are diligent in their research. It makes a difference in their success. The time is now…..