Good, Better, Best Rebuild Options

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Good, Better, Best Rebuild Options

Guest writer Ron Wilson tackles the gold standard of componentry in this week’s blog post: “Good, Better, Best Rebuild Options.”

Over the years working in the service areas of a dealership (regardless of the brand) we have most likely heard the customer say the dealership “gold plates” the component rebuild. Which means: Price is too high, over builds the components, not providing options to the customers. 

Often the dealership will provide discounts on a rebuild to meet the customers’ pricing concerns. Discounting cuts into the dealers’ profit margins and doesn’t address the image of being overpriced. 

The dealership can address the complaint by providing repair/rebuild options that will meet the individual needs of the customer. The marketing concept “Good, Better, Best” (GBB) is a pricing and marketing strategy to address the various customers’ price points and the life expectancy of the component/machine. Below is a breakdown of the concept from the customer’s view:

  • Good:
    • Price level: Lowest
    • Quality Level Basic
    • Essential repair/rebuild with minimal extras.
    • Meets customer life expectancy of the component- just one more season, get it through this year and will the trade/auction/sell machine.
    • Minimal warranty expectation
  • Better:
    • Machine mid-life rebuilds.
    • Balancing out the component rebuild with the life expectancy of the overall machine.
    • Due to the increased level of rebuild an increase in warranty/life expectancy is expected. 
    • Increased price level due to increased level of rebuild (additional parts and labor) to complete the rebuild.
  • Best:
    • Highest level of rebuild.
    • Additional warranty coverage available
    • Higher expectations relating to the level of parts and labor required to complete the rebuild.
    • Maybe considered equal (or remarkably close) to a new component
    • Higher level of warranty coverage, with possibly extended warranty offering available

Benefits of the “Good, Better, Best” Strategy:

  • Market Segmentation: Allows the dealership to meet the needs of a wider customer base with varying repair/rebuild budgets and expectations. 
  • Customer Choice: Empowers and includes the customers in the repair/rebuild process to choose the repair/rebuild level that best meets their needs and financial capacity.
  • Revenue Optimization for the Dealership: Increases potential revenue by capturing sales across different price points. Many customers may be going to your competitors because the repair options are available within your dealership.
  • Provides standardized and consistency to the rebuild process: Standardization and consistency improves turn time, quality of work, and fewer job interruptions due to waiting for decisions from customers.
  • Upselling Opportunities: Provides the customers an opportunity to move up to a higher price tier based on the additional added value and features.

Implementation Tips

  • Clearly Define Features: Make sure each tier is well-defined in terms of features and benefits. A common understanding between those that have established the price, rebuilds the components, and the salesforce that communicates the various levels of rebuilds to the customers.
  • Transparent Pricing: Clearly communicate the differences in pricing and what customers get at each level. Utilize visual diagram/cut away images to show what is included within each rebuild level.
  • Customer Feedback: Use customer feedback to refine and adjust the tiers to better meet customer needs and preferences over time.
  • Regular Reviews: Periodically review and adjust the tiers to ensure they remain competitive and aligned with market demands.
  • Utilized the Dealer’s Rebuild History to Establish Rebuild Level: The dealers rebuild history can be a great starting point to identify which subcomponent to include in which rebuild level.
  • Work Closely with the Dealers OEM: Gain input from the OEM based on their historical information and awareness of other dealers that have already developed these offerings.
  • Visit with Your Customers to Identify what the various Repair Options should Include:  This can be done as part of a customer focus meeting, Parts and Service Sales team conduct interviews, and examine what the competitors are providing.

Using the “Good, Better, Best” pricing model can help businesses effectively segment their offerings, appeal to a broader audience, and maximize their revenue while being more competitive in the marketplace and providing a level of rebuild the customer can select that best fits their needs.

Look at the article “The Good-Better-Best Approach to Pricing. Why every company should consider a tiered model.”  Written by Rafi Mohammed and published in the September-October 2018 Harvard Business Review.

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Reskill and Upskill Plan

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Reskill and Upskill Plan

Guest writer Ron Wilson brings a blog post on lifelong learning this week with “Reskill and Upskill Plan.”

I came across a book titled “Long Life Learning” written by Michelle Weise. The title intrigued me due to my interest in and commitment to Lifelong Learning.  The need for skills changes along the way and this book does an excellent job of sharing the why’s and how’s of the challenge.

Here are a few quotes from the book that will help set the importance of the rest of the article.

  • Workers who are fifty-five and older are staying in the workforce well into their 60s and 70s.
  • Many of the baby boomers will experience at least twelve job changes by the time they retire.
  • The number of job transitions will only increase with time, as people confront longer and more turbulent work lives.
  • Education has largely been thought of as a “one and done” experience.
  • Technology’s transformation of nearly every facet of our economy means that we will all need to develop new skills and knowledge at a pace and scale never seen before.
  • The future of work changes the future of learning.

Developing a Personal Reskill and Upskill Plan

The bullet points above, and many other examples in the book, identifies the importance and provides direction in developing a personal reskill and upskill plan that will be critical in success of our business, and our employees.

Developing a personal reskill and upskill plan is crucial in today’s rapidly evolving professional landscape. Here are several key reasons why it is important:

  1. Adaptability to Technological Changes
  • Technological Advancement: We have all experienced the challenges of implementing a new business system and updated technology within an organization. Industries are experiencing rapid technological advancements, requiring continuous learning to stay relevant. Automation, AI, and digital transformation are changing job requirements. In a previous blog I shared the expansion of the “Tool Belt Generation” job titles and career paths that are providing many new opportunities to the employees of today. New roles, new skills, and upgrading old skills.
  • Job Market Evolution: Roles that exist today might be obsolete tomorrow, while new roles will emerge. Reskilling and upskilling ensure individuals can transition smoothly into a new job function. Reskilling and upskilling will play a significant role in addressing the labor shortage issues.
  1. Career Growth and Opportunities
  • Enhanced Employability: Employers value employees who are proactive about their learning. A well-rounded skill set makes individuals more attractive to current and potential employers.
  • Promotion and Salary Increase: Upskilling can lead to higher responsibilities, promotions, and better compensation. Demonstrating a commitment to ongoing learning can also increase an employee’s chances of career advancement.
  1. Personal Development and Job Satisfaction
  • Increased Confidence: Gaining new skills boosts confidence and empowers individuals to take on new challenges.
  • Job Satisfaction: Engaging in continuous learning can lead to greater job satisfaction as employees feel more competent and capable in their roles.
  1. Economic Stability
  • Job Security: Continuous learning helps in maintaining job security in an unpredictable economic climate. Employees with a broad skill set are more likely to retain their jobs during layoffs.
  • Financial Resilience: With a diverse skill set, individuals can explore freelance opportunities or transition between industries more easily, contributing to financial stability.
  1. Innovation and Creativity
  • Encouraging Innovation: Learning new skills can spark creativity and innovation. Employees who bring fresh perspectives and innovative ideas are invaluable to organizations.
  • Problem-Solving: A diverse skill set enhances problem-solving abilities, enabling employees to approach challenges from various angles.
  1. Lifelong Learning Culture
  • Adaptation Mindset: Developing a habit of continuous learning fosters a growth mindset. This mindset is essential for personal and professional development.
  • Setting an Example: Individuals who prioritize their own learning can inspire colleagues and peers, contributing to a culture of continuous improvement within the organization.
  1. Navigating Career Transitions
  • Career Shifts: Whether by choice or necessity, reskilling and upskilling provide the tools needed for successful career transitions. This is particularly important for those switching industries or roles.
  • Futureproofing: Proactively acquiring new skills can future-proof a career, preparing individuals for unforeseen changes in their professional paths.

Developing an Effective Plan. 

Now that we have listed several reasons why Reskill and Upskill plans are important, let’s look at what a personal reskill and upskill plan may consist of:

  1. Assess Current Skills: Identify strengths and areas for improvement. Regularly assess the current skills of employees to identify gaps and areas for development.
  2. Offer Diverse Learning Options: Provide a variety of learning formats such as workshops, online courses, mentorship programs, and on-the-job training.
  3. Set Clear Goals: Align Training with Business Goals: Ensure that reskilling and upskilling initiatives are aligned with the strategic goals of the organization. Define what you want to achieve, and the skills required to reach those goals.
  4. Research Trends: Stay informed about industry trends and emerging skills. Look outside the dealership in other industries and how similar roles have changed.
  5. Create a Learning Path: Choose courses, workshops, or certifications that align with your goals.
  6. Allocate Time: Dedicate specific time for learning and practice regularly.
  7. Seek Feedback: Engage with mentors or peers for constructive feedback.
  8. Monitor Progress: Regularly review your progress and adjust your plan as needed. Track and Measure Progress: Monitor the effectiveness of training programs and adjust as needed to ensure the evolving needs of the organization and its employees are being met and accomplished.
  9. Encourage Lifelong Learning: Foster an environment where continuous learning is valued and encouraged.
  10. Provide Support and Resources: Offer the necessary resources, including time, funding, and access to learning platforms, to support employees’ development.

This all sounds complicated and time consuming, but start here:

  • A few roles across the organization and expand systematically.
  • Review the current job descriptions and the changes required to meet the needs of the future.
  • Identify avenues of training. This may be accomplished in-house, with local community colleges, professional dealer training organizations (such Learning without Scares), and professional certification programs. Most likely it will be a combination of the available resources.
  • Define a training path that includes length of training time, length of executing/practicing the new skills, assess the success of the training.
  • Celebrate along the way.
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Managing the New Machine Sales Pre-Delivery Inspection Process.

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Managing the New Machine Sales Pre-Delivery Inspection Process.

This week is all about logistics, with guest writer Ron Wilson writing about “Managing the New Machine Sales Pre-Delivery Inspection Process.”

While my wife and I were sitting in a car dealership and listening to the salesperson explain there is a delay in completing the pre-delivery inspection, my memories of the importance of managing the New Machine Sales Pre-Delivery Inspection reoccurred.

Pre-Delivery Inspections provide a foundational starting point for the new machine in the following areas:

  • Customer Satisfaction: Ensures that the customer receives equipment that is fully functional and free of defects and matches what was ordered by the customer.
  • Safety & Compliance: Verifies that all safety features are operational and ensures that the equipment complies with all relevant regulations and standards.
  • Quality Control: Helps maintain high standards by catching and addressing any issues before delivery.
  • Minimizes Early Field Service Calls: A measure of success can be the number of hours the machine has operated from the first day it was delivered to the date first requesting repairs.

PDI Process at an Equipment Dealership Includes:

  1. Development of a PDI list:  The PDI list is usually a list of items recommended by the OEM, and specific areas that have been defined by the dealer. There are common items across all machines and specific items that have been determined based on previous warranty claims submitted to the OEM by the dealer and local dealer requirements.
  2. Receive Equipment: When new equipment arrives from the manufacturer, log it into inventory, schedule and prepare it for inspection.
  3. Assign and Conduct Inspection: Assign the PDI task to a qualified technician, ensuring they have the necessary tools and checklists. The technician performs the inspection, following the PDI checklist and documenting any issues found. 
  4. Address Issues and Final Check: Any defects or problems identified during the inspection are repaired or resolved. Proper warranty claim documentation is completed and submitted back to the OEM. This information can assist the OEM in addressing these issues at the factory, preventing future quality issues on other machines.
  5. Prepare for Delivery: Clean the equipment, gather all necessary accessories and documentation, and prepare it for delivery to the customer.
  6. Customer Handover: Review the PDI report with the customer, demonstrate key features, and address any questions they may have. Best practices of this process should include the machine sales and product support representatives being scheduled to be at the site on the delivery date. Depending on the machine a technician may need to be scheduled as part of the delivery.

Key Aspects of a Pre-Delivery Inspection

  1. Visual Inspection and Functional Tests
    • Check the exterior and interior for any damage, scratches, or dents.
    • Ensure that all parts and accessories are present and correctly installed.
    • Verify that labels, decals, and instructions are in place and legible.
    • Test all mechanical, electrical, and hydraulic systems to ensure they are operating correctly.
    • Check fluid levels (oil, coolant, hydraulic fluid) and top them up if necessary.
    • Verify that lights, signals, and indicators are functioning properly.
  2. Safety Features
    • Inspect safety features such as brakes, seat belts, alarms, and emergency stops.
    • Ensure compliance with safety regulations and standards. This may vary by client.
    • Test any software-based safety systems for proper functionality.
  3. Software and Firmware Updates
    • Check for any available software or firmware updates to be installed.
    • Verify that all digital systems are working as intended and are up to date.
  4. Performance and Operational Checks
    • Conduct performance tests to ensure the equipment operates within the specified parameters.
    • Test the equipment underload (if applicable) to ensure it performs as expected.
  5. Documentation
    • Review and complete all necessary documentation, including warranty forms, registration papers, and manuals.
    • Provide a detailed PDI report, noting any issues found and actions taken to resolve them.
  6. Final Preparations
    • Clean the equipment thoroughly, removing any protective coverings or shipping materials.
    • Ensure all accessories, tools, and documentation are included with the equipment.
    • Perform a final quality check to confirm that the equipment is ready for delivery.
    • Additional attachments are included as defined within the sales document.

Scope Creep of the NPI Process: Over time the NPI list can become outdated and excessive based on experiences that caused a task to be added to the NPI list and is no longer relevant. Some considerations when updating and managing the NPI list:

  • Is the task still needed or has it been addressed in the OEM machine assembly process?
  • Review the time allocated to perform each task. Can the task be connected to another task that would reduce the individual time needed to complete both tasks? 
  • Have there been/can there be efficiency gains that would improve and streamline the overall process? 
  • Updating and managing the PDI process is a critical step in the overall new machine delivery experience for the customer and managing the cost related to overall process within the dealership.

Here is an example of the impact (the numbers below are not actual but we can gain a sense of the impact).

Total units sold 1,000

Average hours per PDI 20

Total Hours 20,000

Hourly Rate $90.00

Total PDI Costs $1,800,000

PDI Cost Savings 10% $180,000

As can be seen a 10% reduction in PDI cost in the above example provides $180,000 for the Sales Department’s profit relating to these 1,000 machines. This also allows the technicians’ hours to be allocated to other revenue sources.

By following a thorough up to date PDI process dealerships can ensure customers receive high-quality reliable equipment, enhancing their overall experience and trust in the dealership, and control the dealership cost of the overall PDI process. A Win-Win for both the customer and the dealership.

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Applying Services Marketing within the Equipment Dealers Business Model

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Applying Services Marketing within the Equipment Dealers Business Model

Guest writer Ron Wilson offers an instructive guide in this week’s blog post: “Applying Services Marketing within the Equipment Dealers Business Model.”

Marketing plays a critical role within the equipment dealership. Two of the basic functions are to promote the Products and Services for the equipment the dealership sells and services. To successfully accomplish this there are two types of marketing utilized:

  • Product Marketing- focuses on a specific product, features/benefits, comparing one product to another, product application. 
  • Services Marketing– Utilizes marketing strategies that apply customer-centric approaches, builds trust with the customers, and how the dealer’s services can support the customer and the products that were purchased. The offerings will often include benefits, promises, commitments in savings, safety improvements, turn time commitments, and firm pricing. All of which are focused on building trust and relationships.

The remainder of the article will focus on the history and application of Services Marketing.

A Brief Timeline of Key Developments in the History of Services Marketing 

  • 1950s-1960s:  The Services Sector arises as the economies shift from manufacturing to service-oriented markets.
  • 1970s: The 4Ps of marketing were expanded to include People, Physical Evidence, and Processes.
  • 1980s: Growth of Services Marketing Literature grew to academic research and focus services marketing, which included an emphasis on service quality and customer satisfaction.
  • 1990s:  Digital transformation and customer experience evolved due to the internet and digital technologies/
  • 21st Century:  Services marketing continues to advance with the inclusion of data analytics and artificial intelligence with a focus on improving interactions and personalizing of the customer experience.

The formation of Services Marketing has focused on the challenges and addressing opportunities within a unique market.

Apply Services Marketing in the Heavy Equipment Dealers Business Model

Services Marketing applied in the heavy equipment dealer’s business model will contribute to the enhancement of customer satisfaction, customer loyalty, revenue growth, and introduction of new product support offerings.

 

Strategies to Effectively Implement Services Marketing within the Dealers Territory

    • Identify and Understand the Customers’ Needs:
      • Understand the specific needs and preferences of the customers within specific markets. For example, in many cases the needs of the small fleet owner will be different than a large fleet owner, or governmental agencies.
      • Identify the challenges faced by the customers, including frequency and severity of the application.
  • Segmenting and Targeting of the Market:
      • Segment the market based on factors such as fleet size, industry, type/size of machines, local work environments (weather, altitude, job site restrictions)
      • Identify how tailoring the services can assist in meeting the needs of each segment.
    • Develop Value-Added Services:
      • Offer value-added services such as equipment maintenance, machine inspections, mobile air conditioning repairs, field machining services, extended warranties, hydraulic component rebuilds, machine second life rebuild options.
      • Operator and equipment maintenance/repair training for customers.
      • Proactive services connecting machine GPS data to schedule PM services, notifications of machine alerts such as overheats and over speed occurrences focused on preventing down time, improving utilization, and extended the life of the components of the machine while providing touch points with the customer.
    • Communication of the dealer offerings:
      • Clearly communicate the value-added service offering that includes additional benefits and features based on the needs of the customer. These needs would have been collected through customer surveys, focus groups, historical customer response surveys.
      • Utilizing various channels to communicate the offerings through online platforms, brochures, Product Support, Sales Representatives, and Parts Counter Sales personnel are a few examples of communicating the offer to the customer.
    • Build a strong online presence:
      • Establish and continually review and update the user-friendly website.
      • Utilize social media platforms, customer events, community events, local industry trade events that will provide an opportunity to share customer success stories and provide insight to the dealer’s approach of addressing customers business needs.
    • Customer Education and Training:
      • Offer training programs for customers that provide an opportunity to expose and familiarize the customers with the features and benefits of the services provided.
      • Provide educational content, reference materials, and tutorials that empower the customers and enhance their skills.
    • Responsive Customer Support:
      • Implement a responsive customer service process that addresses questions and concerns quickly.
      • Offer multiple channels of communication, including phone, email, and live chat. Quick and accurate responses are important.
      • Utilize the information received to modify and improve the messaging of the services offered.
    • Services Guarantees:
      • Provide service guarantees such as quick response times for maintenance requests, warranty offerings, firm pricing, timely invoicing.
      • Clearly outline the terms and conditions of the service guarantees to avoid confusion both with the customer and within the dealership’s service areas, such as the service department and the warranty department.
  • Feeback Mechanism:
    • Establish a feedback process to gather insights from customers about their experiences with the new service offerings.
    • Utilize the feedback to continually improve and modify the service offerings.
  • Collaborate with the OEM:
    • Partnering with the OEM can enhance the service offerings through program support, technical and historical information of other dealers that may have implemented a similar service offering.
    • Leverage the OEM certifications to build trust and credibility to the dealer’s offering. Fluids Lab certification, Root Cause Failure Analysis Certification, Hydraulic Technician Specialist, Certified Equipment Training Instructors are examples of certifications that can add value to an offering.
  • Promotions and Loyalty Programs:
    • Promotional campaigns will highlight the new service offerings.
    • Implement or link to an existing loyalty program to encourage utilizing the new offering, reward repeat business, bundle with other offerings. All are intended to build long-term partnerships.
  • Networking and Industry Involvement:
    • Participate in industry events, trade shows, and associations to stay updated on industry trends and build a network of contacts.
    • Collaborate with other businesses in the heavy equipment industry to expand the service offerings. An example would expand the hose and fitting business from the customer’s machines to re-hosing of garbage truck fleets as an expanded service offering within the waste/landfill customer base.

The above strategies can effectively assist the dealer apply the services marketing principles to create a competitive advantage and build long-term relationships with the customers.

Closing Remarks

While both services marketing and product marketing share common marketing principles, the unique characteristics of the dealer’s services offerings require different strategies and approaches to meet the marketing needs of the various customers.

Services marketing emphasizes the crucial elements such as customer-centric, variability (among customers), intangible (the tractor business is a people business), relationship building and delivery of exceptional customer experiences.

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

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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 Four “R’s” Within a Talent Management Strategy

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The Four “R’s” Within a Talent Management Strategy

Guest writer Ron Wilson writes about one of the critical focus points of a business plan: the employees. Here he shares “The Four ‘Rs’ Within a Talent Management Strategy.”

Many years ago, we were developing business plans for the year and one of the critical areas of focus was Employee Retention and Recruitment. Retention and recruitment have been a challenge throughout our leadership roles, regardless of the department we lead, or the industry we are a participant in.

Within Employee Retention and Recruitment there are four areas of focus:

  • Recruitment
  • Retention
  • Relationships
  • Respect

Focusing on the four areas above will improve employee retention and attract the new talent needed for the future.

Recruitment– This “R” focuses on recruitment of talent from outside the organization. Recruiting to fill the immediate and long term needs for skilled talent in our industry will continue to be an obstacle to business growth potential. Therefore, out of the box creative approaches are necessary to recruit talent.

  • Recruitment of talent from outside the organization should include a variety of approaches. There is no one successful approach in finding skilled talent and it’s important to continually evaluate what is working and seeking innovative approaches. Look at what other companies are doing (inside and outside the industry).
  • Advertisements will take a focus on what the organization has to offer as a career and a long-term employer with very competitive wages and benefits, seeking employees that will take the company into the future. 
  • Special events utilized to identify skilled talent. Some examples are rodeos, racecar and motor cross events, trade shows, and vocational schools. The intent is to reach communities where potential employees live their daily lives outside of work.
  • Apprenticeship programs will be utilized to “grow” the needed talent from within and outside the organization. Participating in community college and high school technical skills education provides a wonderful opportunity to expose the company to individuals that are seeking a company that is not only a place to work, but also build a career.
  • Shorten the time between posting a position and providing a job offer. Individuals applying for a position are ready to move forward with a new opportunity, and most likely are applying for several positions at other companies. Let’s not delay in reviewing the applications, scheduling interviews, and providing job offers. Develop a metric to measure the amount of time it takes to hire a new employee. It may be surprising the amount of time it takes to recruit, interview, and hire someone,
  • If the applicant does not match the needs of the position being applied for, is there a role that may be a better fit within your organization? 

Retention– This “R” places a great deal of emphasis on developing the talent within the organization to meet the immediate and long-term skill set needed to take the organization into the future. 

  • Development of internal talent will include the skill sets for technicians and non-technicians. 
    • The priority will include developing the skills in the basic skills needed to accomplish the individual’s current job responsibility.
    • Skills needed to prepare the employee for the next level in their career path. 
    • There should be a “building block” approach with career path options. For example, technical level 1-4 starts with the basic skill set needs of a technician to advanced troubleshooting and diagnostics. Additional advanced levels for a technician can include Technical Communicators, Service Department Supervisors/Managers, Product Support Sales Representatives, and Training Instructors. 

Respect for dealing with each other leads us through the challenges that will occur. There will not always be an agreement in everything we do, but everything we do can be managed in a manner of respect. The issues should be addressed based on the issue, and not on the person. 

Relationships that are positive between employees encourage an environment that allows growth and development as individuals and as teams. 

  • Through positive relationships the organization will recognize the needs of the marketplace and introduce competitive products and services that add value to our customers. 
  • Strong internal relationships encourage strong relationships with our customers.
  • Recognition is important to all of us. It is important we seek the opportunities to recognize individuals and teams of employees on their successes and contributions to the organization. Each supervisor should develop their own way of providing employee recognition for their areas of responsibilities. The types of recognition will vary based on the event, the location, and the employees.

The Four “R’s” play a significant role within our talent management strategy of taking care of the current employees and seeking the employees needed for the future.

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Utilizing a Personalized Employee Benefit Statement as Part of the Employee Retention Plan

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Utilizing a Personalized Employee Benefit Statement as Part of the Employee Retention Plan

Guest writer Ron Wilson offers insight into employee benefits tonight in, “Utilizing a Personalized Employee Benefit Statement as Part of the Employee Retention Plan.”

Employee retention plans have become an important part of the organization’s overall recruitment process. As we know the cost to recruit, hire, and train a new employee can exceed the cost of investing in the current employee, especially when we include the revenue lost while we are trying to fill the position.

Although effective Retention Plans have many elements, it is worth our time to focus on one specific element, a Personalized Employee Benefit Statement. Below is an example of how a Personalized Employee Benefit Statement was utilized in retaining a key employee.

A highly productive Product Support Sales Representative scheduled a meeting with me and during the meeting he presented a letter of resignation. We spent some time reviewing the reasons for wanting to leave the company, where he was going, and reemphasizing the importance of his role within our organization. As we were wrapping up our discussion, I gave the letter of resignation back to the employee explaining that I would not accept the resignation at this time and asked that he compare the benefits his “new” employer would be providing as to what he was currently receiving. 

 We would review what he found out the following day and at that point if he still wanted to resign, I would accept his letter of resignation.

Later that evening the employee called me and asked if he could withdraw his letter of resignation. During his review of the “new” employer’s benefits, he discovered their medical coverage was insufficient to what he was currently receiving and his accrued time off was far less than what he was currently receiving.

The Personalized Employee Benefit Statement played a key role in the retention of this key employee. There was work to be done to address some other issues, but we now had some time and an open dialogue to continue strengthening our relationship.

Content of a Personalized Employee Benefit Statement

There can be many elements within a Personalized Employee Benefit Statement, but we will review only a few:

    • Employee Information- Name, employee number, years of service, job title
    • Company Information- Vision, Mission, Values
    • Salary Information- Including base salary, bonus, commissions, overtime.
    • Benefits Summary- This is the most important piece of the statement. Most employees do not see, and may not fully understand, some of these benefits and the cost.
      • Health Insurance- including premiums, deductible, and coverage, along with Wellness programs that are available. (Dental, vision, prescription drugs, etc.)
      • Retirement Benefits/Stock Options- This would include 401(k) match and other retirement plan information.
  • Life insurance and Disability insurance coverage
    • Paid time off (vacation, sick days, holidays)
  • Tuition Reimbursement and Training that has been provided to the employee.

There is no doubt many other examples you can recommend be added to a personalized employee benefits statement based on your organization’s information.

There were two key elements that contributed to the employee deciding not to resign. The medical insurance coverage provided by the new employer was insufficient due to some family medical needs and the new employer’s time off was insufficient to what the employee was accustomed to receiving.

The ability to quickly access this information and spend time with the employee to ensure their understanding of what is included within the current plan, what they may be giving up provided an environment of transparency and building trust. 

This discussion may also identify areas the current employer may need to address as it relates to a competitive benefit package.

To effectively build a Personalized Benefit Statement requires:

  • Information pulled together from payroll, benefits, training, and other key databases to consolidate into an individual employee statement.
  • Supervisors and Human Resources personnel being comfortable discussing the information and listening to the employees as they identify the areas of most importance to them.
  • Provide the personalized employee benefit at least once a year and be accessible to address the immediate situations that arise.

What would you include in a Personalized Benefit Statement? Have you had similar situations and were able to retain an employee that was resigning?

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1% Increase in Income Equals 2.6% Reduction in Expenses

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1% Increase in Income Equals 2.6% Reduction in Expenses

Guest writer Ron Wilson dives into the financial management scene with this week’s blog: 1% Increase in Income Equals 2.6% Reduction in Expenses. He even touches upon something Ron Slee mentions frequently: the downside of discounts.

During complicated economic times businesses tighten up on expenses, spending, and accounts receivable. 

Rafi Mohammed, in his book “The 1% Windfall” provides an additional effort that can assist in meeting the needed changes to the bottom line.

Basically, the concept revolves around increasing income by 1%, without increasing the cost of sales, or reducing direct expenses.

The example below shows that a 1% increase in sales (without impacting cost of sales or direct expense) equals a 2.6% reduction of direct expenses. Apply your organization/department gross profit and pretax percentage to see the impact it has on your own organization.

We have all been through the difficult experience of reducing direct expenses, and it can be very painful.

Here are a few examples that can help to make a positive impact on sales without adjusting the direct expenses areas.

Current Status of Discount Programs– often discount programs are provided to customers based on a request from a salesperson. No doubt the programs may have been needed at a specific point in time, but a review of discount programs may show discounts being given that are not providing the expected increase in sales. Often the OEM provides some type of shared discount program over a specific timeframe. It is important to verify customers’ discounts reflect the OEM’s current program. An OEM may discontinue a rebate program and the dealer may not have applied the same changes and unintentionally may be caring the full burden of the discount being provided to the customer.

Effectiveness of Discount Programs-Verify the discounts are providing the expected results, which is usually increased volume, or expanded use of other products and services within the dealership. If the discount program was not effective, a different approach may need to be reviewed with the sales representative.

Below is a handy website that shows the impact discounting has on gross profits.

The example below applies to a 10% discount on $1 million in sales. Sales need to increase 20% to make up the same dollars.

https://www.growthforce.com/blog/how-giving-discounts-can-destroy-your-business-profits

This can be a great tool to share with the sales representatives when discussing providing a customer with a discount. What can be expected in increase volume over time?         

Providing Repair Options can offset the discount a customer is wanting on a component rebuild, for example. Rebuild options providing a “good-better-best” offering can accomplishing the customers rebuild needs within a specific price range. The variable rebuild options allows the dealer to rebuild a component that meets the level of rebuild needed by the customer within a selected price range. The repair options eliminate the “discount” of a full rebuild while providing a price based on the level of rebuild needed by the customer.

Value Based Pricing requires understanding the customers’ needs and priorities. For example, a customer is focused on reducing the hazards/injuries related to changing ground engaging tools (GET) on a piece of mining equipment. Promoting reduction of the number of GET changes will contribute to reducing the hazards as well as downtime to complete the GET change out. It may not always be about the dollars and cents.

When developing value statements your existing customers can be a great resource to find out what value you bring. Ask your customer to explain the real value of your offer. This will provide a view of their perspective, while building relationships with customers and at the same time it gives you a chance to learn an incredible amount of invaluable information.

Below is an example of a value statement that has identified four areas of importance to the customer. This information was taken from an ESCO GET (Ground Engaging Tool) promotional piece. As can be seen there is no discussion about “discounts,” the discussion is related to “value add” offerings:

Increased Machine Availability

  • Superior alloys and optimized system profile result in longer-lasting components
  • Simple, intuitive locks provide safer, faster parts replacement.
  • Reliability and wear life unmatched in the industry keeps machines operating with minimal downtime.

Lower Maintenance Costs

  • Proprietary alloy, increased lip protection and large bearing areas extend operating intervals.
  • Longer lasting and more dependable G.E.T. reduces planned and unplanned service events.
  • Quick and easy parts replacements by fewer crew members, with no hot work required.
  • Shrouds and adapters are engineered to protect more of the Nemisys lip leading edge, extending the service life between lip rebuilds by up to 70%
  • Improved wear metal placement increases shroud life by up to 30%

Lower Total Parts Expense

  • Longer lasting and more dependable G.E.T. results in fewer parts purchased versus competitors.
  • Fewer parts purchased reduces mine site inventory to ship, stock and manage.

Improved Safety

  • Keep your crew away from crusher maintenance through superior locking systems that keep teeth and shrouds on the lip.
  • Safer installation and removal with integrated pry points and compatibility with the ESCO SecureLift™ system

Best of Both Worlds

1% increase in Sales Without increasing Cost of Sales to Improve the Bottomline:  It would be unrealist to think the 1% increase model is the only option. No doubt there needs to be a combination of both direct expense management and reviewing the pricing models and programs currently in place. Below are some pros and cons that will show the importance of combining the two:

Advantages of the 1% Increase in Sales to Improve the Bottom Line:

  • Incremental growth may seem small but overall can have an enormous impact on the bottom line.
  • Growth in the business comes from income growth, not from reducing expenses.

Disadvantages of the 1% increase in Sales to improve the Bottom Line:

  • The 1% increase is not guaranteed and takes time to implement. Reviewing and developing impactful value statements takes time and resources to research, understand, and develop.
  • Takes time to implement, communicate, and evaluate the results of the changes implemented.

Reducing Direct Expenses to Improve the Bottomline:

  • Has an immediate impact depending on how drastic the effort?
  • May improve efficiencies through improvement/streamlining processes.
  • Requires a focus on the core business and focus on what is important.

The best Solution is a Blending of the Two:

Take some time to review the various recommendations provided in “The1% Windfall”, while reviewing the rest of your key performance indicators, to provide a balanced improvement to the overall financial results. 

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Machine Condition Monitoring Roles

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Machine Condition Monitoring Roles 

Guest writer Ron Wilson writes this week’s blog on the topic of Machine Condition Monitoring Roles as part of a dealer’s product support offerings.

Over the past few years, we have been experiencing a new era emerge around machine condition monitoring.

  • OnStar was introduced in 1996 with a focus on a commitment to the “safety, security and peace of mind to its members”. (The evolution of Onstar- https://www.onstar.com/why-onstar/evolution-of-onstar-innovations)
  • Fluid analysis began sometime around the mid 1940’s with a focus on temperature, pressure and the occasional check for oil color and viscosity. (A History of Oil Analysis, Noria Media January 2023).
  • Payload monitoring has always been important but often was limited to the number of loads estimating the volume based on the bucket size. I remember my dad operating a wheel loader using two counters (one counting the number of trucks and one counting the number of loads).

For the most part dealers didn’t have a major need, or the ability, to apply condition monitoring within their dealership. Today condition monitoring is becoming a core piece of assisting the customers manage their fleet in areas such as:

  • Safety that can identify objects in the way of machine operation, operators being distracted, theft of a machine, locking out the use of machine.
  • Health of the machine and its internal components such as overheats, degree of wear/contaminates, condition of the various fluids, and fault codes indicating various potential issues ranging from life of a component to operator practices.
  • Production management in areas of payload, weight distribution, cycle times, fuel burn.

The equipment industry is moving from a Reactive & Preventive maintenance approach to Predictive and Proactive maintenance program at an extremely fast pace.

Many dealers have implemented roles and responsibilities around the areas of recording, analyzing, reporting, and recommendations based on the results from the various condition monitoring indicators. These roles provide valuable information to the customers and allow them to make decisions based on the data/information received with professional input and experience from the dealership and OEM.

Dealerships have begun integrating three primary roles within condition monitoring to support their customer base. The customers’ expectations will vary based on their own internal strengths and expertise, while utilizing the variety of information available from each machine and applied across their fleet.

The three roles that have emerged relating to the management, interpreting, and communication of the data/information relating to condition monitoring, in support the Product Support Sales Representatives are:

 

  • Condition Monitoring Specialist/Analyst- This role includes the collection and analysis of information relating to:
    • Equipment inspections
    • Work order/repair history
    • Fluid/vibration/thermography analysis and trends
    • Fault code information collected remotely, during machine inspections, and onsite data downloads.
    • Diagnostic test results
    • Predictive analysis-based baseline information and historical data
    • Preparing reports and summary information to be reviewed/reported to the customers
  • Equipment Management Consultant- This role may include tasks such as:
    • Equipment acquisition, disposal, and lifecycle management recommendations. Collaborating with the customer and dealer personnel to develop and maintain a comprehensive equipment lifecycle management strategy relating to rebuilds and replacement.
    • Maintenance planning includes preventive maintenance schedules, maintenance programs and procedures that optimize the utilization and reduce downtime.
    • Compliance and safety requirements are maintained, and all product updates are being addressed.
  • Equipment/Asset Manager takes the information relating to the two roles above while working with the Product Support Sales and Equipment Sales Representatives for the specific customer to develop an overall fleet plan through the lifecycle of the fleet.
  • Understanding the customers fleet planning strategy. Customers vary in their fleet replacement strategy relating to rebuilds/replacement schedules.
  • Overseeing the fleet maintenance and repair plans. Keep the maintenance schedule within the parameters developed in cooperation with the customer.
  • Monitor equipment performance compared to the established KPIs and provide early alerts the goals may not be accomplished and provide recommendations.
  • Monitor the customers rebuilds in the shop based on the agreed upon scope of work. Any variances should be identified and resolved with the various shops, the customer, and the Product Support Sales Representative.

The role of condition monitoring has come a long way from the early days described at the beginning of this article, and the roles are early in their development.

It will be important for the dealerships to keep abreast of the technology introduction of the future, how to apply the data/information in making decisions that not only support the dealership but also supports the customers fleet management expectations and developing the internal skills of the dealership relating to the ever-evolving condition monitoring and fleet management.

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Developing Your Personal and Employee Persona

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Developing Your Personal and Employee Persona

Guest writer Ron Wilson explores the skills that we use in developing our personal and employee persona.

Over our work life a great deal of effort, education, time, and energy is spent on developing the “technical skills” relating to our careers. Technical skills relate to the technical part of any career. An accountant has technical skills relating to the specific role, just as an equipment technician has technical skills to perform repairs/rebuilds, troubleshooting and diagnostics of their career.

During our careers we develop a personal persona that is applied in our actions, roles, and responsibilities. As we progress through our career the types of information, skills, action needed changes and requires an ongoing balance of various skills development.

The skills needing to be developed can be placed into four areas:

  • Technical Skills
  • Personal Skills
  • People Skills
  • Operational Skills

Below is a diagram that shows an example of an employee’s personal and career persona. It is important to balance the skills developed in each of the areas. During a visiting with a Human Resource team, we discussed the most common reasons employees are terminated, or resign, and in most cases, it is not due to a lack of technical skills. The cause is usually related to one of the other three categories.

 

The diagram above really shows the importance of balancing the skills development of our teams. Making sure training and development opportunities are provided in each of the areas, and time is spent with the employee discussing the strengths and opportunities that will provide continued growth relating to the overall personal development.

The diagram below shows that our “Personal Persona” is identified in what we “say and think.”  The “Employee Persona” is often seen in what do (our performance) and our relationships with others. In our everyday work we combine and exhibit all four areas.

While serving on the board of directors at SkillsUSA Arizona I was introduced to the following diagram. I took this diagram and applied it to the equipment dealer work environment. SkillsUSA does an excellent job of developing the students’ work and persona to prepare them for future employment.

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