The Most Important Key Metrics for Equipment Dealers
The Four of the MOST Important Key Metrics for Equipment Dealers
Operating a successful equipment dealership requires understanding your customers and how they interact with your business. Several core metrics can reveal what’s working—and where you might be at risk of losing revenue. By focusing on these metrics, you will be able to make clear, data driven decisions that drive long term growth and success.
- Customer retention
- At risk customers
- Types of purchases
- Geographic market
Customer retention
What it is and why it matters:
Customer retention measures the percentage of customers that purchased within the last 12 months and also purchased within the prior 12 months. It’s an important metric, because retaining a customer is far less expensive—and often more profitable—than acquiring a new one. Long term retention is crucial for your business’s profitability. For example, when it comes to equipment dealers, the revenue that each customer generates skyrockets when they go from year two to year three while working with you. Customers purchase 2.9X more equipment, 9.1X more rentals, 4.1X more service, and 5.6X more parts in the third year, compared to their purchases during their second year as a customer.
How to improve it:
The easiest method for boosting retention is to find out why customers are leaving. The best way to do that is through customer satisfaction surveys conducted by an outside third party. Using a third party will elicit candid comments that customers may not want to share with an employee of your company, and the surveys will provide specific feedback, so you can solve any issues quickly.
Our partner company, Winsby, regularly conducts customer satisfaction surveys for their clients. They see an average increase in retention rates of 20% or more when customers are routinely surveyed about their experience with a company. For one group of equipment dealers who work with them, the ROI of conducting customer satisfaction surveys is 2,395X. The average customer surveyed spends $74,823 more each year and makes 13 more transactions, compared to the customers who aren’t surveyed.
At risk customers
What it is and why it matters:
At risk customers are those whose purchasing behavior indicates they may be preparing to leave you for the competition. A drop in purchase frequency or longer intervals between transactions is the clearest warning sign. If they’re still in business but buying elsewhere, your revenue and customer base are both in jeopardy. Recognizing these signs early is key to keeping your customers from switching to a competitor.
How to improve it:
Similar to increasing customer retention, the best way to keep at risk customers is to implement regular customer satisfaction surveys. By asking customers what issues they are having, and solving those issues as quickly as possible, at-risk customers will be more likely to stay with you and even become more loyal than they were before.
Types of purchases
What it is and why it matters:
Understanding what your customers are buying is essential to developing successful marketing and sales strategies. Are they coming to you for emergency rentals, regular service, or parts? Knowing the common triggers for purchases can help you promote the right products at the right time, ultimately boosting customer retention and revenue.
How to improve it:
Identify “trigger products” that lead to larger transactions or ongoing relationships. For instance, frequent parts like filters and fluids often lead to bigger service engagements or equipment sales. Make sure your dealership captures those easy wins instead of losing them to general supply houses. Analyze purchase patterns by category and adjust your promotions and messaging to highlight these high-opportunity areas.
Distance for geographic market performance
What it is and why it matters:
Distance for geographic market measures the number of miles that customers will travel to do business with you. If distance matters, it will be exceedingly difficult to retain customers beyond the range that is comfortable for them to travel. For example, most heavy equipment dealers have a service area that is usually a maximum of 60 miles. The primary reason is that beyond that distance the dealer won’t be able to reach a customer who needs emergency service quickly enough.
When you have difficulty gaining and keeping customers beyond a certain distance, it’s not worth trying to sell your products and services to customers beyond that maximum range. For that reason, it’s critical to know how far the reach is for your company.
How to improve it:
If your business seems to be affected by the distance from your location to the customer, it’s important to conduct a market analysis of potential customers to determine how large your potential market is and exactly what the distance is for your maximum reach. This analysis will help guide your marketing strategy and prevent you from wasting resources on leads and prospects that are unlikely to work with you anyway.
We work with two partner companies, Zintoro and Winsby. Zintoro, provides equipment dealers with comprehensive business analytics reporting, helping them track key business metrics like types of purchases, purchase frequency, customer retention, and more. Winsby helps dealers improve those numbers through effective marketing programs that include customer satisfaction surveys, email campaigns, and more.
As a first step towards improving your dealership’s revenue, schedule a Zintoro demo today to uncover valuable insights and start making data driven decisions!