Become a Valued "Anomaly' in Your MarketWritten By: Mary Sedor
Article Date: 10-01-2007
Copyright(C) 2008 Associated Equipment Distributors. All Rights Reserved.
Offering insurance to end users has boosted new customers 20 percent at Tracey Road Equipment.
When listing the major components of the average construction equipment dealership, parts, service, sales and rental all come to mind. Insurance, on the other hand, does not.
But at Tracey Road Equipment, a heavy construction equipment dealership based in Syracuse, N.Y., providing insurance to end users is just as important as providing parts or service.
Jerry Tracey, Tracey Road Equipment's chief executive officer, started the company in 1976. The company began offering insurance services about five years ago, but it was only in the last two years that Tracey Road expanded its offerings.
"We were trying to become the best business partner and solutions provider," he said. "But when we first started we were ahead of the curve and weren't really sure of what we were doing. Then my daughter joined our team and expanded our services."
Christine Tracey, vice president and managing partner, brought insurance industry experience to the table. She created Advantage Dealer Insurance, a sister company of Tracey Road Equipment that administers the insurance products. Advantage Dealer Insurance is a company dedicated to assisting dealers in providing insurance services to end-users.
"We saw that our customers were lacking products and programs to help them purchase and rent equipment faster," she said. "We saw an opportunity and a need."
Before offering insurance products, Christine Tracey says she collected and studied all of the certificates and policies from the customer base in order to see how the customer base was covered for loss damage waivers.
"As it turns out, our customers weren't properly covered," said Christine Tracey. "They had actual cash value coverage instead of replacement cost. That's why we've covered our entire rental fleet in the proper way and sell loss damage waivers in the truest sense."
Products for Every Need
Tracey Road Equipment provides its end user customers with a host of products including extended service contracts, physical damage insurance, true loss damage waivers and dealer inventory financing options.
Three different types of coverage are available. Tracey Advantage Guard (TAG) protects new and used equipment beyond the manufacturer's base warranty. Tracey Advantage Rental Protection (TARP) protects rented equipment. And, Tracey Advantage Protection (TAP) is physical damage coverage.
For example, Tracey Road Equipment offers extended warranties beyond the manufacturer warranty. Typically, the industry standard for dealers selling equipment outside of the manufacturer warranty is limited to a 60- or 90-day major component warranty on the equipment. Tracey Road Equipment's innovative programs allow the dealership to offer those machines to the customer with an additional one- or two-year (1,500 or 2,500 hours) warranty.
"We use that as a sales feature," said Scott Collins, vice president of marketing and sales. "Our competition isn't doing that. If we both have the same machine with the same hours and we have a 1,500-hour warranty we're the ones getting the sale."
Tracey Road Equipment has dealer inventory coverage specially written for their company, which completely covers the rental fleet.
"It's very affordable to provide these services to our end users," said Christine Tracey. "Our products and services are growing as we continue to see a need in the marketplace."
Additional Services Attract Customers
Since implementing its expanded insurance products, Tracey Road Equipment estimates it has seen a 20 percent growth in new customers. This additional service also has proven to be an excellent selling and renting point.
"We're using this as an opportunity to get into maintenance programs and pm services," said Collins. "It really boils into the monthly payment for the customer. Now we can buy the machine and have the insurance in there and hopefully a monthly service contract. It allows us to expand our service to our customers."
By offering end users the option of purchasing insurance, Tracey Road Equipment gains an additional method of getting more customers back into the dealership.
"For instance, we're selling service contracts and that brings the customer back in for parts and service," said Christine Tracey. "All of these products bring in more touches with the customer. We're building up our customer base with customers we've never been able to go to before."
Adding insurance has really made Tracey Road Equipment a "one stop shop" for end users.
"We've become the easiest place to do business with in our marketplace," said Collins. "That's our niche market - we're not just your typical distributor. We're an anomaly because nobody else is doing what we're doing. We have a bundle of products available for our end users."
Advice for Adding Insurance
Christine Tracey recommends that if a dealer is considering adding insurance programs to look through AED's Membership Directory and interview a handful of insurance consultants listed. A dealer should find an insurance consultant he is most comfortable dealing with and one that is nationally recognized and fully compliant with all laws and regulations of each state.
Interview the consultants and ensure that they will help set you up as a licensed insurance agent, train you and get you the licenses you need to be in compliance.
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