The Winds of Change Are Around UsBy Ron Slee
Article Date: 11-01-2010
Copyright(C) 2010 Associated Equipment Distributors. All Rights Reserved.
Does it feel like a positive change to you?
The elections have come and gone, and while I did not know the final tallies when the magazine went to press, I am sure, like most of you, that there will be rather far reaching changes coming to Washington and many of the states of the Union.
Yet even during the anticipated transition, there remains a widespread mood of fear and uncertainty around the country, in your markets, and inside your branches. Nevertheless, in the midst of all of this there is much that we can do and more that we must do.
First, we must be more engaged with our customers. We need to talk with them more and visit them more. We need product support salesmen in the field. I know you know that I am convinced that this is one of the weakest areas of our businesses.
We simply do not have sufficient parts and service/product support salesmen.
How many should we have? The same number as you have in equipment sales. Don't forget that the gross profit in the parts department and the gross profit in the service department both exceed the gross profit in the prime product group. This is a level of change that the industry needs to take seriously. The market capture rate in parts and service is nowhere near where it needs to be, and it will get worse if we don't act – soon.
We must be more responsive to our customers' needs in service. We need variable labor rates. No more should we be charging journeymen rates for maintenance work. No more should we be overcharging for nontechnical work or undercharging for highly technical work requiring specialized tools. And let's re-evaluate the field vehicles we employ. Do you really need a two-ton freightliner for all your field work? I don't think so either. Our egos have gotten ahead of our wallets. Consider using a van for much of the field work or a trailer for maintenance work.
The reduction of the owning and operating costs for our customers should be in the forefront of our thinking. So how about one rate for 16 hours a day? Some of you are already using this customer service tool. The customer should not be penalized due to the hours that we work. We should be more concerned with the hours that they work. Remember the banks being open from 10 a.m. to 3 p.m.? That doesn't sound very customer friendly does it? But are we any better? Our customers work from sun-up to sundown and many work multiple shifts. Why do we continue to ignore their needs with our hours of operations?
Parts sales are another rub these days. Every single part that you sell over the counter is a lost unit of labor. Someone else is performing the labor – not our mechanics.
Parts sales orders today should require a model and serial number on all the parts. I know all the old arguments but the new realities outweigh the difficulties. Without the model and serial number we cannot be assured that we have the correct part. The rate of change in equipment over the past 15 years requires that we be much more careful with the parts we supply. We owe it to our customers to be more careful, and that requires model and serial number on each parts order.
And while we're at it, let's ask the customer who it is that is doing the labor. Who was it that determined the parts that are required for the job? Remember, you have a very high percentage of your parts inventory for parts that have not met your stocking criteria and a strong percentage of this surplus comes from parts ordered in error.
And finally this month let me bring up oil analysis – the only product we sell that can predict when a component will fail. If we can avoid component failure, we can reduce the repair costs dramatically. Why is it that we still have low sales on this valuable tool? I believe it requires focus, as do all of the other items listed above.
This new reality is not going away anytime soon. We need to adapt to it and get on with positive work for our customers, our employees and our suppliers. It will put a smile on your face again.
Ron Slee (firstname.lastname@example.org) is the founder of R.J. Slee & Associates, Rancho Mirage, Calif., a consulting firm that specializes in dealership operations – celebrating more than 30 years in business in the United States. Ron also operates Quest, Learning Centers, a company that provides training services specializing in Product Support, and Insight (M&R) Institute, a company that operates and facilitates “Dealer Twenty” Groups.
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