Success in the equipment sales business is a numbers game: the more you sell, the more you make. Both original equipment manufacturers and dealers yearn to expand their territories to increase sales potential – and, thus, profits.
But to be successful, a partnership between OEM and dealer has to be the right fit. Cemen Tech, the world’s largest manufacturer of volumetric proportioning and continuous concrete mixing equipment, undergoes a rigorous process to identify the right dealer for their products.
“It’s a new process we started about four years ago for U.S. dealers,” says Mark Rinehart, director of sales and marketing. “We can only have a limited number of dealers, so we have to find the right one that fits the product and our target market.”
The decision-making process
Choosing the right dealer isn’t easy. As Cemen Tech began transitioning from factory-direct sales to dealership sales, the company faced a steep learning curve. “We picked the wrong dealers before,” Rinehart confesses, admitting that they even canceled dealers one year.
However, the company has initiated a new process to avoid those issues. “We learned from our mistake,” Rinehart states. Applying some of the lessons he learned during 11 years at a Cat dealership and relying on Cemen Tech’s 20 years of experience with their international dealers, Rinehart says they now approach potential partnerships with dealers in much the same way a dealer hires a salesperson. “They will represent our products, so their reputation is critical.” Trust, communication, and an open, honest relationship are crucial for a successful partnership, he adds.
Because Cemen Tech makes the most expensive equipment in its category, according to Rinehart, they prefer to align their brand with dealers at the same level. “Do they sell on value or price? We don’t choose dealers that carry the least expensive equipment.”
Furthermore, they look for dealers that “touch our target markets,” as Rinehart says – dealers already affiliated with customers in industries such as utilities, sewer and water, roads and bridges, and electric and gas, as well as municipalities.
Ultimately, an OEM wants a dealer that understands both the manufacturer and the product – one that can calculate the ROI for a contractor considering purchasing the equipment.
A dealer’s perspective
For 30-plus years, Lyle Machinery Inc. has been known as a dealer of Komatsu, Bobcat, JLG and other equipment. “We’re in the dirt business,” states Marc Dowdell, vice president of sales.
But the company’s objective is to diversify and include different market shares such as scrap and demolition, milling, paving, and energy. In evaluating the possible addition of new lines, Dowdell says they ask questions:
- Does it fit our core business model?
- Does it serve our customer base?
- Does it expand our customer base?
- Can we be successful?
Lyle Machinery considers volumetric mixers a “new product for our marketplace that serves a niche market that ready-mix doesn’t reach,” Dowdell states, adding that one appealing aspect is that it can save 30-40% versus short pours – a value for his customers.
As the No.1 market share dealer for Komatsu with locations in Mississippi, Alabama, Florida, Louisiana and Texas, Lyle was poised for market penetration in a region Cemen Tech had open.
Lyle Machinery interviewed with Cemen Tech to determine if the Cemen Tech products would connect with the products Lyle already represents. There must be no competing products. “We consider how much of the dealer’s time there will be to talk about our product,” Rinehart says.
Next came the vetting. “They looked at our financials, sales coverage and strategy,” Dowdell recalls. Compatibility was considered – by both sides. “We wanted to make sure they were aligned with our philosophy of how to take care of the customer.”
Rinehart accepts the fact that dealer prospects will scrutinize the OEM too.
“Dealers are bombarded by new products all the time. How do they evaluate?”
In the getting-to-know-you phase of what Rinehart compares to a courtship, dealer candidates need to learn about the OEM through factory visits, site visits, Zoom meetings, and consulting with other dealer reps. “A dealer should talk to other dealers repping the product,” Rinehart says. “See the factory, meet the leadership team and regional reps; make sure they’re like-minded.”
They should also get feedback from their customers and talk to Cemen Tech customers too. “If they already do business with our customers, it’s a good sign that they reach our target market,” Rinehart concludes.
Lyle did all of that, and in the process, learned Cemen Tech’s ownership structure, “their formula for market size, their metrics for opportunity as a percentage of the market, potential investment and ROI,” Dowdell says. “We talked about opportunity, training, market size and marketing data.”
Lyle Machinery, a company that emphasizes service, was pleased with what they heard. “They were organized, detailed and understandable,” Dowdell says. “We were impressed by the engagement and attitude we saw in the factory; everyone greeted us.”
The employee-owned OEM and the dealership came to an accord. Lyle became Cemen Tech’s newest dealer, having agreed not to carry competing brands in exchange for exclusive territory. There were other prerequisites, such as investment criteria of stocking equipment and parts inventory.
As a new dealer, Lyle Machinery underwent the full onboarding process with the sales, service and parts teams. That included roughly 40 webinars about what the product does, ROI, whom to call and what questions to ask. There was online training, factory training and on-site training by the regional reps. Lyle employees were instructed in Cemen Tech’s warranty process and how to order parts. “It’s key for a dealer to learn about the support tools and technology,” Rinehart notes. “We think through all scenarios.”
Due to Cemen Tech’s cutting-edge technology and customizable products, extensive training is vital. “We try to get a dealer up to speed quickly,” Rinehart says, but he acknowledges that the education process can take years. Because they want to work with a dealer long-term, he says it’s worth the investment.
“We’ve been using the dealer model for four years. We believe it greatly contributes to our success.”
Happily ever after
Cemen Tech is still looking for distributors in some areas, Rinehart points out. He expects to continue using the vetting process they’ve honed in future dealership selections.
Although they’re “just getting started,” Dowdell says Lyle Machinery has already sold their first machine. So far, he adds, Cemen Tech has met their expectations regarding training, parts, warranty, service and sales. He credits a thorough process for contributing to what he hopes will be a long and successful partnership.