Issue link: http://read.dmtmag.com/i/117833
Aftermarket Get a Handle on the True Parts and Service Volume in Your Territory If you can calculate the potential, the rest is easy. By Ron Slee The past couple of months we have talked about product support selling. I am calling this ���The New Frontier��� as a result of my conclusion that we really have not started to sell parts and service. Oh, I know you have people in the field; you have assigned them specific territories; you have compensation programs in place; you pay commissions based on sales; and that does the job. I don���t think that is correct. You have to know how your sales team is performing against some type of target. To that end we need to set objectives for each customer. And in more specific terms, we need goals and objectives for each parts commodity and every service program and labor type. Now that is a job worth pursuing, don���t you think? I suspect that many of you believe that I am dreaming. You can���t develop a potential parts and service volume for each customer. I beg to differ. You see it is all about machine population. And that is where this approach typically goes off the rails. I believe that if you don���t know your machine population you don���t know your business. It is as simple as that. Machine Population The key to the potential business available to you is the number of hours worked by a machine and the application within which it works. It is really quite simple. Is it 100 percent correct? No, but it is better than nothing and it is pretty darned close. Over the years, there have been many attempts made to have a definitive market opportunity model created ��� in fact, decades ago, the Swedish Caterpillar dealer and I worked on one. Many OEMs have created models to work with at the dealer level. But nothing has really taken hold of the market that is viewed as the definitive model to use. I suggest that the AED mode, which will be revisited in the Opportunities Handbook, should be such a model. It starts with the hours and the application of work for each machine of all brands in your area of responsibility ��� your sales territory. Do you have an accurate machine ownership list? Does it contain all brands? Is it current and accurate? And this is where things come to a grinding halt. You see, it appears as if it will be a bone-crushing job to obtain this information. Well, it will never get done if you don���t start. You have assigned customers to salesmen. Get an accurate machine ownership from them for their customers. Then the remainder of the customers will have to be assigned. We talked about this in market coverage a couple of months ago. The customers that you have to assign now are all the customers in your territory who are not being contacted by anyone from your company. This delinquency on our part causes defections, and lies at the root of the dilemma in which 95 percent of the business is coming from 5 percent of the customers. Start now and at some point in the future you will have an accurate machine population. What is the next step? You have the hours of work. You have the machine population. Now you can calculate the maintenance hours that will be applied. Go to the Operator���s Manual provided from your OEM. It will list off all of the steps to take during a maintenance interval. Then go to the Standard Time Guide provided by your OEM and obtain the standard times for each of these intervals for each of the machine families. All that���s left is to do the math. For each customer and the machines they own and the hours they work you will be able to determine maintenance hours of labor if they follow the prescribed maintenance functions from their Operator���s Manuals. Simple, right? Did you know that the hours of repairs are approximately equal to the hours of maintenance over the lifetime of a machine? OK, so you have the machine population, and you will have the year-built on the ownership list. What is the oldest age for each machine category in your territory? That should give you the expected life. Then do the calculation of the maintenance hours for the life and double it. This will be the total number of hours of repairs and maintenance over the lifetime of the machines in your territory. Divide that by the number of years for each model family in your territory and then you can calculate the annual potential of labor hours. Now it is your turn. Assign the customers. Start the phone calls and the visits. Start updating the files. I will go further with the process next month. The time is now. Ron Slee (ron@rjslee.com) is the founder of R.J. Slee & Associates, Rancho Mirage, Calif., celebrating more than 30 years in business in the United States, a consulting firm that specializes in dealership operations. 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. Follow Ron on Twitter: @RonSlee; and read his blog at learningwithoutscars.com. April 2013 | Construction Equipment Distribution | www.cedmag.com | 51 51_aftermarket_KP.indd 51 3/25/13 12:30 PM