CED

September 2013

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Aftermarket Who's Who in the Competition Zoo? Six ways to reverse the downward spiral of lost parts business By Ron Slee It appears that almost everything we sell is available for sale by someone else, too. So, how do we compete? And how should we compete? I believe it is a series of things that we must do – there is no silver bullet. But we must do things differently in order to impact on market capture rates and obtain a higher portion of the available parts business. Yes, the following list is daunting, and there is a lot of work to be done, but it won't happen unless we start. Market Coverage is one of the most critical in the list. How can we expect to obtain more business if we don't pay more attention to the customers in our trading area? With the thousands of customers using equipment and the hundreds of technicians repairing and maintaining it, how can we get to know all these people with the limited number of product support sales personnel in place? I believe it is impossible. At least have someone cover – in the field – all of the customers that represent the top 25 percent of your parts business and 25 percent of your service business. Let's stop the ongoing loss of customers on an annual basis, which, for many dealers, means that 90 percent of the business is coming from 10 percent of the customers. Product Knowledge is a seriously missing link in our arsenal of sales tools. How can we expect to obtain the business when we don't really know what it is that we are selling and what advantages we have over the competition? The hard-working conscientious people you have working in your parts business need to know all about everything that you are selling. We are confronted with bearing houses, sealing and packing unforgiving standard. We are expected specialists, undercarriage and ground to have the part, yet the competition engaging specialty competitors, hose is not. We have shorter replenishment and fitting businesses – sometimes cycles from our suppliers now, but representing a product much the "JIT" (just in time) inventory at times same as yours, like hardware and hurts us. We have many more tools for batteries. Yet sometimes the customer managing inventory on the business finds better product expertise at these systems, we have much better skills in competitors than they get from us. the parts personnel than ever before, How did we let this happen? and we measure the customer service Market Opportunity is based on performance regularly and critically. the machine ownership lists we should Never lose sight of the fact that time have for each and every customer: and again customers tell us in surveys what they own, the model and serial that the most significant element in the numbers, machine functions, hours parts business is availability. worked per year, and applications. In Expediting is the final bullet that fact, we should be asking for model we have in our gun, and to me it is the and serial number on each parts most important. The only part that inquiry or sale all the time now. The matters to the customer is the one equipment has changed very dramatiyou don't have in stock. I have been cally over the past 10 to 15 years, and "nagging" about this point for years. unless we have the model and serial The No. 1 rule in the parts business is number we cannot be assured we "find every part that every customer is will supply the right part. With this looking for and let them know where information, we will know which it is available – and do that every day customers represent the largest before you go home for the day. You growth opportunity for us. will be amazed how easy it is to do and Pricing is also critical for our success. how much of a difference it will make A distributor I worked with long ago to your customers. described his pricing philosophy as All this work will bring you terrific follows: "I find out how much I am results, but not if you put it off. The going to pay for the part and then look time is now. around and find out what the market charges for it – I set my price somewhere Ron Slee (ron@rjslee.com) is the founder of R.J. Slee & Associates, Rancho Mirage, in between." Personally, I don't believe Calif., celebrating more than 30 years in we should leave the decision of price point to so simplistic a method. We need business in the United States, a consulting firm that specializes in dealership operations. to be dealing with competitive pricing Ron also operates Quest Learning Centers, approaches, lost leaders, specials, and many other sophisticated pricing mecha- a company that provides training services nisms such that our price point is specific specializing in product support, and Insight (M&R) Institute, a company that operates and extremely competitive. But don't and facilitates "Dealer Twenty" Groups. Folforget, you need to make money too. low Ron on Twitter: @RonSlee; and read his Inventory Management is an area on which customers hold us to an blog at learningwithoutscars.com. September 2013 | Construction Equipment Distribution | www.cedmag.com | 51 51_aftermarket_KP.indd 51 8/28/13 12:25 PM

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