Take the parts business off of autopilot, and instead take action to achieve the ‘possible.’

It has been nearly four years since the financial meltdown, and it appears that we have settled in to this new reality – but not in the manner that I expected. We are getting some encouragement as the fleets of the contractors are being refreshed; however, they are not growing.

What is troubling is that we have settled into the situation that we are “stuck” in service because we can’t find any technicians. I suppose I can understand this position. It is just too darned hard to break the molds we have in our businesses – the paradigms. The mold whereby we need to have helpers, we need to develop our own technicians by restarting the apprentice programs. It is interesting as our neighbor to the north, Canada, is looking at allowing more immigration for specific skills workers – this means allowing more technicians into the country. Service is at a logjam. We are stuck.

In parts, however, I thought we had a chance. There is no shortage of skilled personnel. The systems and technologies available have never allowed more productivity. Yet here we are. In the automotive world, Genuine Parts, which mirrors our parts business, saw a decline in 2008 and 2009, profits down 2 and 14 percent respectively; now auto parts have bounced back strongly in 2010 and 2011, with profit growth of 20 and 19 respectively. Analysts are calling for double-digit profit growth again in 2012. I don’t see those kinds of growth in the dealerships that I have been in touch with over those same years. We have settled into a “what the market gives the market will give” mode. If the phone rings, OK; if it doesn’t, we are unsure of what to do.

This doesn’t feel right to me. We are “settling” again. We are in a rut.

In our Parts and Service Management training, we use films from Robert K. Cooper as inspirational break points. One of them is called, “The Next Level and Beyond.” The premise is that “Good” was terrific when we were younger or in school, but it is no longer enough. When we are Good at what we do we are proud of our success and start to protect that position. But at that point Good becomes the enemy of Great. In order to be Great at something you have to give up Good. Good is no longer the bar against which we should be comparing ourselves, comparing our performance. And that itself is a trap because Good and Great are never what is Possible.

In our consulting practice I often talk about the “art of the possible.” What can we do? How do we do things better? Being curious about how we can do more or better is a driving force that I believe is extremely motivating and satisfying. But I am not sure we are in that place at the moment in our parts business. I think we are a bit gun shy. We are satisfied with being good or great. We aren’t even looking at what might be possible. I think we need to regain that edge, that drive; we need to regain our “mojo.”

So where do we start? I think you can find a whole list of things to do.

First is training.

  • Product features and benefits to give everyone confidence
  • Selling skills – parts personnel process a lot of business but can they sell?
  • Overcoming objections
  • Interpersonal skills

Next I would suggest we focus on sales and marketing.

  • Segment your customers.
    1. High potential business, low actual sales.
    2. Growing customers versus those in decline.
  • Stratify your customers.
    1. Too much business is coming from too few customers.
    2. The old 80:20 rule is becoming the 90:10 rule.
  • Determine your defection rate.
    1. How many customers stopped buying from you in 2011?
    2. How many customers declined in sales by more than 75 percent in 2011?
    3. What are you doing about it?

Finally, get a market coverage plan that makes sense.

  1. How many customers do you have?
  2. How many customers are covered by a product support salesman with more than two calls in a year?
  3. How many customers are left?
  4. Who communicates with those customers?

Don’t forget: This market, this new reality, is the same one in which our competitors work. They are struggling as much as we are. Using the example of Genuine Parts, some are succeeding very well. I think we should be succeeding equally well. Don’t you? The time is now.

by Ron Slee
June, 2012
CED Magazine

About CED Magazine

Construction Equipment Distribution is published by Associated Equipment Distributors, a nonprofit trade association founded in 1919, whose membership is primarily comprised of the leading equipment dealerships and rental companies in the U.S. and Canada.

With CED, content is king. No fluff, no advertorials – CED just gives AED members what they want to read: business information, industry and association news, plus fresh, original and useful feature articles that they share with their management teams. Our subjects range from rental, product support, sales strategy and customer service to technology, construction markets and legislation – and much more.