In our fifty-some-odd years of selling lift trucks, we have tried selling and servicing many different allied products (sweepers, racking, people movers, etc.) with limited success. Other than tires and batteries (which I consider more of an accessory than true allied line), what products do you see as the best fit for enhancing the revenue of a traditional lift truck dealer?
— Tim Hagan, General Manager, Stewart & Stevenson (Houston, TX)
Loren Swakow: Over the years, we have struggled with the very same questions you are perusing now. We have tried selling sweepers, scrubbers, utility vehicles, man lifts, golf carts, etc., all with limited success. We would contract to sell a line, then give our salespeople the training and literature and send them out. Initially we would have some small success, but the interest would wane. Our territory people were confident and comfortable selling lift trucks. Consequently, when they stepped out of their comfort zone, the results were not as favorable.
We have since determined that it takes a commitment and dedication as well as a comfort level with the new product. When we wanted to add racking, storage and modular buildings to our repertoire, we hired a dedicated engineer and bought the CAD software as well as the printer required for blueprints.
We now had the infrastructure, but needed an avenue to bring the sales in. The engineer would call on and sell the accounts that happened to inquire about racking. We realized this would be a slow growth situation and needed to get the department to pay its own way. To overcome this, we developed a “shared revenue” concept. The truck sales people would be paid for all installations in their territory. The percentage would vary based on their individual involvement.
We allowed 25% of the GP to be split between the territory salesperson and the engineer. If the territory person brings in the lead and the engineer takes over from there, we give 15% to the engineer and 10% to the territory person. If the territory person brings in a new account, handles the sale, but uses the engineer for drawings and technical expertise, the percentages are reversed. On house accounts, the commission is 25% to the engineer. On catalog items or sales without drawings, the commission is 10% each.
The territory person could now look for the added business as he was getting paid for it. He was not outside his comfort level with the customer due to the fact he would bring in the company engineer to handle the project. The relationship proved to be symbiotic to all parties involved: the customer, the salesperson, the engineer and our company.
To summarize, we found that dedication to a product required an investment on our part. To make the investment pay off, the people assigned needed a basic comfort level to pursue the projects. Finally, each party, from the customer on down, had to benefit.
Ken MacDonald: For other lines to sell, you must first find a market that has a need of sufficient size to provide you with the ROI and proper turns. There are numerous manufacturers in a slow market who will gladly let you represent their product, providing you enter a proper stocking order. Our company has traditionally focused on Yale and, as a result, we have held high market share and a good ROI. This is not a model that fits all, but if you have the staff and they are properly trained and motivated, perhaps there is more opportunity to focus on what you do best and increase your market share and bottom line of all your operating departments.
Greg Morrison: Allied sales can greatly enhance your sales department’s profitability, but a major commitment needs to be made if this is the direction in which you want to go. Selling an item here or there will not make it. You will need to represent numerous quality product lines and market them relentlessly.
Align yourself with manufacturers who will give your salespeople the proper support in specifying the right product for the right application. Mistakes are not only costly, but potentially could affect your current lift truck business at an account.
Start by surveying your existing customers and explain to them that you are exploring the possibilities of representing more material handling items and if you could supply quality products at competitive prices, would they buy them from you?
Who are their current suppliers? What products do they buy? Are they purchasing allied products locally or from a catalog house? Keep in mind that most companies are reducing suppliers and looking for fewer good suppliers that offer more services. That could be you!
You must have direction for your sales force. Most allied lines will not support your parts, service, rental or used equipment departments. Try signing up a warehouse full of new rack on a planned maintenance program. It won’t happen. You must have a balance between lift truck services/sales and allied sales. Your sales team has to know what that balance is up front.
The Manufacturers’ Fair at the annual MHEDA Convention has always been a great time to meet and have a one-on-one with quality suppliers. Hope to see you there, and best of luck!
Dan Senecal: Our firm has added products which are synergistic to our primary line of forklifts and use common assets such as our shop, yet are potential volume businesses in their own right. Batteries and chargers are an example of such products and are marketed both in new equipment sales opportunities and the aftermarket arena. We have been successful in adding incremental business within our core competencies without a large expenditure of capital or effort with these initiatives.