Opportunities for up-selling and cross-selling
In material handling, aftermarket parts sales do not have the cachet that new truck sales have, but when the going gets tough, aftermarket parts sales can keep you going.
The U.S. Gross Domestic Product grew 0.6 percent in First Quarter 2008 following another growth rate of less than one percent in the Fourth Quarter 2007. The Industrial Truck Association membership forecasts flat new truck production for 2008 after a drop of nine percent in 2007 from 2006.
|End-users have strong incentive right now to keep existing equipment operating efficiently through maintenance programs and high- performance aftermarket parts.|
For equipment distributors, these economic facts of life for the near future demand focus on aftermarket parts sales in order to achieve corporate sales growth. While distribution centers, manufacturing plants and warehouses may delay new equipment purchases, these end-users have a strong incentive to keep existing equipment operating efficiently through maintenance programs and quality, high-performance aftermarket parts.
Increasing market share of aftermarket parts sales at individual end-user locations and throughout the dealer regional market is one means of offsetting lost or non-existent new truck sales. How do you do it, you ask? As usual, the answer resides in information—what you know and what you don’t know.
- What percentage of the distribution center (DC) lift truck fleet are you currently servicing?
- What percentage of the DC truck fleet are you not servicing?
- What percentage of regional DCs are you failing to service in any manner at all?
- Within these three segments, are there opportunities for up-selling? Opportunities for cross-selling?
- Are there opportunities to offer value “packages”?
- What products currently being purchased by the end-user cause operational problems due to warranty or availability?
At a time of restricted spending and tight budgets, promoting increased worklife through more expensive products can be a challenge. Accurate information can be your ally. If you can document worklife improvement by using a (typically higher-priced) higher-performance product leading to reduced parts purchased and reduced change-out maintenance required, you have a chance to increase aftermarket parts sales. Take the case of natural rubber tires for cushion-tired trucks. For a modest 25 percent to 50 percent premium for natural rubber tires versus the man-made styrene butadiene (SBR), you may be able to reduce tire purchases by dozens of tires and maintenance labor by several dozen hours over the course of a year, depending on the fleet size.
In the case of electric trucks, going to a higher capacity polyurethane compound or finding a guaranteed “no bond failure” load wheel is an excellent up-selling means to reduce parts purchases and maintenance labor and give your customer a competitive advantage.
Maybe you are servicing the cushion-tired part of the DC fleet and have ignored the polyurethane-tired portion of the fleet. Narrow-aisle, battery-powered equipment often uses industry-standard press-on tire sizes. Are you quoting on all the tire opportunities under the roof of the DCs you are already servicing?
Maybe you are servicing the polyurethane-tired portion of the fleet. Are you selling bearings with the load wheels? Are you selling the stabilizer casters in addition to the tires and load wheels you may already sell for Class 3 motorized hand pallet jacks?
Are you able to combine service work with parts sales? Are you able to offer parts consignments? Are you able to offer new products outside of your typical comfort zone—say, bearings and stabilizers casters with load wheels?
From a material handling manufacturer‘s perspective, whenever we can package components and parts when selling to a distributor, we are offering them a competitive advantage. The same holds true for dealer-to-end-user sales. By using up-selling and cross-selling techniques to complement whatever creative packaging ideas you have, you may be able to overcome slow new lift truck sales with a dynamic aftermarket parts sales program.
|Meet the Author
Bill LeMeur is executive vice president of Superior Tire & Rubber Corp., located in Warren, Pennsylvania, and on the Web at www.superiortire.com.