The most essential strategic element to success.
Selling service is a lot more than sending out an aftermarket rep to quote operational maintenance contracts or an engine rebuild. Done correctly, selling service can become the central theme that drives your dealership to market dominance.
It is critical for you as a dealer principal that your short-term and long-term business strategies align to increase your dealership’s value. Increasing a business’s value requires driving both profitability and revenue growth. Selling service, or more correctly, selling excellent service, is the most essential strategic element to assure success in that effort.
Note that I stated “selling,” not just providing, excellent service. It is my contention that having excellent service only reaches its greatest potential to drive business value when your entire organization be-comes effective at selling your service capabilities to both prospective and existing customers.
The first step, of course, is that you actually provide excellent service! That requires that your employees understand both the vision and value of the excellent service concept. The first place you have to sell excellent service is internally.
|If your sales force believes loyalty is just about non-existent with your customers but means everything to your competitor’s customers, it is time to look long and hard at your service vision.|
Providing a Vision
Two studies on service provide insights into the value of the excellent service concept. The first study comes from the book Selling the Invisible by Harry Beckwith and examines the amount of loyalty suppliers could expect based on the quality of their service. What was interesting was that providing adequate service was not a factor in driving customer loyalty. In fact, providing service rated as “good” still provided suppliers no measureable impact in retaining their customers. Essentially, customers believed, rightly or wrongly, that they could expect “good” service if they switched suppliers. Customer loyalty was only impacted, and then significantly, when the supplier’s service was rated as “excellent.” Not just good—in fact, not even the best when compared to what they had experienced from the supplier’s competitors—but excellent, exceptional, beyond-their-expectations service. To gain a customer’s loyalty, a supplier had to provide service that was extraordinary.
The second study is particular to the lift truck industry. Contracted by NACCO Materials Handling Group and performed by the Deloitte Consulting Group, it examines all the criteria lift truck buyers use when choosing a vendor and then asks buyers to rate them as to their importance. In the eyes of the customer, the four most important things considered in their decision-making process are reliability, durability, safety and local service capabilities. It’s interesting to note that while price is a factor, it is not the most significant factor in the customers’ evaluation process. There is general understanding of competitiveness that keeps that element in check.
Combining these two studies gives us the interesting perspective that (1) service capability is one of the four top considerations in a buyer’s selection process, and (2) the only way to distance your company from the competition in a meaningful way is to first provide and then be able to effectively present your capabilities as an extraordinary service provider.
Growing profitably is only accomplished in any significant way by holding on to your existing customers and acquiring the competitors’ larger accounts that provide good aftermarket profitability. If your dealership has experienced good profitability in recent years but has struggled with growth in revenue and market share, it is possible that one of two things may be at work:
1. Your vision of providing excellent service has been diminished by short-term goals of departmental profitability, or
2. Your team may not be effectively selling the impact of your excellent service both to existing customers and new prospects.
Here’s a paradox to use as a quick test. Are your employees challenging whether customer loyalty is a factor in today’s market when they lose an existing customer or have to “give away the store” to retain them? At the same time, are they consistently arguing that it is nearly impossible to crack into a large prospect and break them away from their current supplier? If they believe loyalty is just about non-existent with your customers and means everything to your competitor’s customers, it is time to look long and hard at your service vision.
The aftermarket service that your dealership offers with the purchase of a lift truck can and should be one of the key deciding factors in the customer’s selection process. The ability of your sales force to effectively market your service capabilities to a customer can be the difference in closing the sale.
It is critical that the vision of excellent service be an essential element of the interaction between every department and the customer. The job of providing excellent service is not a task that is limited to service managers, service dispatchers and technicians. Extend the vision of providing excellent customer service to every employee. The parts and rental departments should define what excellent service means for their customers. The sales department should define their function as providing excellent service to their customers. When salespeople are calling on existing customers or new prospects, they have to see themselves as providing service to the account by constantly looking for new and creative ways to reduce their customers’ costs. When all departments see their primary function as providing excellent customer service, they will have a common purpose that aligns their efforts. It is then a natural step to remove the obstacles created by departmental silos and provide excellent service to the other departments, their internal customers.
When I was first given the position of sales manager at a dealership years ago, a very effective service manager told me, “Son, never forget one thing. The sales department may sell to an account their first lift truck from this company, but the service department will sell every one after that.” To really grow revenue profitably, every department has to take that attitude. What can I do to help our other departments sell our products and services? Consider having every department head responsible for bringing examples to monthly staff meetings of instances where their excellent service helped increase sales in other departments, then publish and distribute those stories to all employees.
|Local service capability is defined by customers as a reliable, well-trained technician.|
Another important area of focus in marketing service effectively is the process you have in place to ensure employee development. It’s important that your primary supplier has a certification program in place to support this activity. Make the process that delivers the technician certification critical to delivering the excellent service your customer requires. It is an excellent incentive to structure your hourly pay scale to award the technician’s development based on achieving certified skill levels. Market this certification to your end-user customer as your effort to ensure their technician will troubleshoot the problem and service the product correctly the first time, every time. When technicians see that your dealership has put a program in place that rewards their efforts and makes them more valuable to the customer, your organization will stand out as a great place to build a future.
Remember my previous comments about the value a customer puts on local service capability. Local service capability is largely defined by customers as a reliable, well-trained technician. The most trusted individual interacting with a customer is a quality technician. There have been many instances when I was visiting with an end-user that they pointed to the technician servicing their product and acknowledged this individual’s ability to keep their fleet productive as the real reason they continue to select our product.
Similar certification processes should be implemented for all employees that provide direct service to the customer, including the dealer sales force. The certification process is an investment that will not only impact your financials in a positive fashion, but will be a beacon within your market to attract quality people. The future of all high-growth companies rests with their ability to attract and retain quality people.
Aligning with the Direction of the Market
The breadth of your products and services is another critical area of focus in today’s market. More and more customers are looking to consolidate their vendor base to decrease the cost of doing business. Your ability to understand these needs and market a single source concept of products and services will separate your dealership from the pack. Today’s customers are looking for suppliers that bring value to their business by packaging the right products and services to allow them to focus on their core business. They are looking for partners that provide an ease of doing business and deliver a “can-do” attitude. The market continues to trend in this direction, with customers focused on outsourcing the elements of their business that do not generate revenue. With these strategic factors in mind, what are the different elements of service that your organization should focus on in the development of your full-service package?
In my opinion, fleet management is the concept that best addresses your customers’ vision of the future of lift truck service. I define fleet management as a process put in place to maximize the effectiveness of your customer’s investment in his material handling equipment while delivering the productivity required to service their customers’ business. It is a process of continuous improvement which is determined by understanding the utilization of the equipment. This information allows you to:
- “Right size” the fleet to reduce excess equipment capital cost
- Provide appropriate service to maximize uptime
- Achieve the total lowest cost of ownership through the effective life cycle of the product based on application
- Provide management reports to make informed replacement decisions
- Implement centralized invoicing to reduce administrative costs
- Spread best practices throughout the customer organization to reduce the overall cost of managing a fleet of material handling equipment.
It was only 20 years ago when the systematic rotation of the fleet in a cost-effective manner was a new concept that replaced the previous logic of rebuilding the equipment two or three times over an 8- to 12-year period. In today’s market, the systematic rotation of the fleet is the accepted norm based on usage. The concept of fleet management will become the most desired way for a customer to manage their fleets over the next five to ten years. If your service department has not embraced fleet management, it needs to do so because that is the direction the market is moving.
As the market evolves, the primary theme moving forward will be usage versus ownership. It’s very important that your dealership be prepared to both service and market fleet management. This a strategic focus that you need to consider if you have not already positioned your company in that direction.
In the final analysis, leadership can be defined as first creating a vision of the dealership’s future that all employees will enthusiastically embrace, and then describing the path to attain that future that makes them believe it is achievable. Making the selling of excellent— in fact extraordinary—service a central theme in your dealership’s road map to the future will provide every employee in every department a mission that inspires pride in their company. At the end of the day, that pride will leave an impact on your customers that will deliver the sustained profitability and growth that all great companies enjoy.
|Meet the Author
Don Chance is president of Yale Materials Handling Corporation located in Greenville, North Carolina, and on the Web at www.yale.com.