In 1987, on an August day in Milwaukee at the Hyatt Regency Hotel, Stuart S. MacKay addressed a large group of farm equipment dealers and manufacturers during the North American Equipment Dealers Association’s Convention (NAEDA).
The President of MacKay & Company in Lombard, Ill., MacKay was a statistical data consultant hired by the manufactures to do a survey of the industry’s aftermarket. The survey was performed to determine the value and size of the aftermarket for the manufacturers, as well as their dealer body. A year later MacKay performed the same survey for the construction industry. It’s a pity that the survey was never run for the industrial lift truck industry because the basic ideas, percentages and numbers produced for the other two industries would probably also hold true for the lift truck industry.
The survey broke out the dollars to be spent by customers, percentages of product, overall market by product, hours of equipment usage, etc. It was a cornucopia of valuable information concerning the size and scope of the aftermarkets for the industries surveyed. Numerous customer surveys detailed why or why not customers purchased their services from the selling dealer after the sale. Dealers and manufacturing personnel were awe struck by the data they saw in a two-hour period of time.
Most conversations for the rest of the day dealt with one subject: The enormity of the equipment dealer’s aftermarket and the increased profitability available to both the dealer and their manufacturers.
The material presented offered a wealth of opportunity to the dealer and their manufacturers. The material presented is still pertinent to manufacturers and equipment dealers today, particularly dealers interested in:
1) Increased product support sales.
2) Increased product support profitability.
3) Increased customer satisfaction.
During the ensuing years, we have taken a small piece of this mass of material and attempted to point out to both dealers and manufacturers the tremendous opportunity available to them in the three areas listed previously. MacKay’s approach to dealer’s service potential is so basic that it is often overlooked.
For years we have talked about the fact that dealers in all industries considered their service departments as little more then that area in the back where they performed “make-ready” and “warranty.” This thinking was fostered by the manufacturers, because in their minds the dealers’ service centers contributed little to their bottom line. In effect, service was not a “profit center” for the manufacturer.
In his presentation 22 years ago, MacKay made several important points about equipment dealers’ service opportunities. MacKay stated that at least 90 percent of an equipment dealer’s service business was lost through a lack of any type of service marketing by the equipment dealer.
Mackay also went further when he revealed what customers said when they were asked why they did not buy service from the dealer who sold them their equipment. Not surprisingly, customers consistently replied along the following lines:
1) Most customers said that no one from the dealership had solicited or even remotely asked for the opportunity to service the customer’s after sale service needs.
2) Many customers told the surveyor that they wanted to service their own equipment because they did not trust the dealer to take optimum care of their investment.
3) Many of those surveyed also said they thought they, or their “hired helper,” could do the job faster, keeping machine downtime to a minimum.
4) Customers also expressed the belief that it cost less to perform their own service or to have an independent or shade-tree technician perform the service.
When presented in this manner, it’s apparent that many of the answers were basically assumptions. Assumptions that could easily be overcome with a focused service marketing effort; the same type of effort the manufacturer would expect the dealer to put forth in selling new product.
