This last article is to announce that after many years I have decided to take down my shingle. But before I do that, I hope this article will be a thank-you to all of you who have made the past 38 years such an enjoyable and successful experience. I name a few names and thank a few people, but explain up front, time and space does not allow me the luxury of expressing my thanks to everyone for making my career choice successful, and most of all enjoyable.
It has been a great experience for almost four decades. It was 18 days before Christmas when I received that pink-slip from my very last employer. I gave the situation some thought and three days later in a fine restaurant, a martini in hand, I presented an idea to my bride. Five minutes later she raised her glass and said, “You’ve always wanted to work for yourself and if we don’t do it now we may never do it!” I never looked back and was never sorry for the decision I made, and I recognize that there were many people who both assisted and contributed to my success.
I decided rather quickly, following my firing, just what I wanted to do and who I wanted to do it for. My early career was spent working with dealers in the farm, construction, industrial golf and turf industries, as well as the lift truck industry. I worked in these industries after my tour for Uncle Sam was ended. I was aware and understood as to what the dealer’s opportunity was within the area of what was referred to as product support and/or aftermarket. I researched the area as best I could and found the competition not truly focusing on just the aftermarket. Nor were the major suppliers (most) focused upon consulting for the equipment dealer’s aftermarket. It appeared to me to be an area that most manufacturers and their dealers were taking for granted. The few consultants that were attacking this particular market also had greatly expanded their focus and were attacking the dealer’s opportunity for the marketing of whole goods. These were professionals such as Bob Currie, Stu MacKay, Bill Sharp, Ed Walsh and Mike Nicholes - all who I have shared the stage with over the years. With the exception of the man (Ed Walsh) that I refer to as the professional guru who passed away many years ago, these gentlemen are still in the business and making a great contribution to all their clients and customers they have built up and worked with over the years.
It is Mike Nicholes, the man who has forgotten more about parts inventory control and management than anybody out there has ever known, who is truly the worldwide expert. Mike consistently shows his clients how to have the right part on the shelf, at the right time, and at the right price. Mike got me started in the heavy duty trucking industry and taught me all about the one topic which I believe helped me most to show equipment dealers the magic of 100% Absorption Rate. The first time I saw Mike work his magic, the dealers came alive and were truly in awe of what Mike had to say. While at the same time, were able to see for themselves what a 100% AR meant to their dealership’s bottom-line.
Simply stated, establishing 100% Absorption Rate (AR) calls for the dealer to establish all of his departments into individual profit centers. It is a call for specific measurement easily identified as: 1) sales transactions, 2) cost of sales transactions, and 3) expense transactions. Therefore a profit center is a department(s) within a dealership that pays all of the expenses of this particular department and has a bit left over for the dealership. If the dealership’s parts manager, service manager and rental manager work together to achieve 100% AR and the left over bit of profit pays the dealership’s fixed overhead and variable selling expense, then the dealer will experience a highly profitable dealership.
When our company came into existence, the car dealer lived by Absorption Rate and there was no question that the minimum goal would be higher than 100%. The typical, farm equipment, lift truck, construction, golf and turf, or industrial dealer could not believe what he was hearing, nor did he have the time to work at someone’s pipe dream. If a dealer checked out his own dealership and his actual AR came out as 58% or 78% (a position dealers had themselves in at that time), he immediately became a Doubting Thomas. They were too much of a Doubting Thomas to push to achieve ultimate success.
I have no way of proving it. So what if I did begin the dealer’s interest in pushing the needle on the dial up in consultants’ heaven? I have a dealer friend who ten years ago hit 100% and now calls me every year with his new Absorption Rate that is now running 132%. Call me every year Charlie. I’m always glad to hear from you and the personal attaboy is always appreciated.
Bob Currie, great at everything he does. I believe he is younger than I am. Before I joined the consultant’s corps I hired Bob to do a series of seminars for the last company I ever worked for. He always does a great, great job. Bob does a great job analyzing numbers on dealer’s financials. He’s made Twenty-Groups popular and extremely effective. Bob and I have always been in sync on the department numbers and what they should tell a dealer. By the way, here is a prediction Bob made years ago - in the future, a minimum 50% of the equipment dealer’s employees will be technicians. It is not a guess any longer, the average dealer has surpassed that prediction.
One thing I’ve never understood, he does great work on showing dealers the techniques of parts and service marketing. Throughout all my years I have stood fast on equipment dealers having an employee out in the field selling the dealership’s product support to the customer. Bob on the other hand tells anyone in the equipment business that it is all a waste of money and should be discontinued. The dealership in most of his cost of doing business studies in most industries is posting in service a 62% to 65%, but then check out their service contribution . . . it is in the single digits. Take a dealer principal through his descending sales reports and show him all the money he has left on the table. Caterpillar a few years ago claimed their dealers were leaving world-wide $18 billion in lost product support sales, which certainly is not chump-change. Someday Bob, I hope we meet and you tell me why you are adverse to product support sales personnel. Please don’t tell me it is a job for the equipment sales person . . .
Stu MacKay, now here is a real genius with the numbers concerning customer usage of parts and service. The work he has done for manufacturers over the years is outstanding and should be more available to dealers for studying. He has excellent material for dealers who have a difficult time figuring out what their product is worth yearly in product support sales for the equipment they sold. Stu it has been a real pleasure knowing and working with you.
Now to Bill Sharp. Bill conducts one hell of a boot camp program for new employees and particularly those entering the area of product support. Bill and I have worked clients together and on several emergencies he’s filled in for me. I know from some of my own experiences this is no simple task. Thanks, Bill for being a good friend and always willing to lend a helping hand.
Now for the associations. They are all great people, fun to work with and great to known for their contacts. I was very lucky at the start of my consulting career to hook-up with numerous associations. They provided me a whole lot of business, contacts and friendships. I’ve had many associations forward me leads which, in turn, become customers. I’ve had associations request information for their members and if I have what is required, they get it. It has been a relationship that has been profitable for both my company and for the association.
I’ll single out two of my association people who I would like to thank for singling me out for one of the best opportunities imaginable. Dave Kahler was executive vice president for the Ohio Farm Equipment Dealer’s Association. Bill Garling was Dave’s operation manager. The three of us were seated in a fast food restaurant in a small South Eastern Ohio town when they convinced me to write, once a month, a four-page article which they would put in their monthly member’s magazine. Now, for a while all I could think about was facing a deadline every 30 days writing an article about something that had to do with the equipment dealer’s product support sales. I hesitated and kept turning them down. I just felt it would tie me down causing more problems than value, but at Dave and Bill’s persistence, I caved. And, I will tell you, my readers, it was one of the best moves I have ever made in my entire life. I have received business throughout the world. I have no worry about selecting topics because they will end up sending me their ideas for topics and I’ll build an article around their thinking. I was given the idea of writing this article by an association manager, who has been a great friend for years. This article ends up being #327 and that ladies and gentlemen is a whole lot of words. It has been a work of enjoyment and fortunately every now and then I’ll get an attaboy from someone out there. And, of course, nothing peps someone up any better than words like “Great article this month, keep up the good work!” Thanks, again Dave & Bill for not letting me talk myself out of writing all those articles.
Dealers/Distributors, a few words of advice, a few important steps for you to take which should make your job not only easier, but much more profitable. You, your father and possibly your great grandfather probably went into business to serve the community and make an appropriate profit for your effort. Somewhere these goals got shuffled around. In this article I don’t want to end on a negative note - I’d like to end with a few comments to increase your profitability and enjoy yourself all at the same time. You’ve all heard speakers at one time or another say to the audience: “If you don’t enjoy what you are doing, then get out of what you are doing!” I told you at the start of this article, I was fired, I discovered life did not end at that point and went out to find a dream that happened to not only provide me with a good income, but more importantly allowed me to enjoy what I did. I would not have retired if I could have avoided not only the hard travel but the airlines themselves. As my wife told me, “For 60 years you have been on the road. Now is the time to enjoy yourself.”
As dealers, the couple of items I’d like to leave you with are to think about what I said about. 1) Absorption Rate. Added profit covers a whole lot of sins and achieving 100% Absorption Rate is not all that difficult, but I assure you it takes a lot of work and commitment. Make your product support managers responsible. 2) Stop telling yourself your problems about increasing your overall service business. Especially when you have a list of customers who bought a ton of equipment from your dealership and are taking that equipment to their own shop or the local shade-tree or independent for service. 3) Stop believing that finding technicians is too hard to do. If you continue to think that way you will never change your mind and will convince yourself that it is hard to find technicians. One of my best friends is a highly successful equipment dealer. He has over 300 technicians and is looking for yet another 30 before the year is out. Funny thing is, I know he will find them because he does not sit around with the excuse that technicians are hard to find! Think positive, stop being reactive and become proactive! 4) Stop worrying about equipment market-share. Run a profitable dealership and the world will beat a path to your door. If you have to worry about the profit you gave up to sit at the president’s table on awards night in order to accept a glass globe, think about how unenjoyable that is and look elsewhere to support yourself and family.
Well, someone has said this at some point in their life. I didn’t, nor will I take credit of this month’s article title: Thanks for the memories! I’ve enjoyed writing this. I like the editors who allow me the freedom to say what I feel. I like everyone out there in the equipment business, and for all these years have thought of you as the salt of this earth!
THANKS FOR YOUR BUSINESS . . . If you ever want to reach me my phone number is (803) 548-6707 or (918)230-0791, John R. Walker, former President of AFTER MARKET SERVICES CONSULTING COMPANY, PO box 541, Ft. Mill, SC 29716-0541. John can be reached at email@example.com by email.