Walter J. McDonald

Assessing Machinery Dealer Fundamentals – A Strategic Approach

Posted on Nov 20, 2024 in Featured, Features

Are you ready for 2025?

Here is a 60-question assessment of how well your business has adopted those fundamental Best Practices essential to be competitive today.

Enter a “Yes” or “No” for each question in the margin. Scoring is on the last page.

DEALER OWNER AND EXECUTIVE ISSUES

1. Have you considered your proper leadership role? Do you want to manage sales and customer relationships OR internal operations and financial administration? You can’t do both well.
2. Is there an established set of Core Values for your company that guides and inspires your employees and helps ensure your organization is constantly aligned with these core values?
3. Are there established quantitative “Big Hairy Audacious Goals” (BHAGs*) that are clear and compelling, stimulate your entire organization’s progress, and create immense team spirit? *BHAGs were first introduced by Jim Collins and Jerry Porras in their pivotal text, Built to Last.
4. Are there mechanisms installed to create discomfort and dissatisfaction with current performance levels: to obliterate complacency, to stimulate change, and to improve before the external world demands it?
5. Is the business making proper investments for the future in new technologies, human capital, technician recruitment, facilities and equipment, new management techniques, and innovative practices vs. waiting for the market and industry to force you to change?
6. Is leadership and supervisory management a strategic training initiative?
7. Are you developing your own personal management skills?
8. Is there an annual Strategic Business Plan that helps management examine marketing and business operations by Revenue Center with statements on how to improve quantitative performance metrics?
9. Does the annual Strategic Business Plan support your Annual Budget? Describe the strategic steps to be taken in each Revenue Center, Sales Territory, and each Key Account to achieve your financial goals for the year.
10. Does planning receive the time and attention it deserves, making it specific and realistic? In addition to having goals and measurable objectives compatible with resources, does your management team evaluate new product and market opportunities? Do your sales reps establish specific new account penetration targets?
11. Do you, the ownership/senior management, have a viable succession plan?
12. Are the investments in a management information system adequate? Will the system provide support for all departments, including service and parts, and generate reports on critical performance metrics in each area?
13. Are all your dealer management information system modules properly installed, and are employees being provided essential training?
14. Are there challenging and meaningful goals for each employee, and structure performance-based incentive compensation for reaching those goals?
15. Does the dealership review monthly financial statements, which include a balance sheet, profit and loss, and cash flow statements?
16. Does the dealership review a daily “flash report” on sales and gross margin by department, cash position, and available line of credit?

NOTE: Ask me to send you a useful example.

17. Does the dealership practice “Open Book” management, providing each revenue center manager with monthly financial results and actual performance against budget?
18. Does your management team review and discuss monthly variance from budgeted performance objectives in each revenue center?
19. Is your management team properly managing cash and avoiding cash traps such as excessive obsolete parts, unsold new units, over-aged used machinery, and idle rental machinery?
20. Does your management team have strong skills in utilizing key financial ratios, critical profit variables, and operations performance metrics daily, weekly, and monthly to help identify the causes of potential problems (low cash, poor gross margins, low labor productivity, weak parts sales, drop in field sales account contacts, etc.)?
21. Is the dealer leadership team improving financial management skills by learning what to ask and where to look?
22. Is the leadership team helping and coaching employees to understand how their actions affect the company’s ability to make money, how they can make decisions that support the company’s profit objectives, and how they will benefit if the company is successful?
23. Does the dealership offer special recognition and incentives for employees who suggest practical ways to increase efficiency, reduce costs, increase revenue, and improve overall profitability?
24. Do you set an absorption rate goal and monitor it monthly toward a long-term objective of over 100%?

26. Do you review the scores of Absorption Rate components with your management team at least monthly?
27. Can Revenue Center Managers give five reasons why achieving a 100% Absorption Rate is critical to the dealership’s future?
28. Is the dealership making the proper investments in service and parts essential to succeeding in today’s market?
29. Is the dealer website current, user-friendly, and a useful living catalog for the business?
30. Is the dealership capturing website visitors with appropriate “Can I help you?” popups?
31. When a major problem occurs, do your managers first look for a process issue before seeking to blame an individual employee?
32. Does your dealership formally review work processes and procedures at least every 2 years to ensure they are meeting the needs of your growing organization?
33. Do your managers understand the importance of your Cash Flow Cycle and the role their department plays in optimizing cash generation?
34. Does the leadership team review critical OEM Sales and Service Agreements that drive the business at least annually and update new executives to avoid blunders that could end the business relationship?
35. Does sales leadership track sales mix and profitability by major product line, including aftermarket revenue, and works toward improving overall margin contribution by each product line?
36. Does the dealership conduct a formal annual product line revenue/cost analysis based on the operating profit generated by each line to determine where to invest and what line(s) to drop?
37. Does management honestly evaluate new product and market opportunities as well as branch and/or acquisition options to maintain growth and competitiveness?

NOTE: Manufacturer strengths, technology, and priorities change over time, and although they may not impact your business immediately, over time, these small changes can have a determining impact on your ability to be competitive. Senior management can’t afford to be caught off guard. Long-term success for a dealership is more than impacting current metrics.

MACHINERY SALES AND RENTAL MANAGEMENT ISSUES

38. Is there an effective process for identifying and capturing at least three large, never-before-conquest accounts each year?
39. Does the dealership maintain an accurate customer mailing list with correct names, titles, phone numbers, e-mail, etc., in a Customer Relationship Management system that is open to all departments for reference and updates?
40. Does the dealership track and monitor customer purchases over time by each department to spot negative trends, especially in parts and service? Do they flag accounts with no purchases in 8 weeks for follow-up?
41. Does sales leadership track the percentage of total deals your sales rep sees (Deal Visibility Rate) and the percent of deals closed (Closure Rate) and serve more as a coach than a policeman or super salesman?
42. Is the dealership carefully controlling your used equipment inventory and ensuring you get at least four turns annually?
43. Is the dealership achieving five annual turns on new machinery inventory?
44. Is there a proactive Key Account development plan involving sales and Product Support personnel?
45. Does the dealership send promotional emails at least semi-monthly that include all revenue center products and services to at least 90%of current and prospective accounts?

NOTE: For an excellent dealer marketing resource, check out Winsby.

46. Does the dealership have a formal accelerated start-up program for new machinery and product support sales reps to get them productive in the first 90 days?
47. Does the dealership provide selling skills training for improving deal visibility, including market assessments, prospecting, referrals, bird dog leads, CRM follow-up, time and territory management, field demo programs, etc.?
48. Does the dealership provide selling skills training for improving deal closure rates, including diagnostic questioning and listening techniques, feature-function-benefit product demonstration skills, handling objections, and getting commitments?
49. Does the dealership have a master A-B-C-D account coverage strategy for every current customer and prospective account that defines the type and frequency of contact, including machinery sales reps, customer support reps, field service technicians, email promotions, direct mail, and telephone calls?
50. Does sales leadership maintain a minimum sales velocity of at least 200 sales rep account contacts per month per rep, including personal visits, phone contacts, emails, and direct mail?

PRODUCT SUPPORT MANAGEMENT ISSUES

51. Does the dealership conduct an annual aftermarket market potential assessment based on unit parts and service consumption factors for your primary line installed fleet to monitor and improve aftermarket market share?
52. Does the dealership review service labor productivity and efficiency by technicians and the service team at least weekly?

53. Are scheduled maintenance and/or machine inspection programs in the aftermarket marketing strategy?
54. Does the dealership have a good inventory management system and controls in place for your supplies, components, and spare parts?
55. Is your Parts Manager trained and given the tools and time to adequately study and manage your “stock status” report?
56. Does the dealership invest in adequate leadership and supervisory management training, especially for service management personnel?
57. Are best practices in Shop Safety being employed?

CUSTOMER SERVICE MANAGEMENT ISSUES

58. Does the dealership conduct an annual comprehensive customer census to update contact information, build an email promo list, identify customer satisfaction levels, uncover unresolved problems, and identify purchase/rental intentions? (8-10% of accounts can be done monthly.)

59. Does the dealership make mini customer service follow-up interviews on 6 – 8 weekly repair orders at each location?

60. Does the dealership formally test and compare its overall service delivery and level of customer satisfaction to key competitors at least every two years?

SUGGESTION:

Ask each of your key managers to complete the Fundamentals Assessment. Then, discuss the following: “What are the five or six most critical issues we must address?”

About the Author:

The McDonald Group helps our clients identify their crucial performance issues and work with them to determine if there is an appropriate training solution. A unique capability of The McDonald Group, Inc. is our ability to structure training effectiveness measurements within the curriculum design to help ensure clients optimize the return on their training investment. We offer our flagship workshop, The Master’s Program in Dealer Management, to assist your leadership team in formally assessing your current sales and operations in each Revenue Center. Then, we build a powerful and realistic 2025 strategy to improve overall profitability, market share, cash flow, and customer service and retention.