Bob Clements spoke at the Joint South Equipment Dealers Association Annual Meeting in Charleston a few weeks ago. He talked about the three dealership tips and best practices: set up well-defined processes, outline a plan for growth, and promote high capacity employees. In my last article, I discussed well-defined processes and how technology is involved in the success of those processes. Now I’d like to talk about plans for growth.
One of the most common ways to achieve growth in this industry is through acquisition. You could also create growth by expanding into new market segments as well as new product lines. All of these have significant risks and require a major capital investment. Sometimes it is better to look closer to home and see if there are growth opportunities within your own customer base. It is less expensive and not as risky as some of the other dealership tips you can use to achieve growth.
Many people look at their business system to complete transactions and pump out financial statements. Growth organically can be achieved by improving your KPIs combined with utilizing the data within your business system to pinpoint opportunities. (KPIs is a great topic for another series). Let’s focus on utilizing your data to grow revenue.
Bob Clements talked about upselling to grow sales. Everyone experiences upselling daily, whether it is at your favorite fast food place or Amazon. Clements mentioned that 35% of Amazon’s revenue is from suggestive upselling. WOW! While it would be hard to replicate what Amazon is doing, there are small things you can do at your agriculture dealership to upsell. Some business systems allow you to associate parts and/or miscellaneous charges to part numbers, standard jobs, and rental units. When selling, the system prompts the user to suggest additional items that the customer may need. Spending time associating parts and miscellaneous charges in your business system will pay off in increasing your average invoice amount. For upselling to work, you must have a set script that your employees use. Upselling needs to be second nature in the sales process to be effective.
Bob also mentioned managing sales contacts and activities to drive growth. How do you figure out what customers to contact? This is where you can use your existing data (and the other dealership tips in this series!) to find opportunities. We have a customer who refers to it as their “fish finder”. Our system has a Customer Vision screen to bring you in tune with potential opportunities: who purchased units but hasn’t had service, who purchased parts but has never purchased a unit, who has rented but not purchased, whose warranty dates are upcoming, who has had service but hasn’t purchased a unit? It can even get more granular – who purchased a specific model but never purchased its associated filter? Using your system to pinpoint those customers and then provide your sales reps a list of whom to contact or create a marketing campaign can drive revenue. Upselling existing customers should be part of your overall growth strategy.
One of the most important success factors to growth comes down to capturing customer contact information. You must have a minimum standard of what information you expect your employees to gather about a customer. Do you allow them to use “Mr. Cash” as a customer? Do you have a process and script for collecting an email, cell phone, and address? What other fields on the customer record do you consider required? Garbage in, garbage out. Create a process to ensure that you have clean data.
Any growth strategy depends on good data. Start taking steps now to make sure you have the right tools in place to capture and analyze your data. Then use that data to create a marketing and sales strategy and you will see your organization grow.