Equipment.com? The world is changing for machinery dealers

By SCOTT HIGHLAND
Smith Tractor & Equipment

Twenty years ago, heavy equipment distributors needed to provide quality equipment, competitive pricing, parts and a well-trained service staff. Good customer service was important and delivering these basic values to customers, could earn their business and win their loyalty.

Today equipment distributors offer these same values. However, price, product acceptability, parts availability, and service capability are merely entry requirements in the equipment distribution business. The market drivers that affect all consumer products are influencing the heavy equipment market more than we ever imagined.

In order to capture and keep the attention of today's customers, we must be in front of them in a variety of different ways. As little as five years ago it was difficult to imagine selling or renting heavy equipment over the Internet. Today, Internet marketing is an essential and growing part of our business. Not unlike selling books or music, equipment buyers require real time information and accessibility.

Although we categorize customers into groups like underground contractors, material handling, independent rental companies, paving contractors, and many more, we also need to recognize the dimensionality and segmentation of customers within each category.

In many ways, companies in each of these groups are similar and have specific needs that we can focus on. However, the capability to solve a specific problem for one contractor group may be of no help and no interest to another.

For example, a paving company wins a job on a major highway. He only works at night, and has severe penalties for late completion. His need for dealership 24-hour parts and service support are more serious than that of the utility contractor working 12-hour days in peak season. Both contractors need similar equipment and service, especially after-hour service. But, if you asked managers from each company to rank 24-hour service among dealer performance criteria, the paving contractor would probably have it much higher on the list.

A contractor with a small equipment fleet that doesn't have professional service technicians can benefit from maintenance contracts that allow him to have required scheduled maintenance on individual pieces of machinery. Those types of contracts are of little value to independent rental companies that do maintenance on machinery every day.

Large contractors with in-house mechanics take advantage of technical service training offered through the local dealers. Smaller contractors prefer maintenance and safety training for its operators.

In essence our customers today are markets of one. And unlike a large grocery chain that can carry enormous inventory and stay open 24 hours a day to meet the great variety of individual needs, equipment dealers must evaluate customer needs and prioritize the value enhancements available. In some cases, value-added services are fairly expensive to deliver and will have costs attached to them. They include:

• Guaranteed next-morning equipment replacement in the event of breakdown
  
• A comprehensive preventive maintenance program
  
• Service and maintenance programs that guarantee fixed equipment operating costs
  
• Machine-down parts availability by 8 a.m. the next morning for non-stocked parts
  
• Parts delivery to the job-site
  
• A direct means to give feedback to the manufacturer
  
• Software that allows owners to track equipment operation and maintenance costs
  
• Detailed, factual information that allows owners to anticipate equipment breakdowns before they take place
  
• Built-in diagnostic computers that allow owners, operators and dealers to monitor equipment so that it can be serviced before breakdowns occur
  
• The opportunity to participate in a contractor advisory board which gives the manufacturer direct input on equipment design and improvement
  
• Detailed service and maintenance information via the Internet
  
• Extensive safety training for operators
  
• Complete outsourcing of service departments
  
• Specialized finance, insurance and/or bonding programs offered through dealers

These can be looked at as a menu for tailoring services for specific needs of each customer. The individual services can be combined to customize a package to meet the needs of a specific contractor. As an example, a medium-sized contractor that wants to completely eliminate the hassle and risk of equipment ownership can get a package that includes an equipment lease, complete repair and maintenance agreement, guaranteed machine uptime, operator safety training, insurance, and a factory tour. This could be created and billed by the month or even by the hour.

Some of this may seem far-fetched but it isn't. Unlike selling coffee or books where the customers primary focus is convenience and price, heavy equipment is a major investment and must be backed by product knowledge and a strong relationship.

The day is coming when people may well buy or rent heavy equipment using the Internet, but those transactions will require a solid relationship and trust before they are completed. Although retail and on-line merchandisers work to build customer loyalty, equipment dealers are quite literally partners with customers. And as in any partnership, the predominant need is communication. We must communicate with each other in new ways to ensure that the specific needs customers have are served.

Communication can be time consuming, difficult and sometimes outright uncomfortable, but it can and will pay off. It solidifies the partnership and ensures that all parties have an opportunity to hear and understand each others needs and develop ways to meet them to maximize productivity and profitability of each.

This brings me to the fifth and final entry requirement for the distributor to earn business: trust. We are talking about joint planning, large capital investments and expensive repercussions for making wrong choices. In addition to the four core values of price, product acceptability, parts availability and service, customers must have confidence in the distributors they choose so that together they can solve the problems that inevitably come up.

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