Dealing with Dealers
March 1, 2015 by JIM BARNES
The new contractor needs all the help he can get and the early years can be make-or-break. While most of them know exactly how to run a piece of equipment, fewer are as experienced in how to run a business. Good decisions on selecting, financing and maintaining equipment are critical, and in the early days not many have the time to research these things thoroughly.
A source of help you might be overlooking is your equipment dealer. If your dealer can’t give you sound advice on these issues, you might be buying from the wrong guy.
A good dealer doesn’t want just to sell you a machine. He wants to sell you dozens of machines over the years to come, and that will depend on satisfying you as a customer and helping your business grow.
The key criterion is trust, notes Ted Breland, director, National Product Support, Strongco Corp., Mississauga Ont. “It’s all about being a trusted advisor in a long-term relationship. If they grow, we grow.”
“If the relationship is built on trust, then the information flows freely in both directions,” notes Breland. The more the customer tells the dealer about his business objectives and his strategy for reaching those objectives, the better feedback he will get. The dealer should be able to talk to you about the local construction environment, regulations, mitigating risk and the total cost of ownership of a machine.
“Typically, when someone is starting out, they are challenged for cash,” notes Breland. “They are often waiting to get paid.” A good dealer will help the contractor deal with those challenges, serving like a personal business consultant.
Here are some tips on establishing a productive relationship with a dealer.
CHOOSING MACHINES: Help with equipment selection is the obvious place to start. The dealer should be showing you the machine you need, not the machine he wants to sell you. Even if you think you know equipment well, getting background is always useful. The dealer has extensive experience and knowledge that can be tapped into.
“The type and size of equipment and what attachments are needed is dependent on what work the contractor is expecting to do,” says Breland. “Are they moving dirt, digging holes, stockpiling or loading trucks? What is the environment of the expected work site, how many hours a week is the machine expected to work, what is the customers’ budget?” The answers help lead you to a profitable choice.
LIFECYCLE COSTS: It’s usually a mistake to focus on price rather than lifecycle costs. Sometimes, the cheapest machine you see is also the most expensive, long-term. The dealer can help you determine the projected total cost of ownership, considering things like fuel economy. “A five per cent savings in fuel every day over the operating life of a machine has a large impact in the overall cost of ownership,” notes Breland. Many dealers have spreadsheets to help you work through the lifecycle cost calculations.
FINANCING: A good dealer will make suggestions on acquiring the machine. “Does it make sense to consider a rental purchase option, a lease, or make an outright purchase?” asks Breland. “If the purchase is being financed, what are the terms available – from interest rates to length of the agreement? Are skip payments needed over a slow period of the year to assist with business cash?” Skip payments can help with your cash flow. “(In winter), when not everybody is working, you might need to build some skip payments into your financing plan,” says Breland.
STANDARD WARRANTY: Make sure you understand the terms of your basic warranty. The dealer can help by explaining the differences between different manufacturers’ warranties. The standard coverage may vary from manufacturer to manufacturer, on elements like the total hours or the time the machine is covered. Another example is travel; “Some dealers include travel coverage to a machine during the standard coverage, but many do not,” notes Breland.
EXTENDED WARRANTY: Large construction companies often self-fund to cover unexpected costs. However, for a new player, an extended warranty might help control equipment risk and help the business avoid financial stress. “Most extended warranty programs offer flexibility over the amount of hours and/or time, which allows the new machine owner the flexibility to modify the coverage to their specific business needs,” notes Breland.
TRAINING: Training is a strong differentiator between dealers. Does the dealer take the time to do a walk-around of the machine, show the operator all the controls and explain the features and functions? Does he go over the operator’s manual and review the safety and maintenance requirements, as well as any special features? Is the dealer willing to train operators over time, and not just the owners? Find out what your purchase includes.
NEW TECHNOLOGY: Technologies like telematics are becoming important in owning and operating equipment profitably. It can support remote monitoring of hours, fuel levels, security, location and machine operating condition. “You can have all this technology, but you need to know how to use it, access it,” notes Breland. Breland’s reps visit the customer, work with them on set-up, shows them how to access the site where they can monitor the equipment, put in the PM alerts, and help build a geo-fence, for example. “(The contractor) should be digging holes and moving dirt – not trying to figure out how to use his technology.”
SERVICE AGREEMENTS: Customer service agreements for PM (preventative maintenance) programs are available from most dealers today. Some contractors prefer to handle their own maintenance, but there are pros and cons, especially for the new contractor.
Should you be spending time and resources on work you can’t bill for? What about expertise – are you adequately trained to service a sophisticated machine? Will it take you twice as long as the dealer to get the machine back into action? Do you have all the tools and equipment to do the work properly? How much will a breakdown cost you if you don’t meet the PM schedule or the work is not done correctly?
PRIMARY ASSETS: “Visiting any dealership can be scary the first time, if you don’t have a relationship with the people in the building. You really don’t know what level of support you’re getting. There can be a fear of the unknown,” says Breland.
But remember that your business is a good dealer’s primary asset. “Growing customers buy more equipment, so we will do whatever we can to help them get there,” says Breland.
Knowledge is Power
Product support staff like Chris Safinuk, manager, ICT, SMS Equipment Inc., Acheson Alta., are well aware of what having a productive relationship with the customer means. “If they are not happy with that first machine, they are never going to come back.”
“There is always apprehension with new technology. It doesn’t matter if it’s somebody that’s brand-new to the industry, or they are nearing retirement,” says Safinuk. “Customers want to be assured that they are going to have that support.”
“In my former job, I used to be a consultant,” he says, adding that the relationship he builds with customers is very much like consulting.
Safinuk and his staff focus on machine control technology, working with the customer to get them up to speed. “A lot of times, customers aren’t sure what machine
control is, so we help them and show them how our equipment can help their businesses.”
It’s important that they know how to use the equipment productively right off the bat. Safinuk and his team do everything from setting the customer up on the first data product support to service a month down the line and a year down the line.
Information is the key. “Getting the customer as much knowledge as possible is always to our benefit,” he says.
Helping customers access information is also a priority. “It’s a fairly new technology, so making those connections to forums and user groups can be difficult,” he adds.
The Tough Questions
Just like in any new relationship, you want to ask your prospective dealer a few tough questions. Make sure he satisfies you on the following points:
- What is the response time for field service? If you’re sitting at the side of the road, how long will it take to get the machine working again? How long will it take the dealer to get there?
- Are dealer technicians factory-trained? How often do they get updated training?
- Does the dealer provide after-hours emergency service? If you’re doing snow removal at 4 AM, what happens when your machine breaks down?
- What is the dealer’s over-the-counter fill rate for parts supply? If you need a part, how long is it going to take to get it?
- There are other points to cover. What does the dealer offer as ancillary support, such as online parts ordering? How big is the customer support staff? Is the dealership involved in industry associations and does it have a community focus? What associations and local trade shows would the dealer recommend for the customer to attend or join, and why?
- You need specific answers on what the dealer is prepared to do to keep your business moving forward.
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