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AN OPERATIONAL GUIDE FOR MANAGING A PLANT AND EQUIPMENT DEALERSHIP

Written by: Thomas F. Jardine

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Introduction

This document is a basic guideline for managing a Dealership in a territory, and must be used in

conjunction with the agreed terms and conditions of the Dealership, the laws governing the

particular territory, Aims and objectives of your Company and good corporate governance.

The objective of a Dealership is..

TO SELL AS MANY UNITS INTO THE MARKET AS POSSIBLE AND TO RETAIN

THOSE CUSTOMERS IN ORDER TO GROW THE AFTERMARKET SECTOR,

SUPPLYING THEM WITH PARTS AND SERVICE.

The aim of this document is to offer a guideline to management of a Dealership and to provoke a

train of thinking that allows you to put together a plan of action for your business that will result

in success.

It is also a reminder of some of the operational requirements needed to manage your business

and to highlight some of the potential pitfalls.

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Business Plan

Firstly, before you start any venture you must have a sound business plan. The information that

is entered into your business plan must be both accurate and factual. Like computing, rubbish in

is equal to rubbish out. If you do not have a plan, then you have planned to fail.

When drawing up your Business Plan, you must take note of the following:

1. Laws of the Territory

a. Rules governing ownership – is there any restriction on foreign shareholding (if

applicable)

b. Rules governing foreign exchange – the ability and ease of paying foreign

suppliers and the ability to pay foreign investor dividends.

c. Tax laws – Company, Individual and foreign investment.

d. Labour laws – local and expatriate.

e. Import and Export rules and regulations, duties and taxes.

f. Legal requirements to open, register and trade with a company.

g. Banking laws

2. The Market

a. Size of the market.

b. Competitors – know who and what you are competing against.

i. Opposition pricing

ii. Specification Sheets

iii. Models sold

c. Identify models for the market.

d. Sales Budget – in units based on:

i. Market Size

ii. Projected growth of market

iii. Market Share – market percentage to be achieved annually

e. Marketing Plan – show how you are going to achieve the numbers that you have

projected in the Sales Budget.

f. Company/Product Launches, Open Days, Demonstrations etc

g. Identify existing customers and units already in the field – if applicable

h. Know your strengths and weaknesses

3. Dealer Corporate Branding Requirements

a. Make sure that you are aware of the visual identity/OEM Corporate Branding

requirements so that these can be taken into account with your project costs and

selection of premises, service vehicles, printing etc.

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4. Manpower

a. Manpower is one of the most critical assets of any business and therefore one

must make sure that when you put the plan together, the budget covers your

requirements.

b. Every territory will be different depending on availability of personnel, skills and

skills levels.

i. Expat or Local personnel

ii. Relocation allowances etc

iii. Are these people available in the market place or do you have entice them

from existing dealerships.

5. Administration

In order to control your business properly you need a Computer Operating System that

can handle your internal aspects of your business as well as the external aspects. Both

Hardware and Software.

a. Hardware

i. Ensure that you know the requirements for communications and obtaining

information from the OEM with regards to on-line communications.

These days more work is done on line such as Parts Queries, Orders

Warranty Claims, Unit Quotes, Workshop Manuals and even Training.

Not to mention your requirements with regards to Branches or Sub-

Dealers.

b. Software

i. Ensure that whatever accounting package that you use can cope with the

requirements of the business. In this business you need to do the

following:

1. Account for sales Stock – able to calculate the actual costs for each

unit

2. Parts inventory showing cost, average cost, quantity, selling price,

bin location, part number, minimum and maximum stock levels

etc. Parts performance – measurement of Key Performance Areas

(KPA)

3. External job pricing for customers

4. Internal Job pricing for sales and rework - Workshop revenue and

performance etc.

5. Sales Quotations, Invoices, Delivery Notes, Invoices etc.

6. Your personal requirements with regards to Accounting,

Management Accounts, Reports etc.

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6. Financial

a. 3-5 Year business Plan

b. Shareholding

c. Initial investment – How will the project be funded

d. Project Cost

e. Capital Equipment Expenditure

f. Working Capital

g. Cash flow

h. Breakeven

i. Manpower Costs- Personnel (CTC) cost to company

j. Landed Cost – Accurate costs related to Units and Parts.

k. Sales Value – Achievable Selling Price-Realistic margins/GP on Unit Sales,

Servicing and Parts.

l. Working Result/Profit and Loss Statement

m. Depreciation

n. Balance Sheet

o. ROI- Return On Total Investment

Once your business plan has been compiled it must be submitted to the Board of

Directors/Shareholders for approval.

After your Business Plan has been accepted by the shareholders it must be submitted to the OEM

for approval.

After OEM approval, you must make sure that you have the Dealership Agreement in place and

signed by all the authorized signatories.

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Premises

Existing/Relocating/New It is important that you have a premise that fits in with your business

module and operational requirements. No more can be said that is not already said in the

property market – LOCATION - LOCATION - LOCATION

You are proud of your Business and want your customers to come to your premises and see your

business. In order for this to be successful you need to make sure that your premises is going to

give, either a WOW factor, or satisfy the customer that you are capable of meeting his

requirements and that you mean business.

1. Your premises must always be kept neat and tidy. The grass is cut and the pathways and

driveways are swept, there is no rubbish lying all over. Units and vehicles are parked

neatly.

2. The buildings are painted and clean. If possible the buildings should comply with the

OEM requirement on decor, colouring and finishes. Check with the OEM/ Dealer

Branding and Development requirements.

3. Does your workshop conform to the requirements?

a. Size?

b. Access – Door height etc

4. Signage is very important as you want your customers to be able to find your premises

easily. Signage is also a form of advertising. You need to check the following:

a. If directly on a main road, can the traffic see your signs?

b. Are your contact numbers readable on your signs?

c. If you have sign posts leading from the main road – are they visible? Do they

comply with municipal regulations etc

d. Make sure all signage conforms to requirements and is OEM approved.

5. Is parking clearly marked?

6. Is the reception clearly marked?

7. If you have separate entrance to parts and or service is it clearly marked?

8. Do you have adequate security and check point control?

9. Does the premise’s comply with the fire, health and safety requirements?

10. If possible it is always good to have an area on your road frontage where you can display

units (New and Used). This is a good form of advertising. Constantly change the units

that are on display. This will make passes bye think that you are selling a lot of units.

11. Ensure that any units on display are mechanically sound (no oil leaks and do not have

visibly worn or damaged parts) and look good. Ensure that these units are kept clean at

all times.

12. Do you have an off loading ramp? Do you have space to build one?

13. Do you have truck access?

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Human Resources

We are all well aware that Human Resources are one of the key areas relating to a business,

not to mention one of the Business’ biggest assets. It is therefore critical that the right people are

in the right positions.

It is important that you stick to the labour rules and regulations of your territory and therefore

you must ensure that you meet all the requirements such as Work Permits, Residence Permits,

Employment Contracts, Social Security, Tax Registrations etc. Different territories will have

different regulations – Make sure that you know what they are and adhere to them.

Just as the buyer of a Company, “ is a window through which other companies, suppliers and

people see your Company”, the very same can be said about your personnel that are in direct

contact with your customers, potential customers and the business community. Therefore it is of

vital importance that employees in key roles are of the highest standard and meet all the

requirements needed in these areas.

Key Customer Contact Areas (KCCA)

1. Reception/Switchboard

2. Sales

3. Parts

4. Workshop

5. Field Service

6. Product Support

1. Reception/Switchboard (This can be one or two people depending on how you have

structured your business) – this is your first line of contact with your customer, when

your customer either walks in or phones in. Therefore your switchboard/receptionist must

have the following attributes:

a. Must be presentable. (We are not talking about a person’s looks) Must dress

appropriately, sit correctly at the desk/counter, etc

b. Must be courteous and give a warm welcome to all customers/ delivery persons/

people entering the premises.

c. Be able to understand what the customer wants and put the customers through to

the correct departments/people, first time round.

d. Be able to converse fluently in the languages required in the territory.

e. The ability to deal with customer diversities

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2. Salesmen – Your sales people make or break your business, so it is vital that you select

your sales staff very carefully. They should comply to the following:

a. Presentable and professional in all aspects – Even out of the workplace he/she is

still seen to be associated with your company.

b. Honest and diligent and must be able to work with minimum supervision.

c. Must have Time Management Skills.

d. Excellent Communication Skills (Written, Verbal and Presentation)

e. Sound Product Knowledge

f. Analytical

g. Team Player

h. Deal Closer

i. Target Driven

j. Problem Solver

k. Customer Orientated

l. Passionate

m. Industry Knowledge – knows customers/potential customers, is aware of the

pitfalls and difficulties, regulations etc

n. Must be both a farmer and a hunter – Hunting the opportunities at hand and

sewing the seeds for future deals.

3. Parts Counter Sales – Now we are entering the After Sales Market. We need to remember

that the salesman sells the first machine to a customer, and the After Sales Team sell the

second and third machines, because it is only once the customer is satisfied that he has

the level of support he needs from both the parts department and workshop, that he will

then purchase a second unit from the same supplier. Hence the fact that this is also a

KCCA and the ideal candidate should have the following attributes:

a. Must be courteous and give a warm welcome to all customers.

b. Presentable with good communication skills – both written and verbal

c. Numerical Skills

d. Sound Product and System knowledge.

e. Problem Solver

f. The ability to deal with customer diversities

g. Deal Closing capabilities

h. Time Management Skills

i. Target Driven

j. Analytical

k. Honest

l. Team Player

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4. Workshop Foreman/Manager – Another key member of the After Market Team. Your

Workshop Foreman/Manager plays a pivotal role in your business as once you have sold

a machine to a customer, the customer’s first contact after the sale is via the workshop for

the first service. The success of your Dealership, as we said earlier, lies in the

Dealership’s ability to serve the customer well in the After Sales Market. For this to

happen you need to have a Manager/Foreman with the following skills:

a. Excellent Technical Skills

b. Sound Product Knowledge

c. Good Communication Skills – both written and verbal

d. Numerical Skills

e. The ability to deal with customer diversities

f. Management Skills

g. Leadership Capabilities

h. Industry Knowledge

i. Analytical Thinker

j. Target Driven

k. Honest

l. Reporting/Quoting Skills

m. Knowledge of Health & Safety Regulations

n. Team Player

5. Field Service Technicians – Not all technicians make good field service technicians.

Field Service Technicians must not only be competent in their ability to service and

repair equipment, but must also have the ability to work alone, work under pressure and

in a diverse range of conditions. Your Field Service Technicians have to go to your

customers site/place of work and they are a representative of your company and therefore

need to have the following capabilities:

a. Presentable

b. Excellent Technical Skills

c. Sound Product Knowledge

d. The ability to deal with customer diversities

e. Good Communication Skills

f. Time Management Skills

g. Problem Solver

h. Honest

i. Team Player

6. Product Support – The main object of product support is to increase your workshop and

parts turnover. This person has to be technical and must be able to interact with your

customer and therefore needs to have the following capabilities:

a. Presentable

b. Selling Skills

c. Excellent Technical Skills

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d. Sound Product Knowledge

e. Good communication skills – both written and verbal

f. Good Reporting/Quoting Skills

g. Numerical Skills

h. The ability to deal with customer diversities

i. Machine Application Knowledge

j. Target Driven

k. Honest

l. Team Player

m. Must be able to close deals

The above attributes and requirements for KCCA are a guideline only and you must also

add in your requirements to suite your business. For example there are no requirements

for any particular computer software or drivers licence etc. All of these change from

territory to territory as well as from one business to another.

All staff must be registered with the required authorities and have, if required all the

necessary permits etc to work in the territory. Ensure that all employee records are

accurate and kept up to date.

Make sure that whenever you employ staff that you have carried out proper reference

checks and that you are sure that they are suitable for the position that you are employing

them in.

Make sure that your employees have the necessary tools and skills in order for them to

carry out the jobs. Training is an on-going part of a Dealership, and your staff members

need to be kept up to date at all times, both Sales and After Sales personnel (New

products/product development/changes).

All your staff members need to be customer orientated and they need to understand that

without the customer there is no business. All jobs within a company are important and

are interlinked. e.g. The sweeper keeps the floors clean – this in turn keeps your premises

looking good, prevents accidents to your staff and customers, allows for easier, faster,

more comfortable working environment and therefore has a direct impact on your ability

to perform.

Now in the same way you can take each employee’s job and see the effect it has on your

business.

People spend more time at work than they do with their own families (Most of the time

spent at home is during the night when they are asleep), so it is very import to create a

pleasant working environment where respect is shown to all and everyone is treated

equal.

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Administration

Your Administration is going to help you control and manage your business, so it is very

import that you have all your documents, reporting channels and reports set up and in place so

that you can manage the business and not run around putting out fires. e.g. if you do not have

employment contracts in place and there is a dispute regarding a dismissal issue, you are going to

waste a lot of time trying to resolve the issue whereas you could have followed the contents of

the contract, resolved immediately according to the law of the territory and saved a lot of time

and avoided any potential loss with regards to pay outs, legal fees etc. Sound administration

policies will create good governance and prevent loss and waste.

1. Company Documents – Make sure all your Company documents are in place and

up to date. (Requirement may change from territory to territory)

a. Shareholder Agreement

b. Business Registration/Certificates

c. Trading Licenses

d. Importer licenses

e. Receiver of Revenue registration

i. Company Tax

ii. Importer tax and duties

iii. Employee tax

f. National Social Security registrations and revenue

g. Guarantees

h. Authorised Bank Signatories

i. Bank Accounts

j. Any other documentation regarding operating the company in a territory.

2. Personnel Documents – as we mentioned earlier, make sure that all the

requirements are met and that all the documentation is in order and kept up to

date. If all your documentation is correct and up to date there can be no

comebacks or misunderstandings. The following should be in your personnel

files:

a. Letters of Offer

b. Signed Employment Contracts

c. Signed Job Description

d. Copy of valid Driver’s License

e. Next of Kin Details

f. Photo of employee

g. Personal tax registration

h. National security details

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i. Letter pertaining to use of company vehicle – terms and conditions

j. The same applies to Tools, Cellular Phones, Laptops etc

k. Leave Forms

l. Disciplinary Documents

m. Any amendments to Job description and or employment contract – Signed

by both parties.

3. Company Policies and Procedures – This document is a good communication tool

to your staff and clearly outlines the way you want the company to operate. Your

document should include but not be limited to the following:

a. Working Times – start, tea times, lunch times and knock off times and

working days and holidays.

b. Company Ethics and Code of Conduct

c. Channel of Command and Communication

d. Responsibility and Accountability

e. Leave – Annual/Sick/Special Leave

f. Use of Company Premises

g. Use of Company Property

h. Use of Company Vehicles

i. Purchasing Procedure

j. Sales Procedure

k. Receiving Procedure

l. Use of Petty Cash

4. Reports – Everyone has their own style of management and therefore will require

their own style, frequency and make up of report. Ensure that it is clear as to who

has to submit what report and that you have made your report requirements clear.

Here are some examples:

a. Sales Prospect Report

b. Current Market Situation and Emerging Market Trends

c. Monetary Exchange Rate situation and its effect on your business

d. Sales Reports – New & Used Unit Sales, Parts and Workshop sales

e. Purchases Report – New Units Orders this month, Parts Purchases

f. Unit Stock Report – Stock on hand, Units dispatched,

g. Debtors Report

h. Cash Flow

i. Profit & Loss Statement, Balance Sheet, Depreciation,

5. Documents and Document Flow – make sure that all your internal and external

documents are in place and that you are satisfied with the content and context of

the documents. Remember to ensure that you are not exposed to any risks with

external documents such as quotations and terms and conditions of sale etc. At

the same time you do not want to slow your business down with too much

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paperwork. Documents must flow easily in your system and must be filed and

stored correctly. Some of the more important documents:

a. Quotations

b. Terms and Condition of Sale

c. Warranty Terms and Conditions

d. Invoices

e. Credit Notes

f. Delivery Notes

g. Job Cards

h. Orders

i. Debtors Documents

j. Creditors Documents

k. Goods Received Notes

l. Credit Applications

m. Internal Requisitions

n. Agreements

o. Leases

p. Minutes of Meeting

q. Budget

r. Reports

s. Etc, etc

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Finance

Finance – In the Introduction we said that the objective of a dealership is to sell as many units as

possible into a territory and to retain those customers in order to grow the after sales sector,

supplying them with parts and service. That is true from an operational point of view. The real

essence of a business is to make a profit. ALL SHAREHOLDERS WANT TO SEE A RETURN

ON THEIR INVESTMENT. Your investors need to get a good return on their investment or else

they could just as well put their money in the bank. Sound financial management will create a

stress free working environment creating the freedom to strive to reach the targets that have been

laid out in your business plan.

1. Your Budget – I cannot stress enough how important it is to have a realistic budget to

work with, as the budget is not only a yardstick that is used to measure all areas of

performance in your business, but it is also a tool to show you where your problems lie

and where you are successful.

a. In order to get an accurate budget you must remember to take into consideration,

not limited to, but including the following:

On the Income Statement:

i. Size of your market

ii. Market trends

iii. Government policies and its effect on your market

iv. Unit Sales Makes and Models

v. Various Turnover and GP’s achievable on units

vi. Various Turnover and GP’s achievable on parts

vii. Various Turnover and GP’s achievable in workshop

viii. Current Machine/Vehicle Park in your territory

ix. Customer retention – Customers that carry on servicing and buying parts

from you after the warranty has expired.

On your Expenses:

i. All costs relating to units

1. Cost of Unit

2. Insurance

3. Freight

4. Transport International and Local

5. Duties and Taxes

6. Assembly – If required

7. Clearing and Port Charges

8. PDI

9. Warranty

ii. All costs relating to parts

1. Cost of Part

2. Insurance

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3. Freight

4. Transport International and Local

5. Duties and Taxes

6. Clearing and Port Charges

7. Stock Orders

8. VOR Orders

iii. Manpower Costs

1. Salaries

2. Commissions

3. Health Insurance

4. Staff Welfare

5. Uniforms

iv. Rent and Building Maintenance

1. Water and Electricity

2. City Levies

v. Communications

1. Land line

2. Fax

3. Broadband

4. Mobile phones

vi. Vehicle Expenses

vii. Insurance

viii. Security

ix. Travel/Board and Management Meetings

x. Advertising and Promotions

xi. Stationary and Printing

xii. Audit and Legal Fees

xiii. Bank Charges

xiv. Workshop Tooling/Maintenance

xv. Miscellaneous Expenses

Additional

xvi. Capital Expenditure

xvii. Depreciation

b. It is not good enough just to look at the unit sales required or the turnover figure

that is shown in the budget. You need to also keep an eye on your Gross Profit

(GP) on the sales in the various areas (Any quantities, unit numbers or values

stated herein ore fictitious and are used just to highlight a point only)::

i. If your budget requires ten unit sales every month, you can meet your unit

target and yet still operate at a loss because the GP in the sales is not there.

Let us say, for example your business is an Earthmoving Equipment

Dealership and your unit sales, as we said earlier is ten units. You can sell

smaller units let us say:

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10 Skid Steer units @ $ 25,000.00 Total Sales $ 250,000.00

As apposed to:

5 Excavator units @ 200,000.00 $ 1,000,000.00

3 Loader units @ 75,000.00 $ 225,000.00

2 Skid Steer units @ $25,000.00 $ 50,000.00

Total Sales $ 1,275,000.00

You can have different GP’s on different units, which will further affect the

results. For ease of calculation let us say that the Gross Profit on all units is the

same and that it is 10%.

Therefore if you sold 10 Skid steer units you GP will be $ 25,000.00 as opposed

to $ 127,500.00.

You can very clearly see the difference in Gross Profit. The same applies to your

parts and your service divisions. They all need to make or beat the budgeted GP

and not just the turnover or the units.

c. When we look at the above effect on your income you must remember that the

exact opposite occurs on your expenditure and can have serious implications on

your cash flow. For instance is you sell above your budget in units and turnover

you must remember that these units will need to be replaced and will have an

effect on your cash flow as you could be selling on credit terms and now you have

to spend unbudgeted amounts on replacing/replenishing your stock before you are

paid.

d. Without reaching your budgeted gross profit you will very soon run out of funds

and will not be able to make ends meet.

e. Watch the expenses side of your budget. If you are spending more in any

particular area, than what was expected, you need to investigate why and then

take the appropriate action.

2. Cash Flow – Must be watched carefully and adjusted according to the expenses, sales, the

unit prospects, market trends and Government Policies of the territory. All guarantees,

overdraughts and loans cost money and must be kept in check.

3. Debtors – Every company will have its own policy regarding debtors and it is important

to keep a control on your debtors

a. Make sure that your credit application and terms of credit adhere to the laws

governing debtors in the territory and allow for speedy cost effective recovery of

debt, if required.

b. Ensure that any credits given are done with the correct approval and that the

documentation is in order as all credits have both legal tax implications.

c. Do not let your customers use you as a bank. You are not in the banking business.

d. Debtors that reach 90 and 120 days outstanding become very difficult to collect.

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4. Purchasing – Like with customers, you need to build relationships with your creditors.

a. When making purchases, cheapest is not necessarily the best option. You must

evaluate the product and or service carefully and make sure that it meets with

your requirements. An example: If you are making a deal with a lubricant

supplier:

i. Does the product meet the required OEM specification for lubricants?

ii. Does the supplier always keep the correct packaging that you require?

iii. Do they deliver?

iv. What lead time is required on an order?

v. What are the payment Terms?

b. JIT – Just in Time – This is the perfect way to operate with all your purchases as

you save money because you can hold a smaller inventory (Cash is not tied up in

stock) You want it when you need it and not delayed – Just In Time. Careful

planning and accurate stock re-order levels assist you with this.

c. Use orders when you place an order and ensure that the order is accurate, clearly

shows the correct description of the good, packaging, units and price and agreed

terms and conditions. Make sure the supplier gets s copy of the order. This

prevents any misunderstandings and will assist with returns if required, and speed

up your accounts processing as everything is clear and checking invoice against

order will be a matter of protocol.

d. With capital expenditure, before placing any orders make sure that the relevant

Capital Expenditure approval and authorisation is obtained in writing.

e. Any saving made in purchasing directly effects your bottom line, so purchase

carefully and wisely.

5. Creditors

a. Pay your creditors on time. This can assist with settlement discounts and also…

b. If you do end up in a tight cash flow situation, speak to your creditors (Never hide

from a creditor when they call), and work with them to get out of your difficulties.

Remember to bring everything back into line as quickly as possible.

c. If all your purchases are done with accurate orders, then your creditor

reconciliations will be smother and quicker and less stressful.

6. Reporting – Every business and manager will have their own particular choice of what

they want in their reports, reporting intervals required, and how they want their reports to

be presented. Communicate with your Financial Manager/Finance Department as to what

your requirements and reporting intervals are.

7. Pilferage – By having strict control measures on Invoicing/Delivery Notes and Credit

Notes as well as good security, you will be able to minimize pilferage.

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8. Being aware of opportunities where savings can be achieved by the like of the following:

a. Watching the exchange rates (If you have international supplier lines) and paying

your creditors when the exchange rate is favourable, even if it is early payment.

b. Buying currency at good rates/buying forward cover

c. Negotiating settlement discounts and paying customers early.

9. Keep a close eye on your expenses. If you see expenses increase in any particular area,

immediately check the reasons why.

10. Watch wastage - it is amazing how much we can save by curtailing waste:

a. Leaking toilets and taps – save both on costs and the environment.

b. Use Energy saving bulbs – don’t waste electricity.

c. Make sure air conditioners are switched off when not using offices and at night.

d. Save paper – print only necessary documents.

e. Plan you drivers trips so that he saves time, fuel and vehicle costs

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Marketing

Marketing – With a Dealership you are marketing two brands, Namely, Your Company and the

OEM (Original Equipment Manufacturer) Brands, of which both are equally important as a

dealership is a co-existence between these two brands. One cannot work without the other. If the

market place only knows the OEM brand they will not know where to find the dealer and if the

market only knows your company brand they will not know who you represent. If you are a

multi branded franchise you can have leading brands with associated brands and you will need to

make the connection with all the brands and your company. When going multi brand, you need

to make sure that all the brands compliment each other, are not in competition with each other,

and the OEM’s are happy with the relationships.

Marketing is a key part of the business and you must have a marketing plan in place, which,

should, form part of your business strategy, be realistic, measurable, achievable, time bound and

clearly state the following:

1. Target Market – Which potential and existing customers are you aiming at.

2. Products – Which of your products are you going to offer and if any what particular

changes will you make to meet your customer needs.

3. Pricing – Where are you going to price your machine in the market. Special price.

Normal price but with added value such as additional warrant, free services, extras, etc

4. Place – Where and how you are going to sell these units. By using addition distributors,

on the internet, etc

5. Promotions – How are you going to reach your existing and potential customers? What

form of advertising are you going to use. Billboards, Industry Related Periodicals,

Personal Selling, Direct E-mail data base, Television, Radio, Newspaper.

Marketing is required for all three your sales areas namely, Unit Sales, Parts and Workshop.

There are different requirements for each of the departments and you need to put a plan together

for each one and they must form part of your overall marketing strategy. For example:

1. Parts campaigns can be done on fast movers such as filters. This can be achieved in the

same way that the supermarket uses loss leaders such as milk, for example, to attract the

customer to the store. They know that once the customer is in the store they will pick up

one or two extras so that they do not have to make another stop to get the balance of their

purchases.

2. Workshop campaigns can be run on fixed price servicing or service specials, as once you

are servicing the customer’s machine, as part of the service the whole machine is checked

out and the “extra repairs” can then be sold to the customer. You may also want to look at

specials on refurbishing machines where you create a special pricing for large jobs.

3. Unit Sales campaigns – The scope of different choices is huge and you need to take out

from your market research as to what “specials” you are going to promote. This can be

anything from offering Demo Units, Free Servicing, Additional Warranty, Buy Backs,

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Market Specials – machines altered specially for a market, or whatever else works in

your territory and for your customer or potential customer.

Marketing starts at home. In conjunction with your branding you need to make sure that your

premises is always neat, tidy and in a state of good repair. You premises must look appeasing as

the perception that must be generated to any customer, is that you are professional in your

business, that you care about your customer’s needs and that you are capable of satisfying his

requirements. This brings us straight back to our Key Customer Contact Areas. All of these

people interact with the customer and they must make sure that the customer’s needs are taken

care of. It is not a bad idea, as part of your branding to have uniforms for you staff. This not only

shows that you are proud of your company and brand, but also distinguishes your KCCA staff

from others and your customer will immediately be able to see who he/she should be speaking

to.

Branding of company vehicle gives you advertising time in the market place and shows that you

are proud of what you do. Vehicle branding must be according to the requirements of both

brands, Your Company and the OEM and must stick to the key objectives of marketing

communications.

Marketing Communications – Any form of advertising – Billboards, advertisement in a printed

media (Periodicals, Newspaper, Flyers, Leaflets etc). All marketing communication must be able

to achieve the following key objectives:

1. INFORM- This is intended to create or stimulate interest and awareness i.e. to let targeted

customers know your product, what services you offer and where to find them. You must

ensure that you use the correct media channels in order to reach your targeted customers.

E.g. As an Earthmoving Equipment Supplier, it does not help placing an advertisement

for your equipment in a medical periodical as you will not reach your customers. You

need to place and advertisement in an Industry related periodical. Plant Hire magazine or

Contractors magazine.

2. PERSUADE – This goal aims to convince your customers/potential customers that your

product or service will provide the best value to your customer/potential customer,

compared to the opposition. This is done through your promotional offer, competitive

pricing/extended warranty/etc. You can also create a sense of urgency by limiting the

offer to a time period.

3. REMIND – Once you have made your message interesting and persuasive, then you need

to remind your customer/potential customer to take action. To purchase your product. It

is also important to show visibility and to stay in the limelight reminding your

customer/potential customer that you are still in existence.

The clearer and more interesting and more convincing your communication is, the more

influence it will have on your customer/potential customer to take positive action and purchase

your product.

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Speak to your OEM about advertising and promotional material before you go ahead with your

plans:

1. Many OEM’s already have marketing departments so before you start re-inventing the

wheel check the material they have and check what they can do for you.

2. Check how much they charge as they might assist with the cost of advertising.

3. If you use OEM marketing department, check that the format and programme they use is

compatible with your local printing house.

Sponsorship is a financial or in-kind support of an activity, event. Sponsorship should not be

confused with advertising. Advertising is quantitative medium whereby Sponsorship is

qualitative medium. Before you can effectively use sponsorship, you need to have brand

recognition. Why Sponsor?

1. To enhance the image of your Company, and to shape the consumer’s attitude towards

your products and or company.

2. Create positive publicity

3. Increase visibility in the market

4. Social Economic Responsibility. Show good corporate citizenship, buy supporting the

community

5. Advertising Opportunity. Creating an opportunity to showcase your products.

As an example one of the ways on can sponsor an event is to sponsor a contractor’s association

meeting, provide venue, and or providing refreshments, and in return you get an opportunity to

make a presentation to the audience showcasing your Company’s services and product. You

might even display some of your products. The advantage of this is that you are directly targeting

your potential customers, creating a good image for your company and making the right contacts

in the industry to obtain valuable information regarding the market.

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Sales

Sales are achieved in three different areas. Firstly Unit Sales, secondly, Spare Parts Sales, and

thirdly, Workshop Sales. These sales areas are divided into two groups, Units Sales and After

Market Sales (Parts and Service). As said earlier, the salesman sells the first machine to a

customer and the second and re-curing sales are made by your aftermarket team. Once you

salesman has convinced the customer to buy his first machine, the customer then begins a

relationship with the workshop and the parts department. If your workshop and parts department

are able to satisfactorily support the customer, your salesman will become an “order taker” when

the customer makes his next unit purchase. By this I mean that the hard sell was initially done by

the salesman and then the company backed the sale by offering a high standard of after sales

service, making sure the customer is happy because his equipment/vehicles are able to perform

to meet his requirements. Now when he needs additional units in his fleet he will automatically

call you for a quotation and because you have already proved your ability to meet his

requirements, you are now in a position of command over any other suppliers.

Your sales are dictated by your marketing plan, which you set up as part of your business plan

and shown in your budget.

Unit sales – From your business plan you know who your opposition is, what the size of the

market is, the type and number of units you plan to sell, and the market share you aim to achieve.

From your marketing plan you know how you are going to achieve this.

Although you have done your research well and planned correctly in your business plan, you

need to remain flexible enough to be able to alter your plan slightly as market changes might

occur due to political changes, competition changes, foreign exchange influences etc. What is

important is that you stay abreast of what is happening in the market and the way to do that is

through your sales team who must constantly give feedback on what is happening in the market.

Sales Information Required from your Sales Team:

1. General market information

a. What tenders are out and who has been awarded them, What future developments

are coming – This will tell you what is about to happen in the market place and

which customers you need to stay close to. The more tenders that are out and

awarded the more buoyant the market is going to be. Knowing who has been

awarded those tenders will give some insight as to futures sales.

b. Who your opposition is and any new players on the scene.

c. What the oppositions pricing is.

d. Thorough knowledge of your competitor’s products and their capabilities. This

will help you strategize correctly and be able to compare apples with apples.

e. Health and Welfare of your existing and potential customers. By being close to

your customers you will get upfront knowledge of any potential disasters

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(Customers on the brink of foreclosure etc) and who is doing very well in the

market.

2. Prospect List

a. Units Sold – Any new customers that need to be entered into your customer

database, additional units to be added to your customers on the database

b. Hot Prospects – 80% done deal, you know you are getting the order imminently.

c. Short Term Prospect - Deals that are about to happen over the next 3- 6 months

d. Long prospects – Deals that are expected to materialize 6 months and further

down the line

e. Lost Sales – Deals that you have lost and the reason why.

3. Call Sheets/ Visit Reports

a. This will give you an insight as to your market penetration

b. New potential customers

c. Measure your sales people’s ability to:

i. Management their time effectively

ii. Plan effectively

iii. Waste – work areas by areas and not running from one side of the territory

to the next

Unit Sales Key Performance Indicators (KPI)

1. Unit Sales KPI Measurements

a. Market Share – Percentage of unit sales in the overall market

b. Market Penetration – The ability to penetrate the market to such an extent that you

know of every sale that is happening and that all customers and potential

customers know who you are, what products you represent, and where you

are/how to contact you. Your unit sales plus lost sales as a percentage of the total

market sales.

c. Budget – Actual unit sales versus budget (Overall for territory) and the same for

individual sales persons.

d. Hit Ratio on Quotations – The number of sales made versus the number of

quotations issued.

e. Hit Ratio on hot prospects – Actual sales versus hot prospects. This will help you

with forward ordering as most of your sales will come out of your hot prospects.

Sales Administration:

Sales paperwork – you do not want to bog your sales staff down with too much paperwork, but at

the same time you need to ensure that the relevant information is noted and shared and that all

your documentation that goes to your customer/potential customer is of a professional nature.

1. Quotations – Your quotation tells your customer/potential customer all about who you

are. It is also your formal opportunity to convince your customers/potential customers

that your product or service will provide the best value to your customer/potential

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customer, compared to the opposition. At this point of time you do not want to insult your

customer/potential customer, ensure the following:

a. Company name is correct and spelt correctly.

b. The same applies to the contact person on the quotation.

c. Contact details are accurate as this information is what goes to your database,

used for follow up etc.

d. Dates are accurate as this has legal implications with regards to validity.

e. Validity of quotation is clearly stated.

f. Exchange rate clauses also have legal implications and pricing implications.

g. Use reference numbers as this makes further correspondence and look up quick

and easy.

h. Product and specifications are clearly stated as this helps with comparisons and

legal implication as to exactly what is on offer.

i. Clear description of goods including serial numbers, part numbers, registration

numbers, quantities, packaging, unit, etc, as required

j. Terms and conditions of sale are clear.

k. Pricing is correct, taxes and duties shown.

l. Point of delivery is clear.

m. Any deviations/additions of normal terms and conditions are clearly stated.

n. Specification sheets attached

o. Authorized signature obtained

p. Presentation is good – typing accurate, correct letterhead used, in presentation

packaging as used by your company.

2. Invoices

a. Correct Customer Information.

b. Order number reflected if necessary.

c. Vat numbers etc as required by law.

d. Clear description of goods including serial numbers, part numbers, registration

numbers, quantities, packaging, unit, etc, as required

e. Correct number of copies as required.

f. Stamped and authorised signature.

3. Delivery Notes

a. Correct Customer Information.

b. Order number reflected if necessary.

c. Vat numbers etc as required by law.

d. Clear description of goods including serial numbers, part numbers, registration

numbers, quantities, packaging, unit, etc, as required

e. Correct number of copies as required.

f. Stamped and authorised signature.

g. Checked and signed by the customers authorised signatory

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Unit Stock for Sales

Stock is a critical part of any business because if you do not have stock you cannot supply and

therefore cannot invoice and as a result cannot be achieved the required income. This applies to

both your unit sales as well as your parts sales. The importance of stock on hand is:

1. Make sure that you carry the correct stock for your territory – this can be achieved by

using your marketing plan together with your prospect list so that your forward orders are

accurate and meet the requirements of the market.

2. Planning of forward order as crucial – In order to meet your delivery requirements you

need to take into consideration the following;

a. Lead time required by OEM factory

b. Shipping lead time. Also check for delays at ports due to congestion and delays

that can be caused to due civil unrest or strikes at the various ports.

3. Timing of Deliveries - The timing of the deliveries of the stock is important as it has a) an

impact on your cash flow. (Depending on your agreements with OEM), b) impact on your

ability to deliver to a customer (Credibility in the market place).

4. Financial Facility – You need to make sure that whatever your arrangements are with

your OEM, that you have enough facility for Units in production, Units waiting dispatch,

and Units in transit. You need to have stock on the ground plus the units in the system

and you need your deliveries to flow constantly with your requirements.

5. Promotions – Before you can go ahead with any Promotions, Launches, Open Days,

Demonstrations etc you need to make sure that you are going to have the stock on the

ground, the people available and the financial resources to carry out your plans/events.

When planning your promotions you must communicate with your OEM and jointly

work out the best possible promotions.

6. Make sure that all times that you have all the necessary brochures and specification

sheets required for your sales.

Tendering

In order to get access to a tender you need to make sure that your company is registered with the

necessary Municipalities, Government Departments, Mine and Businesses Supplier registers. It

is also very important that you submit your tenders, in order to stay in contention for invitations

to bid on future tenders.

1. Firstly you need your sales people to be involved on the ground with all the players in the

tendering process, from end user to Mechanical Engineer putting together the specs to the

supply chain persons and management. This way you stand more of a chance having the

specifications written closer to your products specifications.

2. Make sure that you always have available the necessary legal documents required for

tenders such as Tax Clearance Certificates, Resolutions pertaining to signatories, Letters

from the OEM stating that you are the Authorised Dealer/Agent for the territory.

3. Prepare your tenders with time to spare – you never know what can go wrong,

printer/copier breakdowns, vehicle problems. Always allow time to go through your

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tender and double check everything. You do not want to lose a tender because you have

put a comma in the wrong place, that you have left a document out or that you are late.

4. Your tender presentation is import as it shows the tender board what kind of supplier you

are. A neatly put together and presentably bound tender with all the documents, divisions

in place with accurate typing, tells the tender board that you are professional and know

what you are doing and will be a reliable supplier to their organisation.

Selling and Sales

There is commonality between your three sales areas and when the word “Salesman” is used, it

can be any one of the KCCA personnel working in sales or after sales department that are

dealing with the customer. Namely:

1. Salesman selling units

2. Workshop Manger/Foreman selling service or repairs

3. Product Support Specialist selling parts, service or repairs

4. Field Service Technician selling additional repairs when carrying out a service and or

repair

Salesmen do not make sales sitting in the office, so make sure that they are not tied with too

much “office administration” and meetings and that you give them the tools that are required to

perform their duties. Also:

1. Your sales people must get close to your customers in order to get the low down in the

market place

2. Your customers are very important to your business so get to know your customers as the

manager and not leave it just to the sales people.

3. Define your Customers’ Requirements - Listen to your customer, he will tell you what he

wants. Do not offer him what he does not need.

4. Get to understand your Customers’ business. By doing so you will be able to offer the

correct units, be able to advise the aftermarket on his particular requirements, thus

enhancing your relationship with the customer.

5. Application Selling – By understanding what your customer requires together with

knowing and understanding of what your equipment can do in the field, you can offer

your Customers’ solutions to their problems.

6. Create Niche Markets – keep your eye open on where and how you can place a machine

in a particular application/market, where your competitors are unable to compete against.

7. Create a Market – Creating a market is a combination of Niche Market selling,

Application selling and Concept selling. You are able to grow your market, create sales

by selling a concept to a customer. Unlike, A customer who, already has a

need/requirement and or looking for a solution- (Application Sell), You being the only

Dealer that can offer a 30 ton telescopic handler- (Niche Market Sell). With market

creation you are taking an idea, that you can prove will work in a market, and selling it to

“an investor”. E.g. You sell the concept of rental to a small contractor who does not

purchase a machine because he does not have the volume of work to justify the purchase

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and show him the rental opportunities available in the market, so he then purchases a

machine, that he can use and also rent out. This rental business can now even grow

further because the contractor will now keep his eye on rental opportunities available and

could end up getting more enquiries and extending his fleet. You are creating a need

where there is no need. You can also increase the market by “offering a cost saving

solution” to a customer without his asking. In other words a customer is happy using his

Front End Loader to load his bagging machine, but you know how much less fuel a

telescopic handler uses and show the customer the savings on fuel and maintenance and

also show that the unit can be used as a secondary fork lift for loading pallets or cover the

forklift on a breakdown. There was no need, but now you have created a need. Similarly,

you have a contractor that is excavating by hand. (He is happy and does not require any

machines – No need)You show him the cost saving of doing the job with a machine, and

the incremental business that can be done with the speed of operation, (you create the

need) You have now created a sale that was not there. In order to create sales, you need to

know your products and what they can do. You also need to understand the industry in

which they can work.

8. Consult with the OEM on possible modifications/changes required to a particular unit.

You will be surprised what can be done. Any modifications/changes must be approved by

the OEM.

9. Attachment Sales are a good source of income and assist your customer with his

requirements.

10. On any sale you need to be speaking to the correct people in order for a sale to happen.

For example, on a construction site, you might be talking to the foreman and he really

needs to have an additional Excavator on site, but he does not have the authority to make

that decision. Therefore you need to be speaking to the “M.A.N.” The “M.A.N.” can be

one person, or can be three or more depending on how the company is structured.

MONEY

AUTHORITY

NEED

Firstly for a sale to happen there must be a need. In this example the foreman clearly has

the NEED for an additional Excavator.

The Financial Manager is the one who will advise as to whether they have the MONEY

for the purchase, or will arrange the necessary finance for the purchase.

The Company Manager will either have the AUTHORITY to make the purchase or seek

the AUTHORITY from his board of directors.

11. Close the deal. You are allowed to ask for the order. You need to know where stand on a

deal and push the customer for a decision. If you are close to your customers, you will

know exactly how far to push and when to back off.

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12. Be both the farmer and the hunter. Hunt for the deals that are happening at this moment,

and sew the seeds for future deals. A classic example of sewing is by, staying in close to

a mine’s procurement technical advisor, keeping him up to date on latest developments to

your equipment and range of equipment as well as reminding him that your are still in the

market. This mechanical engineer is the person who assists with the drawing up of the

capital equipment tender and advises the tender board on technical issues and conformity

to specifications. You need to convince him that your specifications meet their

requirement and therefore the tender specification written will give you the advantage in

the tender.

13. Make sure that you join the necessary associations pertaining to the market and your

business.

14. Invite Customers to your OEM Factory – this is done together with your OEM. This is an

expensive exercise so make sure that there is a sale on, the trip will influence the sale and

that you are taking the decision maker

15. Invite Customers to your premises. Let them see what you have got so that they can feel

comfortable that you can deliver on your promises.

16. Entertain in smaller groups and one on ones as you can achieve a better result.

a. If you have a large group together you cannot collectively keep them entertained

or hold their attention. A smaller group of let say related companies or from the

same industry at your premises showing the latest models will be more effective

than a diverse group of customers who then start chatting with each other and not

you and your people.

b. As an example if you take four people on a deep sea fishing trip, you have their

ear for the entire time as the area is confined and there is nowhere they can go.

17. Make sure that you socialise or seen to socialise in the right circles.

18. Get to know your equals in the industry.

19. Always create a team spirit and use the tools/people that you have available to you in

order to win people over or to close deals. If one salesman is battling to break the ice with

a particular customer, try yourself, or use another salesman who perhaps has the same

interests as the customer.

20. Always make good on your promises. There is nothing better than having a reputation as

a company that delivers and keeps to their side of the bargain.

21. Above all you must be passionate about what you do and enjoy what you do. If you enjoy

what you do and are passionate, it makes for a good day at work, which will result in you

achieving your goals.

Machine Delivery and Hand Over

1. Make sure that the machine complies to the Customer’s requirements and take special

note of any “Specials” i.e. paint finish, fire extinguishers etc.

2. Make sure that the machine has had it’s Pre Delivery Inspection Service (PDI) .

3. There are no faults on the machine.

4. Machine is clean.

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5. If you are delivering the machine make sure that the transporter has adequate insurance

6. Operation of the machine is explained and special features have been highlighted.

7. All the Machine Related Tools and Accessories are handed over.

a. Tyre gauges

b. Parts Books, Operator Manuals

c. Tools

d. Key and Spare Key

8. Ensure that Hand Over Documents are filled in and the paperwork is completed and

signed for by an Authorised Signatory.

a. Invoice and Delivery Note

b. Registration Documents

c. Signed and stamped Bank Release note if financed

d. Terms and Conditions of Warranty

e. Service Requirements Explained and introduce and give your After Market

contact details

9. It is not a bad idea to take photographs of all hand over of machines.

a. This can create an opportunity for editorials in industry related periodicals

b. Use as a gift to the customer – give Customer framed photo of handover. Use

photo for your own collection

10. Salesman must be present at the hand over

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Workshop/Service

Workshop and Workshop Sales

A lot has already being said about workshop sales with regards to the technical skills,

management and administrative requirements are concerned as well as the importance of offering

the customer the best service available in the territory. When you are in Unit Sales negotiations

and you are against a competitor of equal quality of equipment, it is the After Sales Service that

will make the difference between you and your competitor. If you can offer a better after sales

service in both parts and workshops you should get the order.

1. As laid out in Sales and Selling, with regards to the relationship with the customers,

getting out to the customers, making good on promises – The exact same applies to both

your parts and service departments.

2. Have a Workshop Development Plan in place – without a plan you have no idea what you

want to achieve. In your development plan, consider the following:

a. Personnel Requirements

b. Apprentice Program

c. Technician Training Program

d. Tooling Requirements and Replacement Program

e. Service Vehicle Requirements

f. Service Campaigns and Promotions

g. Product Support Strategy

As with all plans state how you are going to achieve the goals set out and set time lines as

to when you want what to happen. Follow your plan and monitor the performance

3. Your technicians have to be skilled and competent. There is just no alternative. You need

to keep your technicians skills honed to perfection and they will need constant training in

order to keep up with the latest developments with your products.

4. Use only approved Parts, Consumables and Oils. There are no short cuts or quick money

to be made. Failure to use approved Parts, Consumables and Oils can result in comebacks

and warranty losses.

5. In order to be a cut above the rest “Think out the Box” see what you can do that will

retain your customers

6. Field Service Vehicles – All field service vehicles must be equipped with all the

necessary tools and consumables required to carry out the work at hand and must be

branded according to your Company policy. Failure to do so will result in bad service and

you will lose/waste money on travelling to and from site unnecessarily.

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7. Make sure that your quotations are accurate, and are complete with the necessary

information, as shown in sales administration section under quotations – Correct

company information, contact details, terms and condition, scope of work, etc.

8. Your workshop administration is extremely important, as the Quotations and Job Cards

are your main legal documents pertaining to the scope of work, pricing etc and need to be

approved and signed off by authorised signatories.

a. Your quotation is a scope of work that you have offered to a customer at a

particular price. Once the customer has accepted and approved the quotation, you

will have your instruction from the customer, to proceed with the repairs

according to the quotation, by receipt of order and or payment/deposit (Whatever

your company operational requirements are).

b. Should you need to carry out repairs that are over and above the quotation (This

can happen after stripping of a particular part section and you find additional

damage) You need to obtain authorisation for the additional repairs before you

carry them out, as afterward you can have problems trying to get payment for the

additional work, if it was not authorised.

c. Your Job Cards must be signed off by an authorised signatory of the customer.

This is the proof that the job has been completed and that the customer is satisfied

with the repair.

d. Your Quotations and Job Cards need to be filed accurately and kept safe as these

form part of the machine’s maintenance history and can help you with technical

and warranty issues at a later time.

9. Warranty Claims - In order to ensure that you recover your warranty costs you need to

make sure that you follow the OEM requirements with regards to warranty and especially

take note of time constraints with regards to submission of warranty claims and protocol

as dictated by the OEM.

10. Communication between any “salesman” and the customer is crucial, but, in the After

Market Sector it is even more important as your customer will plan according to what

you tell him.

a. In order to ensure that you recover your warranty costs you need to make sure that

you follow the OEM requirements with regards to warranty and especially take

note of time constraints with regards to submission of warranty claims

b. For instance if you have a Customer’s machine in the workshop undergoing

repairs and you have said that the machine will be ready in five days, he plans his

operation based on that information and will require that machine after five days.

If it is not ready and available, it can have financial and contractual implication

for your Customer. This creates a bad feeling between you and the customer, and

can drive your Customer to your opposition. As soon as you know there is going

to be a problem, inform your Customer immediately. This allows him to make

other plans to keep his operations running.

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c. The same applies to the Parts Department.

d. There are some things we can control and there are others we cannot control.

Know what you can control and know what you cannot. You cannot control what

is not under your control. So again the importance for supplier relationships is

highlighted as you can only perform as well as your suppliers. Therefore when

you stated delivery dates, clearly state if the promised delivery is depended on

possible glitches – e.g. Your parts will be here in seven days provided there are no

hiccups at customs. Or possibly – We have booked your machine for service on

Wednesday, but all our Field Service Technicians are all out on jobs. They are

expected back on Tuesday and provided that there are no problems we will be

there on Wednesday. If you just give a date – You have made a promise to your

Customer. (That is how your Customer will see it).

e. Another example of communication in the field Service Sector is – you informed

a Customer that you will service his machine on Thursday and then you cannot do

the service on that day. Remember that your Customer might have hired a

machine so that he can pull your machine off to carry out the service. If you do

not communicate with him, he is not going to be happy because he has incurred

the costs of hiring a machine.

11. With Field service repairs you need to make sure that you get the correct information on

the breakdown, as when you send out your field service team, you do not want to have

them running up and down for spares or special tools because you have not been able to

accurately define the breakdown.

12. Make sure that your workshop conforms to the national health and safety regulation of

your territory and that the workshop staff, are issued with, and use their required Personal

Protective Equipment. (Overalls, Safety Boots, Eye Protection, Reflective Vests/Bands

etc)

13. Promote a Safe Working, and Environmentally Friendly Working atmosphere. We need

to look after ourselves and our Natural Resources

Workshop Key Performance Indicators (KPI)

1. Workshop KPI Measurements

a. Budget – Actual sales versus budget in value terms and as a percentage

b. Gross Profit – Actual GP achieved versus Budget and as a percentage

c. Absorption – Percentage of Company overhead covered by Workshop GP.

d. Hit Ratio on Quotations – The number of Jobs received versus the number of

quotations issued, as a percentage.

e. Labour Recovery – Number of available man hours versus the number of man

hours sold, shown as a percentage.

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f. Rework (Comebacks) – The number of jobs that have had to be repeated because

they were not done satisfactorily the first time as a number and as a percentage of

total jobs.

g. First Time Repair (Field Service Jobs) The number of times that the field Service

team is able to go out to a job, complete the job satisfactorily without have to

come back for parts etc, as a percentage of all field sales Jobs.

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Parts

The Parts Department is the other half of your After Sales Market and is very closely linked to

your workshop. If your parts department does not perform, your workshop cannot perform. Your

parts department is one of the most important areas of your business. Parts sees more customers

than any other section, has more communication and your business performance is judged on

your parts departments ability to produce.

Customer Data Base/ Machine Park (Existing Machine in a Territory) is of vital importance as

this list of equipment by customer, forms the basis of your business and is crucial in determining

what parts to carry in stock. In linking the existing customer data base and machine park you

can:

1. Determine your parts stock holding more accurately

2. Have the necessary contact information at hand. Who to talk to regarding parts purchases

accounts etc

3. Send promotional flyers, e-mail advertisements etc as you have all the necessary info at

hand.

4. Impress the customer by being able to assist with serial numbers from your data base.

5. Ensure correct parts are order because you have the correct serial numbers so that you

can look up parts more accurately.

6. Know which customers to target for replacement of equipment because you have the year

when the purchased the equipment.

The Customer Data Base must:

1. Show Customer name, postal and physical address (this allows for zoning customers and

visitations)

2. Have correct contact details:

a. Names and departments.

i. Manager

ii. Workshop

iii. Buyer

iv. Accounts

b. Telephone numbers, Mobile numbers and e-mail addresses

c. Machine models and serial numbers (registration and plant number if applicable)

d. Year of purchase

3. Be kept up to date at all times

4. Be Neat and legible

5. Shared by all sales departments, i.e. Parts Workshops and Sales, accounts and Marketing

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There are basically three types of parts orders, namely:

1. Stock Order – Monthly/Quarterly (you need to decide the frequency as it is dependent on

the territory, if you are purchasing international or not, and the logistics involved. Stock

orders are normally larger quantities and longer delivery times, but cheapest transport

costs, and therefore you would want to have most of your parts ordered this way.

2. Intermediate Orders are place let us say on a weekly or bi-weekly basis as it is a

consolidated load (You need to determine the time frame) This is more expensive than

stock orders and arrive quicker.

3. VOR orders (Vehicle Off the Road) these are urgent orders because the machine is

standing due to breakdown and waiting for parts. Normally air freight or overnight

courier and is very expensive.

It is obvious that you want to order majority of your parts as stock orders and in order to do that

you need to have the following:

1. Accurate data base so that you can keep the correct parts in stock

2. Effective minimum and maximum stock levels and re-order levels

As said earlier about workshop communication the exact same thing applies to parts as your

customer will plan according to what you tell him.

a. For instance if you have a Customer’s machine in the workshop undergoing

repairs, or you have given a delivery date for parts shipment, and you have said

that the parts will be with you in five days, he plans his operation based on that

information. If it is not available, it can have financial and contractual implication

for your Customer. This creates a bad feeling between you and the customer, and

can drive your Customer to your opposition. As soon as you know there is going

to be a problem, inform your Customer immediately. This allows him to make

other plans to keep his operations running.

b. You also need to remember that your workshop is also one of your customers and

that they will base their delivery on what information you give them.

c. There are some things we can control and there are others we cannot control.

Know what you can control and know what you cannot. You cannot control what

is not under your control. So again the importance for supplier relationships is

highlighted as you can only perform as well as your suppliers. Therefore when

you stated delivery dates, clearly state if the promised delivery is depended on

possible glitches – e.g. Your parts will be here in seven days provided there are no

hiccups at customs. If you just give a date – You have made a promise to your

Customer. (That is how your Customer will see it).

Your parts department must be kept clean and neat at all times and:

1. Have clear bin locations so that you can quickly and easily locate your parts.

2. Have at least two stock takes in a financial year, so that you are aware of stock in hand.

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3. Parts department must be secure – you have a lot on money invested in your stock. Also

insure your parts and check with your insurer that the security is acceptable to them.

4. Your parts personnel must be able to operate the parts identification system – They need

to be able to respond to the customers quickly.

Parts Key Performance Indicators (KPI)

1. Parts KPI Measurements

a. Budget – Actual sales versus budget in value terms and as a percentage

b. Gross Profit – Actual GP achieved versus Budget and as a percentage

c. Absorption – Percentage of Company overhead covered by parts GP.

d. Hit Ratio on Quotations – The number of Jobs received versus the number of

quotations issued, as a percentage.

e. Stock Order Efficiency (SOE) – VOR purchase line items versus the total parts

purchases as a percentage.

f. Parts Units in Operation (UIO) – Annual parts purchases divided by the six year

machine park, represented in Value terms.

g. Attachment Units in (UIO) – Annual Attachment Purchases divided by Annual

Unit sales Volume.

h. Parts Availability (PA) – The number of parts that you are able to supply, off your

shelf when you receive a request, shown as a percentage. Total Available Parts

(Line items at sale) divided by Total Number of Parts Ordered (number of line

items ordered from OEM) represented as a percentage. These figures need to be

past on to your sales people as it is a common question asked by a potential

customer in order to measure the level of your after sales service. Above 85%

(eighty-five percent) is acceptable, and the higher the better. You need to set your

goal and work towards it.

i. Stock Turn Around – Annual Purchases divided by Stock Value at Cost. Ideally

you need to turn your stock at least three times a year. Anything above three times

is good.

Parts Campaigns and Promotions will help you increase your parts turnover. As we stated in the

section covering Workshops/Service you need to identify what promotions you wish put forward

and you need to plan properly and ensure that you have the stock available and that you advertise

of your campaign properly. Suggestions:

1. Ground Engaging Tools (GET), Filters, Service Kits (Filters, Belts Oils, Grease)

2. Service Exchange Components

3. Engine Parts

4. Glazing, etc

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Management

Your Dealership is like a gearbox and it needs to run smoothly. Your staff and your departments

are the gears and gear clusters inside the gearbox. They all need to work together and be in good

condition in order for the gearbox to run smoothly. As the manager, you are the oil that ensures

smooth running and prevents overheating.

Lead by example and treat everyone equally and with respect. If you respect others they will in

turn respect you. Subordinates tend to emulate their superiors so you must be careful as to how

you behave or what you say in front of them. If you rant and rave, do not be surprised if your

staff carry on the same way. The same applies to how you handle the customers, your dress code

and how you speak.

As the leader of the team you need to get the most out of your staff and in order to do so, the

following is suggested but not limited to:

1. Be fair but be strong

2. Get to know your staff. (Not as house friends) but close enough that they feel that you

care and that you can notice when something is wrong.

3. React to conflicts quickly and find a solution before it becomes a problem.

4. Follow the labour laws governing the territory.

5. Respect confidentiality, your company secrets, information, documents and personal

confidentiality.

6. Create a “Good Working Environment”

7. Give credit to a staff member where it is due. People like to be praised from time to

time.

8. At this level you do not need to steal ideas, promote a working environment whereby

your staff can participate in bring new ideas and feel part of the team.

9. Manage change properly and sell new ideas to your staff rather than dictate.

10. Foster good governance and follow the rules, that way your staff will realize that

everyone has to abide by the rules.

Project and Event Management

1. Before you can go ahead with any event, you need to make sure that you have all the

resources available for the event/promotion/project, i.e. Finances, Manpower, Stock,

Specification Sheets, Brochures etc.

2. Only one person can be responsible and co-ordinate a project or event. (A slave cannot

serve two masters)

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3. Draw up a project list detailing the following:

a. Description of task – This is very important as it must cover all the tasks required

to make the event happen.

b. Who is responsible for the task

c. Time period given for the task

d. Who they must report to - In some cases you might have different people

managing different sections of the project so it is vital that everyone knows who

to report to. (Section leader or Chief Co-ordinator)

e. Task status Completed/In Progress, and remarks on task

4. Do not assume anything.

5. Write it all down or else you are going to forget an item on your list and that could have a

huge knock on effect and even cause failure of you event.

6. Dates for co-ordination meetings

7. Check your dates for your event to make sure that they do not clash with other events that

are going to influence your attendance. For example, you are hosting a customer evening

and that particular evening is also the Contractors Association meeting. You are not

going to get all your customers to attend.

8. Confirm any bookings nearer the date. Things can change overnight.

9. Confirm you attendance nearer the time, this way you can get the catering right.

10. Have a plan A and a Plan B. It is good to have a backup plan for critical areas like your

MC, Band/DJ/Caterer.

11. Take the weather into consideration. You have no control over the weather, so if yours is

an outdoor event, what are you going to do if it rains?

12. Allow time for delays especially when it comes to logistics. Again you cannot control the

traffic, flights or courier, etc.

Responsibility and Accountability

Ensure that all your employees understand what their responsibilities are and what they are

accountable for. Here is a guideline:

1. Once you have been given a task, it is your responsibility to carry out that task and to meet the deadlines set.

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2. After accepting receipt of the task (This can also be part of your normal day to day functions), you are accountable to your management for that task.

3. Should a problem arise you need to go back to that person you gave you the task and

discuss the matter with them. Once you have discussed the issues at hand ensure that you are aware as to what your next move is.

4. Until such time that the person has confirmed that they are taking back the task, or the task is completed and handed back to the person who gave you the task, you are

responsible for the task. Delegation

You are one person and therefore cannot do everything yourself. You have to delegate functions,

tasks and responsibilities in order to get everything done. Make sure that when you do delegate, the person or persons have the ability to perform and that they either, have the required authority or you have given the required authority needed.

Training

Much has already been said about training, but without equipping your staff members with all the necessary “tools” required to do their work, they will not be able to carry out the tasks

required of them. In some cases training is part of the “tools” required. For instance a salesman cannot sell the products if he has not had product training.

On the other hand you want to have growth in your business and in order to get the growth you will need to “grow people”. A very clear example in an apprentice in the workshop – you have an apprentice at a particular cost and then you train him in his trade and as he grows in

knowledge so does his stature and position. You need to invest in people and that is why it is essential to select your personnel wisely.

Communication

We have mentioned the need for teamwork in the requirements for KCCA personnel, we have described the business as a gearbox and that all the parts need to work together, this is all

achieved with communiqués, that give clear instructions and highlights each person’s responsibilities:

1. For each person to know what they need to do and what they are responsible for, can be achieved through a detailed job description.

2. How you want things to happen is stated in your Company Policies and Procedures. 3. Who reports to who and who are the managers and supervisors is clearly shown in you

organogram which forms part of your Policies and Procedures.

4. Some communications are more important than others and some have legal implications. With this type of communication it is suggest that written communication is used. (Avoid Verbal Message) .We all know the game of broken telephone. Some examples of written

communiqués:

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a. Instructions to workshop to prepare a machine for sale and what additions are required.

b. Special authorities required for a task. c. Changes to your Policy and Procedures.

d. Communication between your Company and your Debtors e. Internal Reports

5. Besides from knowing what to do and how to do it your staff also need to know things like:

a. What events are coming up b. What promotions are happening – this is just another way of advertising – by

word of mouth.

c. VIP visits d. What machines have been sold and to whom.

e. Non sensitive information - this way everyone knows what is happening and can resolve small potential problems before they become an issue.

6. Also some personal information such as marriages, births etc. This makes everyone feel like part of the family.

7. One way of staying in touch is to have “informal coffee meeting” . Done in the morning

with your morning coffee and just a general chat with staff members. You will be

surprised what you will pick up.

8. Communication is a two way street so therefore you need to create an atmosphere where the staff member will feel comfortable talking to you.

Key Performance Measurements

KPI measurements are a tool for you to see where you are going wrong and take immediate remedial action, to highlight your strengths, and to measure performance. The examples given

are to show the various areas of measurement, but you need to work with your team and decide how you are going to measure and what you are going to measure in order to achieve the best

results for your company.

Overall Key Performance Indicators (KPI)

1. Profitability – Profit/Loss of Dealership/Branch

2. Budgeted Sales – Overall percentage of budget achieved in value terms

3. Gross Profit Margin – Percentage of budgeted GP

4. Expenses – Budget versus actual

5. After Market Absorption Rate – Combined Aftermarket GP versus Total Company

Overhead as a Percentage

6. Market Share – Percentage of unit sales in the overall market

7. Market Penetration – Your unit sales plus lost sales as a percentage of the total market

sales.

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Healthy Business Relationships

You need to foster healthy business relationships with your OEM, with your Customer and with

your suppliers. A business relationship is like a marriage and needs to be worked at, nurtured and

be mutually beneficial.

When it comes to your OEM, speak to each other about your particular territory, weaknesses and

strengths and set yourselves mutually agreed goals. Strive to obtain these goals. The more

successful you are the more units you are going to put into the territory and this will relate into

more parts, making the OEM more successful. Grow strong mutually beneficial relationships

with you OEM representatives, so, that when it comes to sales problems like special technical

specification requirements and or even pricing, they will assist you in doing everything they can

to make the deal happen.

My motto is that I will never say no to a deal on my own. The OEM together with your

Company should make a joint decision. Classic examples are :

1. Tender Pricing Validity – Special requirement to hold the price over a long period by

discussing the requirement you can come to an agreement.

2. Pricing – Before you can discuss pricing as an issue with your OEM you need to have a)

Actual evidence of opposition pricing, b) Show your OEM your price build up with all

the working and profits. (Do not be afraid to show your workings. We are all in business

to make a profit, and no-one will knock you down for making a fair profit). Then you can

openly discuss pricing and come to a mutual agreement either on the pricing, or to walk

away from the deal. Bear in mind that no one party is going to carry all the burden by

themselves.

3. Technical specifications and alterations – Again discuss with the OEM what they can do

at the factory, and or what you can do in the territory. Remember to obtain prior approval

from the factory. The same applies to any other special requirement.

The same applies to your supplier relationship, and you need that similar relationship with your

customer, so that you can all grow your businesses and all become more successful.

Every manager is different and has their own styles of management and what one needs to do is

take the points out of this document, that are relevant to you and the company, and incorporate

into your style and your company.

Apart from all that is written in this document you need to have passion for this industry. Passion

gives you the drive required to face the many different challenges that one is faced with in this

industry. It is also the different challenges that prevent you from becoming bored and stimulates

you both mentally and physically.

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