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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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