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  IN THIS ISSUE                              FEBRUARY 2013

Industry Q&A

Question:

What do you find to be the most effective strategies for pre-selling used combines — before taking possession of the units? Why?

Answers (Leave your own thoughts in the comments section below):

“Our most effective strategy on preselling used combines is to start immediately after harvest. We take possession of the customer’s trade-in when they are done with it in the field. Many times this is over six months prior to the anticipated delivery date of their new machine from the factory. When the machine is sold, we immediately payoff the customer’s loan. This rewards the customer with reduced interest expense. We have trained our customers and account managers to include used combines in their end of year purchasing instead of waiting until the next spring or summer.”

— Keith Kreps,
RDO Equipment Co., Fargo, N.D.

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“I appreciate the opportunity to offer my opinion on what is a critically important issue in relationship to dealership profitability. These are the most effective strategies for pre-selling used combines. Territory Management: You must have the used combine sold before you take the trade, not after (plan for every piece). Salespeople must have strong customer relationships and know who’s considering upgrading combines and what they’re looking for in a used combine. Next, the salesperson must identify who currently owns a machine like that and is also considering an upgrade. Then, and only then, should they pursue a trade. Proper Valuation: Combine values are based on what your potential buyers (in your trade area) have communicated they are willing to pay. Units should be valued using a top-down approach (Conservative Selling Price – Margin Target – Reconditioning – Handling = Allowance), not bottom-up. Salesperson Ownership: You must recognize and reward salespeople based on their ability to turn their used inventory quickly and profitably. Used equipment is not a necessary evil to sell new equipment, but is its own profit center that must take priority. Used equipment performance must be measured and included as part of a formal review process. In other words, salespeople must be conditioned to act as if they ‘own’ the equipment.”

— Aaron Koenig,
Koenig Equipment Inc., Botkins, Ohio

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“Why pre-sell a combine? I feel my role in the distribution chain is to add value, and to do that I need to take possession, clean it up, do an inspection, display it, advertise it, and sell it to a retail buyer.”

— Leo Johnson,
Johnson Tractor, Janesville, Wis.

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“The most effective way for us to move the used combines is to have a customer in mind way out in front of the first transaction ... actually making them a part of the selling process for the new machine. They have the buy-in up front and feel included in the process. Most often, the customers know each other, and that helps too. Full disclosure on everything with the used machine ... that way there are no surprises! Our customers actually like to know that their used machines sell for us and are willing to help out however they can.”

— Dave Colvin,
Lowe & Young Inc., Wooster, Ohio

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“I thank God every day that I don’t sell combines!”

— John Bieringer,
Dairyland Supply Inc., Sauke Centre, Minn.

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“It takes three things to sell used combines in our market: (1) low rate or free financing for at least five years; (2) warranty, either partial or full for some term; and (3) it takes a motivated salesperson.”

— Glen Vetter,
Vetter Equipment, Denison, Iowa

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“It’s all about a strong relationship between sales personnel and their customers. It takes a lot of communication and trust between all of the parties involved to make this work. Look at all of the places in the transaction where ‘trust’ is involved. First, the original customer and salesman have to agree upon the value and condition of the combine at a future date … that requires trust and a clear understanding of what is expected. Second, the second buyer is trusting that the used combine that he may not have even seen will be in the condition he is expecting. He is putting a lot of faith in the salesperson, his dealer and the original owner to give him a machine in working condition. The salesman is trusting that none of the parties will ‘back out’ of the deal and leave him with a machine that he didn’t expect. The salesperson is trusting that all of the machines involved will be serviced and taken care of for the next buyer. He also trusts his dealership to stand behind him if for some unanticipated reason a machine has an unknown issue that requires dealer participation. Lastly, the dealership is trusting that the manufacturing programs and pricing are consistent. An unanticipated price increase can send the whole process back to square one.”

— Chris Scott, MacAllister Machinery, Indianapolis, Ind.

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“We have a fool proof system to keep us from getting overloaded on used combines … don’t deal with combines, period.”

— T.J. Hurkes,
Hurkes Implement Co., Watertown, S.D.

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“The process is one of knowing our customers and staying in contact on a regular basis. The needs and requirements of the customer base regarding acreage worked and type of crops all factor in to the customer requirements. Obviously, used combines are the likely choice for well managed but lower acreage farms that prefer to manage their own harvest. By working with them on a continuous and regular basis with all their needs, we understand their requirements and expectations.”

— Bob Downham,
Connect Equipment Co., Listowel, Ontario

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We have not been the ‘best’ at selling used, but we have found a few strategies that help. One of best things we can do in any situation is communicate, and selling used is no different. As we started pre-selling new machines earlier and earlier, we realize the trade at the time of signing the order. This means even if we pre-sell a new machine in June for December delivery, we book the trade internally in June.”

— Jed Bengston,
Torgerson’s LLC, Ethridge, Mont.

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We have the unit available on our business systems and Internet sites when the deal is signed (within 48 hours). Salespeople can play rewards for early movement of used machines and penalties (reduces the commission) for the salesperson (who traded the unit in) the longer it sits on the lot. If the machine is ‘pre sold’ the commissions are increased in tiers, if it sits, the commissions are decreased in tiers. We also provide complete service records available on the machines, PowerGuard protection, cleanup and inspection. The sales department focuses on used equipment turn over.”

— Rick Lineburg,
Vincennes Tractor Inc., Vincennes, Ind.

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The most difficult part is finding the customer to purchase the used unit ahead of time. Seems the only way we have found is a lot of personal contact.”

— Brad Gering,
Freeman Implement Inc., Freeman, S.D.

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The best way I see to market used combines is through the Internet. Getting pictures right away and getting them out there for everyone to see. Once you get that connection, you get a jump-start before that new one you sold needs to be paid for or the used one floor planned. It does make a difference to get it out there on the World Wide Web.”

— Jeff Stammen,
North Star Hardware & Implement Co., North Star, Ohio

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You do not get too much invested in the trade in.”

— Alvin Kaddatz,
Kaddatz Farm Equipment Sale, Hillsboro, Texas

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Get the trade value right. There’s too much kidding ourselves that selling new offsets a used value mistake. Having the unit come from a grower who has a reputation for maintaining the unit in good shape. Having been serviced at dealership is important credibility.”

— Herman Wilson,
Pioneer Equipment Co., Houston, Texas

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In my years of selling, with my own business, I have only taken one Lexion combine on trade and had no trouble selling it. As up here in Alberta where the harvesting can be tough, (i.e., lots of straw and any thing but dry conditions), no other combine manufacture can match a Lexion for production. Likewise, before when I was with a national dealer, we had no trouble selling trades. The key is to buy the trade at the right/saleable price.”

— Peder M. Lodoen,
Peders Agri Services, St. Albert, Alberta

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Our trade area is not one that sells new combines, so any combines we sell are purchased from other dealers and then resold to our customers. Always presold.”

— Rick Sale,
Hollingsworths’ Inc., Weiser, Idaho

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We do not sell combines. If a good customer needs one, then we will find one for them.”

— Anne Hahn,
Hodges Farm Equipment Inc., Fenton, Mich.

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This is not a very scientific response, but … my most successful combine salespeople know their customers, their trade cycles and have one or two trades lined up when things are going right. When it doesn’t work, it’s because we put too much in the trade or the economy went south.

— Steve Danner,
Ag West Supply, Rickreall, Ore.

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Strategies for moving traded combines before the new ones come in include: Very aggressive finance options for used combines, advertising and face-to-face visits with prospects.”

— Tony Swanner,
Baker Implement Co., Portageville, Mo.

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The following are a few things we do to help keep combines moving:

• Have prospects in mind before you trade;
•  Know wholesale and retail values before trading;
•  Do an inspection on the combine before trading so you know how much reconditioning it needs;
•  Advertise machines soon after you trade for them; and
•  In house used combine program.”

— Shane Sammons,
A&M Green Power Group, Pacific Junction, Iowa

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The most effective way to sell a used combine for me is to bring it in to the shop as soon as it comes in, clean it up, service and repair as needed. You need to make it appealing to the prospective buyer. You will sell it a lot quicker that way. Plus, the customer is confident he is getting a machine that is field ready.”

— Joe Selhorst, North Star Hardware & Implement Co., North Star, Ohio

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