Precision service is still an afterthought for some dealers who are more focused on selling the latest hardware or attachment. But with product margins shrinking, billable support is an increasingly vital part of creating a consistent precision revenue stream.
So how are dealers implementing bankable strategies to package, price and promote service plans? While there isn’t a universal approach, some methods are proving more successful than others.
One foundational necessity is that dealers need to improve tracking and billing for their time inside of service plans if they expect to be profitable. An approach several dealers are taking is to include the cost of an annual precision service plan on the purchase orders of new and used equipment.
“We require the base service plan to be included on all machines with telematic systems and our salespeople are trained on how to sell that value to the customer,” says one precision manager. “It’s $1,500 for the first year, which includes phone and remote support per machine. Customers can’t buy one tractor with the plan and expect us to service all of their other equipment for free.”
To encourage renewals after the first year, the dealership creates a report for the customer 90 days prior to the expiration of their agreement, detailing the value they received from the contract.
“We’ve had a couple of customers renew a part of the plan, but our foundation is going to be reminding them at the end of the year that we’re tracking all of these services and send them a recap,” the manager says. “All these services are done through our work order system, so no matter what a customer has done, they’ll have a charge. If it’s part of a value-add service plan, the customer will have a credit on that same work order. At the end of the year, there will be a breakdown and they can decide if they want to buy a la carte or renew their entire plan.”
By requiring service plans to be included on equipment purchase orders, this also provides a financial incentive for salespeople to proactively promote them. One dealer notes that savvy salespeople will know the precision service agreement charge is on the initial invoice, rather than risk having to explain it later to the customer.
“If the salesperson is good enough, he prices it ahead of time and knows the plan charge is part of the equipment purchase,” the dealer says. “If the price gets negotiated down, the salesperson is going to be out X amount of dollars on his commission.
“But that charge always shows up on the purchase order. It’s a matter of whether it gets negotiated in after the customer agrees to $50,000 for the trade in, the salesperson is supposed to have had the service plan charge already included. If he doesn’t, then the customer agreed to $50,000, but guess what, he really bought it for a little less and the salesperson take the hit.”
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