Sales management in farm equipment dealerships is undergoing major changes in which measuring the performance of the salesforce is becoming increasingly critical. These changes are being forced by the growing size and demands of farming operations that require more attention from the sales team, as well as the expansion of dealership operations via industry consolidation. Effectively managing and measuring the dealership’s efforts and subsequent results is essential for increasing profits.
While close attention to internal metrics and comparing these to past performance remains important, determining where the dealership stands compared to similar operations and its competition is an essential component in determining overall sales performance. One of the methods for doing so is through benchmarking.
To make these comparisons, this Farm Equipment 2019 Confidential Sales Survey was compiled by the editors of Farm Equipment to help dealerships evaluate the performance of their salesforce compared to an industry baseline.
This report is based on results of an April 2019 survey of sales managers, sales directors, general managers and dealer-principals for farm equipment dealers in the U.S. and Canada. Nearly 200 responses were collected for the report.
This report is broken out into the following sections:
- Part 1: Dealership Characteristics
- Part 2: Characteristics of the Dealership Salesforce
It is important to note that the results of this survey are representative of the survey respondents and not necessarily a perfect representation of the market as a whole. These results serve as a window for what the market looks like for some.
Part 1: Dealership Characteristics
This section of the report breaks out the survey respondents by annual revenue. This breakdown is further segmented by source of the dealerships’ revenue. This includes percent of 2018 revenue from production ag customers, rural lifestylers and large property owners, and lawn, turf & landscape contractors. All other sources of annual revenue were combined into an “other” category.
Out of the responses to this survey, over 53% of respondents were operating dealerships with annual revenue under $20 million (Fig. 1). The most common revenue range of respondents was $1 million-$9.99 million with 30.7%. The annual revenue range with the lowest amount of respondents was $50-$79.99 million.
Overall, 64% of dealers’ 2018 revenue was attributed to customers involved in production agriculture and commercial farming operations (Fig. 2). Rural lifestylers and large property owners accounted for 24% of dealer revenues in 2018, while business from commercial lawn, turf & landscape contractors made up 11% of revenues. “Other” sources of sales revenues accounted for roughly 10% of dealer sales in 2018.
Revenue Segment vs. Revenue Sources
A trend found when looking at the revenue source of respondents was that, those indicating lower annual revenues tended to have a smaller percentage of production ag accounting for their overall revenue. In these instances, respondents reported more reliance on rural lifestyle and landscape contractor customer bases for sales.
For example, for survey respondents reporting annual revenue less than $20 million, an average of 57.1% of revenue comes from production ag and an average of 28% from rural lifestyle and landscape markets (Table 1).
The significant variation occurs with dealers reporting $20-$49.99 million in annual sales and those in the next category of $50-$79.99 million. Dealers in the lower revenue group attribute 71% of annual revenue to production ag but those in the high revenue category says that only 62.8% of revenue is accounted for by production ag, an 8.2% difference (Table 1).
Respondents with dealerships in the over $80 million annual revenue category report that an average of 80.3% of their annual sales are attributable to production ag and an average of 11.5% result from sales to rural lifestyle and landscape segments (Table 1).
Greatest Success in Sales Structure/Management in the Last Year
“Reworking the compensation system and the development of a reporting system for sales team members.” … “A dedicated sales manager that mainly stays at the dealership to oversee the sales department and handle walk-in customers.” … “Having one person to do trade approvals and coming up with a very specific way of dealing with inventory as it gets older.” … “Outside sales training.”
“Learning more about how to evaluate used equipment and becoming aware of what will sell in today’s economy.” … “Centralizing the valuation of inventory management and used equipment valuation.” … “Setting up more appointments and making less cold calls.” … “Better at trade values.” … “Improved compensation packages for junior salespeople to attract and retain them.” … “Building on existing relationships and adding new key accounts with enhanced product offerings.”
“Developing a calendar of tasks related to sales support.” … “Changing our compensation plan for our sales team. Compensation plans won’t make poor salespeople good salespeople but they will drive behavior. We needed to change the behavior of our sales team based on where the industry is headed.” … “Better follow ups and better mailing lists.” … “More effective on farm sales support.” … “Inventory management changes.”
“Teamwork amongst the sales team. The more our managers encourage the flow of information throughout the organization, the better our sales performance becomes.” … “Adding digital marketing and enforcing CRM.” … “Changing senior salespeople and sales manager commission from per sale monthly to total dealership profit annually.” … “We moved to a regional manager structure to improve communication and responses to customer needs.”
“More accountability of salespeople through better one-on-ones with managers.” … “Hiring people outside of the dealership world with great customer service and sales skills. This has been an important change in the last few years. Starting fresh without bringing in someone with bad habits from another dealer has been important for success.” … “Splitting territories up into smaller areas and hiring new salespeople.” … “Implementing a new call strategy.”
“Driving home the need for strong gross margins on both new and used.” … “Switching some people to inside sales so that the field salespeople can stay out more.” … “Focusing training by specialty,” … “We have reduced the amount of paperwork that our sales people do by adding some of those responsibilities to current office personnel.” … “In house product training.” … “Implementing an inside sales team for follow up on used equipment leads.”
“Decreasing inventory by half and shifting our sales process to a pre-sell first mentality.” … “Letting the reins loose on young salespeople.” … “Cross training so salespeople can help with parts when needed.” … “Making sure we have inventory, the staff is knowledgeable on equipment and we have competitive prices.” … “Creating a better purchase order system.” … “Doing a better job of tracking on farm visits and customer interface.” … “Having competition with sales goals.”