Manufacturers say that communicating the facts about shortages and early-order program dates so farmers can take full advantage of financial incentives and receive assurance of delivery are critical. Further, a number of manufacturers say top dealers use the programs as a means to enter into a greater business planning role with their farm customers, talking about future equipment needs and the steps needed to ensure them. In almost all cases, manufacturers say top-performing dealers are more hands-on than in previous years.
According to Agric-Bemvig's Ferran Meinhardt, there's no silver-bullet that dealers are following to make pre-sells a success. To him, it's about "As much imagination as possible, to combine price, availability, transport, discount and as many other factors that one can identify."
Managing the Trades
One key that makes pre-selling an easier pill to swallow is getting the current used equipment off farmers' hands. When the dealer knows in advance when a unit may need to be replaced, it's a lot easier. It comes back to being close to the customer.
Craig Harthoorn, sales manager, Kinze Manufacturing, Inc., says his most successful dealers begin trying to sell a new piece of equipment before the farmer is done using his current one.
"Successful dealers are becoming increasingly knowledgeable of their second-tier customer base," adds Tom Draper, AGCO. "The best practice has now become selling the trade-in — and then selling the new. This practice has resulted in a dramatic reduction in the amount of carrying cost and working capital required to manage the business."
To do so, says Case IH's Jim Walker, consistent and predictable pre-sell programs are needed to work most effectively with customers, and Case is working hard to keep these programs consistent and transparent. But more importantly, he says, is the successful dealer's ability to engage customers at a higher level, beyond the specific equipment purchase.
"This puts them in the role of a business partner, not just a machinery vendor. These dealers better understand their customers' operations and business challenges and opportunities, allowing them to provide equipment recommendations as well as management opportunities and recommendations. This kind of relationship allows a successful dealer to engage a customer early to get them the best deal and, in the case of the current market, ensure their equipment needs are filled." He adds that Case IH is supporting this model with an expanded field team to back-up its dealers.
Demco's Ken Streff agrees. "Successful dealers spend time with the retail customers to try and put together a long-term plan for future equipment requirements. While the exact timing for the purchase of a particular piece of equipment can change due to weather, markets or personal reasons, the need to update a certain piece of equipment remains in a structured overall plan."
Like most things in this business, success comes down to good old fashioned communication — laying out the facts for the farm customer, getting the straight scoop from the manufacturer and making sure everyone knows what's happening every step of the way to avoid surprises.
First is properly explaining the current predicament. "Our dealers are letting their customers know about the shortages coming this fall, and then continue to help the producer make his buying decision based on the manufacturer's early-order program dates," says Brillion's Mike Irish.
Antonio Carraro's Bruce Clark adds that customers still need to be told that they must make projections and order equipment 4-6 months before the equipment is needed in the field. Some still expect to drive in and have the unit on their land the following day.
In addition to the opportunity for the farmer to mitigate steel pricing and rising freight costs, New Holland's Ed Barry says the benefits cannot be emphasized enough. "Dealers must explain how the customers can order the specs to meet their needs, earn the best price of the year and get the unit in time before seeding and harvest," he says. Letting customers watch their unit being built is another tactic to educate the customer on what it takes to get a unit out the door, he points out.
Tonutti's Ralph Booth stresses the communication up the chain as well. "Top dealers follow up with the factories to make sure everything is going as planned. Communication is one of the keys."
Takes Active Promoting, Selling
Manufacturers say that dealers are also capitalizing on early-order programs by making it a priority in their advertising, promotions and day-to-day dialog. Rite-Way's Les Hulicsko notes that their advertising programs encourage early buying, and help reinforce that buyers won't be able to get delivery on their equipment unless they order early.
Kubota Tractor's Paul Williams has seen the early-order concept packaged well with promotions at the dealer level. "We've seen multiple-day open houses this spring to get the customers in, and our RoadShow truck has been instrumental at a number of dealerships with great results," he says.
In addition to seeing more promotion on early-order discounts and programs, Kongskilde's Jim Allison also is noticing other trends among top dealers. "We see aggressive dealers actually ordering several pieces of equipment on spec. Many dealers are also relying on outside financing, as equipment manufacturers have reduced the amount of field inventory they are willing to, or able to finance."
In previous years, a U.S. equipment shortage could have beaten a path for foreign-based manufacturers. Some aggressive manufacturers might have boosted exports to North America on this piece of news alone.
But with their "backyard" markets now booming (particularly in the former Soviet states) and a very difficult U.S. exchange rate, many of those players, at least the less committed ones, are "staying at home."
"With the raw material price evolution and decreasing value of U.S. currency, many manufacturers delay orders for material as late as possible to reduce financial costs," says Ferran Meinhardt, general manager of Agric-Bemvig of Spain.
While limiting dealers' ability to cost-effectively retail foreign-based equipment, the exchange rate also has likely contributed to lack of machines at home, though few manufacturers will admit it. "With the dollar being so low, much of any excess equipment is being exported," says Lee Richey, vice president, Jacto, Inc., Tualatin, Ore.
- Equipment Supply to Remain Tight All Year
- Early-Order Concept: A 'New Norm' for this Industry
- Dealer Tactics & Approaches That Work (currently reading)
- Climate Bringing Change to Manufacturer Programs