The most innovative marketing plans are only successful when the goals are clear and the vision is implemented with religious fervor. At JayDee AgTech it starts with the numbers.
We are a 9-store John Deere dealership group scattered throughout Saskatchewan specializing in large ag equipment. Only about 8% of our market would be considered small ag and sprayers make up roughly 16% of our total sales. The remaining 76% falls into the large ag category, with 50% of this comprised of combine sales.
When I speak of “numbers,” I’m referring to benchmarks that we work toward and continuously keep in front of our sales department using a very structured approach. We believe it’s absolutely necessary to keep our targets visible to the sales department. We make sure we review the numbers on a monthly, quarterly and yearly basis to keep everyone in the loop of where we are at all times.
Reporting to me are 3 regional sales managers who are located in 3 different stores. In the 9 individual stores we have 21 ag territory managers. We also have 5 salespeople on the turf side of our business that are positioned in our larger locations. They report to a commercial/turf sales manager.
We have a separate precision services division and 6 agronomy specialists on staff as well. On the administrative side of the business, we have 2 settlement people who handle all settlements for ag and turf across the company. The regional sales managers and I work closely with 3 sales coordinators to make sure the paperwork is handled quickly and thoroughly.
of Sales Department JayDee AgTech
– 3 Regional Sales Managers
for 9 stores
• 21 Ag Territory Managers
– Commercial/Turf Sales Manager
• 5 Sales Staff
– Precision Services Division Manager
• 4 AMS staff
• 6 Agronomy Staff
– Sales Administration Staff
• 2 Settlement Staff
• 3 Sales Coordinators
Developing the ‘Numbers’
JayDee AgTech belongs to the Friend Management group that develops benchmark numbers that we work toward. It’s really a peer group of John Deere dealers throughout North America. We then get together with our management staff to compare notes and to discuss business trends. We set budgets and goals, and then challenge each department manager from each of our stores to write action plans on how they are going to achieve their goals. Then, on a monthly basis, we share financials and at the end of the year we review the financials of all departments. We then review the action plans they developed and the results they achieved toward their goals.
The model developed through the management group gives dealers a range of “minimums” that we should be achieving along with numbers to be in the “model” dealership category. When achieving the model numbers, you then know that you are probably producing results with the top 15% of dealers in North America.
When breaking down the numbers, we look at a variety of different metrics.
On the sales side, we look at gross margins, expenses, market share, customer experience, sales staff efficiencies, sales staff compensation, total gross margin and net margin per salesperson, aged inventory, inventory turn, and percent of used inventory relative to new and used sales.
With parts and service some of the same metrics are examined. But we also look at percentage fill on parts, stock order percentage, hours billed vs. hours paid, the efficiency of both service technicians and parts people and total sales per employee and, of course, absorption.
So to sum up, there are lots of numbers to look at and focus on. The one thing we continue to stress in our marketing plans and the goals we set out is to watch our overall total expenses. At some point, we will see another downturn in the farm economy and if we are not running as lean as we can, it would not take long to see the bottom line number diminish.
As part of this strategy, we go as far as measuring the efficiency of our sales staff and expect them to obtain certain gross margins. We feel that if they’re not bringing at least $400,000 of gross margin from sales into the business, they may not be cut out for selling ag equipment.
We also track what it costs us to have salespeople on the road. This includes what we pay them in commission and base salary. We feel that we can’t afford to pay a salesman more than about 27% of the gross margin on a deal or there isn’t enough to invest in new facilities, the tools they need to do their jobs, or provide a return for the owners. As a result, we have a lot of a metrics tied to sales expenses.
Remarketing is Key
Because of the cash tied up in used inventory, every dealer knows how critical it is to turn it. But we look at it a little differently.
While we talk about used turns, the big factor for our dealership is the total used equipment inventory as a percentage of total new and used sales. We strive to achieve a mark of at least 10% at the end of the year.
So, if we sell $200 million worth of product, the goal is to have no more than $20 million of used inventory at year-end. We recognize the importance of turns, but at the end of the day we’re trying to get to that factor of less than 10%.
Our sales staff will complain once in a while because they think our inventory is a little too lean and there’s not enough stuff on the lots. When you consider that used combines and four-wheel drive tractors can be worth $300,000 or $400,000, the way we look at it is if we turn them, it gives the salespeople the opportunity to go out and get more deals.
We treat used inventory in our turf division the same way as we do our large ag equipment. We measure all factors in the same fashion.
Our remarketing manager is the key to our business because used equipment is really what we all live and die by. He develops our quarterly trade guide, so all the values of our equipment are referenced through Iron Solutions and its trade guide. But we also maintain our own guide for our specific region.
We communicate the data quarterly with our territory and regional sales managers. They know that those are our numbers and we don’t book anything more into trades, because trades aren’t worth any more just because you’re in a tight deal. Everything’s booked consistently across our 9 stores.
Our remarketing manager is also responsible for consistency of the reconditioning of used equipment. It makes it easy for us to move used equipment from one store to another store. Farmers who know us, know that our repair and reconditioning work is consistent from one location to another. Once again, my remarketing manager is in charge of our used turns, and of course, the percentage of used equipment to new and used sales. He is also responsible for days in inventory.
Maybe the most effective thing we can do to help our salespeople sell is to provide them with the gross margin benchmark for each of our product lines. For example, the gross margin on a new John Deere tractor may be 6% and 7% on a combine. Hay tools may be 10%, AMS or precision products 23%. Each product, including the shortlines, are assigned a gross margin target. The same is true for our used equipment as well as the machinery for rent or lease.
Once a year, we sit down with our territory managers and discuss where we need to be with gross margins on every line we sell. By getting their feedback, we get buy-in from them. So when they’re out there making a deal on a new hay tool, they know we’re looking for a minimum 10% margin, they can go ahead and do the deal. They don’t need approval from any manager. That’s the goal we set, that’s the benchmark. If they get the deal for the minimum margin, they’re good to go.
Keeping It Simple
If there’s one secret to JayDee’s success in executing its marketing plan, it’s that we keep it simple. We found if we don’t keep it straightforward and uncomplicated, it doesn’t get used.
If you make a 30 page marketing plan, how many managers are going to pull it out of their drawer once a month to see where they’re at? It’s not going to happen.
It starts with the ownership group creating the vision that covers 1, 3 and 5 years. We then sit down with our senior management staff, which includes human resources, marketing, remarketing, corporate parts and service, the comptroller, CEO and general manager. It’s a group of about 10 people and we layout the marketing plan for the year.
On the sales side, we focus on just a few things. These include:
- How much we’re going to spend on advertising, with emphasis on promoting the JayDee AgTech brand?
- How many competitive owner conversions do we want to target during the year?
- How will we retain our own customers?
- Review our loaner and demo equipment for the year.
- Review our benchmarks to make sure everyone knows the targets.
- Review the overall budget for the sales team. This includes total annual sales, which includes unit sales and a breakdown by AOR.
From this, we empower regional sales managers to make all the decisions they need to do to run their departments, including staffing issues for all their regions. They’re also empowered to handle customer issues, even if it’s to write a check or look after a piece of equipment that’s failed that the customer just bought.
When it comes to loaner equipment for demo situations or customers who are down, it is not unusual for us to tie up a dozen or even 20 combines for these uses. If we run out of loaners and a key customer goes down, our regional sales managers can go buy one. If it’s $300,000 or $350,000, they go out, they get it done and they look after the customer. The customer really is king for us.
We have dollars built in to gain growth in their regions. If they need to buy a deal, they have parameters to fall back on. With those, they can go ahead and get the deal done. They don’t need approval from senior management.
Taking Care of the Details
After setting budgets and sales goals, how we achieve our targets is a matter of executing the details. From here, the plan is delivered to the territory managers, who have protected trade areas. They’re challenged to complete the assigned tasks and meet their sales goals for their trade areas, and their progress is measured. For example, our TMs have a list of competitive conversions that are targeted for the coming year.
First and foremost, they are responsible for establishing and nurturing customer relationships. We expect them to have constant face time with customers because we believe it’s relationships that are important for our business.
We expect our TMs to have a complete and accurate profile of every farm operation in their trade area. They’re in charge of their customers’ equipment deliveries and optimization. It’s standard operating procedure for the TMs to do equipment walk arounds and to follow up on all new equipment they sell. They’re also responsible for organizing customer clinics in their trade areas.
Tools of the Trade
As a company, we invest in the most up-to-date tools our territory managers need to do their jobs and to communicate effectively with management and staff in the dealership.
In addition to a quoting system for both new and used equipment, we’ve invested in a cutting edge customer relations management (CRM) technology. This system allows them to manage all interactions with current and, hopefully, future customers. It’s designed to track what their customers are doing, and to provide a thorough profile of whatever information we have for each individual farm operations in their trade area. This system also allows the TMs to record their call reports and organizes all sales, marketing and services involving the customer.
It’s designed to keep everyone informed on what’s going on at any given time. For example, any quote that’s created by a territory manager pops up on our CMS email. It shows the piece of equipment being quoted and the margin on the sale. The regional sales manager (RSM) who is responsible for the TM is able to see it. If there’s something that doesn’t quite look right on it, he can call the territory manager and correct it before the customer receives it.
What’s really important about our business system is it is set up to communicate with our quoting system. This gives our parts and service managers access to the information as well. With access to the customer profile and other pertinent data, everyone’s working from the same information.
Speeding Up Remarketing
Earlier I mentioned that remarketing is a key function at JayDee AgTech. Our business system provides a report to our remarketing manager that shows the value of anything we’re putting into used equipment inventory, the value of the reconditioning on it and the margin.
After deals are completed, we feel it’s very important, especially on the used side, that all of the information on the transaction is available on the business system within 48 hours.
Trades are not protected by store and are available to all 21 ag salespeople across all 9 locations. Units are brought into the dealership, reconditioned and ready for sale.
One of the best things about our sales quoting system is everything gets scanned into the system and everyone has access. They no longer have to deal with paper. Everything is in digital format, so everything is settled on their screens. Incidents of lost paperwork are now non-existent.
The Key: Sharing Information
At JayDee AgTech, we believe strongly that the single biggest factor in the success of our organization lies in sharing information with those who are expected to carry out our marketing vision.
We conduct mid-season and year-end reviews with the full sales team where we share information on where we are with total sales and total gross margins. We also display where each salesperson is relative to the others.
We feel it’s important to make sure we keep the numbers in front of them. If we don’t have something to measure and we’re not constantly looking at it month after month, then really we’re just chasing a dream. We make sure we do the reviews on a monthly, quarterly and yearly basis to make sure everybody stays in the loop of where we are and where they stand.