Whether we like it or not, change is here when we talk about business technology. In your dealership, the adoption and use of new technology is moving literally at the speed of sound. The products you sell and service are more technologically sophisticated, which means that the way you sell and service them must at least match that level of sophistication.
This column provides some lessons for the dealership on how best to take advantage of the changes that are affecting their customers and how the dealership does its business. This decision will produce a material effect on your bottom line.
There are two concepts that are new to most dealerships that significantly affect your business. The farm equipment business, like others, is becoming knowledge-based and interconnected.
Precision farming products that most dealers sell are the best example of a knowledge-based product or service. The information that is gathered by machines and then analyzed and used is based on knowledge about soils, seeds, yields, fertilizer, etc.
In our personal lives, we Google to find information about where things are, what is happening or how something should work.
The same thing should be happening in dealerships. There is information and knowledge available that you could be using to make more money, become more productive and improve customer satisfaction.
A good example is data mining. This is digging into your own data to find nuggets of valuable insights about your customers. For example, what they’re buying or what they’re not buying. You already have a lot of information about machine purchases, service and repairs, parts purchases, quotes you’ve done, lost sales, emergency orders, etc. This type of information is valuable when its organized and integrated to create a knowledge base.
Here are some simple examples. Are there customers who buy machinery from you but you don’t do their service? Or how about those who have you do some service but don’t buy parts from you for repairs they do themselves? How about customers whose parts purchases are increasing for a particular machine that indicates there may be an opportunity for them to upgrade?
Another knowledge-based example is speeding up the troubleshooting of customer repairs. Most manufacturers provide tools to electronically search for technical information or websites to find solutions that others have found somewhere else for the same problem. Increasingly, answers can be found from users of similar equipment or from other dealers.
The search capabilities and knowledge is there if you know where and how to look for it.
On June 8, the capacity of the Internet increased significantly with the addition of trillions more addresses. The Internet was running out of addresses and a new system called IPv6 was introduced. This was necessary because of the tremendous increase in the number of interconnected devices being used.
From smart phones with Internet, Wi-Fi or Bluetooth capability to telematics for remotely monitoring and controlling machinery, your dealership uses a variety of devices that are interconnected and you’ll have more in the future. These devices can be used in the field or wirelessly around the dealership and — like it or not — provide access to and from customers 24/7.
Given the two drivers of knowledge-based products and services and interconnected devices, how can you take best advantage of them? Here are some of the things we’ve learned from working with some of the most progressive equipment dealers.
Lesson 1: Software drives hardware, but hardware is important.
All of the technological devices described here are controlled by software. The software is the “secret sauce” that makes the devices simple or difficult to use, and which provide the “real” value. However, the capability of the hardware to interconnect, to grow as the needs of your dealership grow, and to operate at a low cost must be considered as well.
“Often we find that dealers purchase new devices and software to solve a short-term problem, and then try to figure out how it will work with the other devices and software already in place. In making these type of decisions you should always ask about how the new device/software will integrate with existing technology needed to run your business,” says Jennie Davis, business technology specialist for Currie Management Consultants.
Lesson 2: Listen to the experts but do not let the IT people make your decision for you.
Most dealership executives are smart about their business, but may not be as smart about smart technology. You’ll probably need to depend on experts within your business or on vendors and consultants for advice. Don’t be intimidated by your lack of expertise. Involve these people in your decision so they know what you need now and in the future. Continue to insist on solutions that meet your real needs, not fancy features that look like fun but may not have value.
Lesson 3: Be practical, but understand your customer’s expectations are changing fast.
Be careful because what you might perceive as a fad or frivolous could well be the beginning of a new way of doing business. The geometric growth of the Internet and interconnected devices happened because they’ve proved to be valuable in many new ways.
Some say that social media like Facebook and Twitter are for kids, but every Fortune 500 company uses them for marketing and selling. More and more dealers are expanding their on-line identify and business. Internet access and use of devices to connect to each other are what’s driving the unprecedented adoption rate for iPad tablets and smart phones.
The fact is even the U.S. Army uses iPads for technical troubleshooting and repairing tanks. Don’t dismiss the use of this technology for your dealership, says Davis. “When a dealership purchases an asset, it does its due diligence to determine the return on investment. It’s amazing that we neglect to use the same process when it comes to adopting technology. Just like every other asset, technology must produce a ROI.”
Bottom Line Benefits
In future columns, we’ll dig into other “lessons learned” and provide examples how technology results in “real” dealership benefits. We’ll do this with the goal of showing one or more of the financial targets the best farm equipment dealers can achieve in:
- Lowering the cost of operations. Total expenses should be less than 10% of revenues.
- Increased annual productivity, including: salespeople averaging more than $3 million in wholegoods; parts people selling more than $600,000 per year; technicians billing more than $120,000.
- High levels of customer satisfaction through speed of response and getting answers quickly.
- Creating a better image, thus attracting and keeping the best customers who also use technology to improve their profitability.
Meanwhile, if you have examples of knowledge-based dealer applications or interconnected devices to improve dealer business results, please let us know about them.