Fiscal year 2019 has been all about selling new equipment, even to the point of taking a loss at the dealer level just to gain market share. We applaud the entrepreneurs who are heeding to the cause, but we are leaving the most profitable departments off of our radar: parts and service.
Tim Whitley, CEO and founder of Team SI EQ, grew up in his mother's dealership. He knows that you may lose .1 to 2.0 percent of
net profit on your P&L at the end of the year by selling only equipment.
That is why his mom had a vibrant rental operation, parts department and a service department. Those are the departments that gave his family the luxury to go on vacation before harvest and planting seasons.
In the automotive industry, 86 percent of regular maintenance customers return to buy another vehicle. In the equipment industry, we know that the aftermarket game is a game of decay. Starting when a piece of equipment is no longer in warranty to when it is 10- to 20-years-old, equipment dealers may no longer see those customers as they choose to order their parts online and fix their equipment on their farms. However, we also know this is a multi-billion dollar industry that we are missing out on.
In June 2019, we asked 21 dealers questions on how they achieve success in the aftermarket arena. To our surprise, they didn’t really have a strategy.
That’s why we decided to invent “Retention Ramp” and provide a mapped-out plan for equipment dealers to target their aftermarket consumers.
Approximately 95 percent of our respondents said the aftermarket is an important sector for their business goals and yet about 52 percent of them replied that they didn’t have a way of tracking customer satisfaction in the aftermarket arena.
When Team SI asked, “How do you retain customers after selling a piece of equipment to transition them from purchasing to the aftermarket?” or “What channel/venue have you seen the most success in for customer retention for parts or services?”, the responses were mixed and hardly any dealer had a clear strategy.
In fact, 40 percent of the dealers said they only contact their customers one to four times a year, 10 percent said “only one time approximately 14 days after delivery” of a new piece of equipment and another 10 percent said once a month.
Team SI EQ wants to work to increase the 10 percent who said they contact their customers once a month because we see a ton of opportunity in that sector. We also know dealers don’t necessarily have the time to do that, so we knew we would have to automate that ability with a program that we invented called Retention Ramp.
This is an opportunity to leverage personalization. Let’s say some of your consumers have a two- to a five-year piece of equipment. With Retention Ramp, you have the ability to target ONLY THOSE PEOPLE with display, video, social media, and email marketing. If they have owned a piece of equipment for 10 to 20 years, ONLY THOSE PEOPLE will see a different message through your display, video, social media and email marketing campaigns.
Think of this as drip marketing, a term you may have heard.
By providing these meaningful and personalized experiences, both offline and online, you can maximize customer lifetime value, procure new business through referrals and boost customer retention. Just like you target people for new equipment sales, you can implement a similar strategy with your current customers. To do this, you have to know and understand the relationship between customer behavior and data mining, which Team SI’s product Retention Ramp provides. Without the ability to properly extract and process information, the ability to understand customer behavior will be flawed online. It is all about hitting the right people at the right time using the right frequency. Not everyone needs to see the same message about your equipment, especially in the aftermarket world.
Retention Ramp gives your dealership a way to fix this — a plan to increase in the aftermarket space versus just sending your customers direct mail. Plus, we know if we can get them back in the aftermarket, the likelihood of them purchasing their next piece of equipment increases incredibly.
So, before you sign anything for your 2020 marketing strategy, set up a meeting with us. You will want to hear the details of Retention Ramp.