Do You Really Need PRODUCT SUPPORT PSSRs, or CSAs?

Do You Really Need Product Support PSSRs, or CSAs?

Guest writer Bill Pyles shares all the ways we really do need Product Support SRs or CSAs.

Most larger equipment dealerships have a robust PSSR (Product Support Sales & Service Rep), CSR (Customer Support Representative) or CSA (Customer Support Advisor) that has been in the making for years. This group of Product Support men and women are an integral, value-added, sales and profit generating part of the entire dealer organization.

But maybe you’re a smaller dealer and looking to get to the next tier of the Product Support ladder. 

This blog is for you!

The CSA acronym is my personal favorite as I truly believe the words customer support advisor best describes the position. The CSA is the direct link between the dealer and everything Product Support related. A well-trained CSA offers the options that meets the financial and equipment requirements of the customer. Should a failed engine be repaired, rebuilt, or replaced? Is the machine a production machine or a backup? Is the machine scheduled to be sold out of the fleet within the next six months? While the machine is down, are there any other critical areas of the machine that need inspected and repaired before going to failure? Customers get very angry when a leaking final drive went to complete failure, resulting in a machine down situation just after leaving your shop.

If your dealership sells and services tracked type equipment (excavators, dozers and tracked loaders) I know your aware the largest cost of ownership is the undercarriage. The undercarriage is a system into itself. Your CSA should have a complete understanding of the undercarriage system. A simple proper track adjusting discussion with the customer demonstrates a knowledge that will save him dollars and downtime. Getting a customer maximum undercarriage life will save thousands of dollars over the life of the machine. 

You’ll also need a good machine population file. It’s tough to forecast sales not knowing your opportunity. A good machine population file will identify the aging, location, and hours on the equipment. By the way a good population file is beneficial to sales, many machines are removed from the fleet after so years and hours. New sales opportunities!

Typically, the 80/20 rule is the typical CSA customer list. The top 20 customers assigned to a CSA typically take of 80 percent of their time and resources. Dealers will need to develop the unassigned fleet customers and the “middle segment”, customers who have your equipment but do not purchase any parts or services.

You’ll need an annual CSA meeting to discuss trends, sales forecast, changes in the market and to celebrate over and above accomplishments (just picture your last whole goods sales meeting).  Is the GM or dealer principle attending? The GM and or dealer principle must make an appearance to show support and comment on the current business environment and congratulate the high performing CSA’s. A well-developed CSA program will give you much to celebrate!

But who does the CSA report to? The dealer principle? 

I once worked for a regional vice president who upon returning from an executive meeting was convinced, we should terminate the CSA program, all of it, today, now.

This executive meeting was held during one of the severe cyclic downturns in heavy equipment sales. Dealers were struggling to survive and expense control was job one. Elimination of the CSA program would save accelerating expense dollars. His rational was simple, if severely flawed. We have a good product and if a customer experiences a failure, he will simply pick up the phone and call us. And with our new snazzy web site, the customer will simply log on and make arrangements for needed parts and or service. After thinking this over maybe for 60 seconds I countered with the elimination of the whole goods salesmen using the exact same logic; we sell good equipment and if a customer needs a new machine or a long-term rental, he will simply pick up the phone and call us. Fortunately, neither plan was put into action, we survived the downturn and came out stronger on the other end.

The sales manager? Maybe not a good choice as the sales manager has enough on his plate with inventory, inventory aging, salesmen, OEM programs, order windows, financing and fleet deals. A CSA reporting to the sales manager may turn into a delivery driver for a bucket, gathering hours for a trade in or running out docs to be signed.

The parts manager? Maybe not a good idea as most part managers are outstanding at managing their inventory, over the counter fill, stock orders, counter activity but not managing a parts and service sales person.

The service manager? Not here either. Service managers have many balls in the air dealing with shop service, field service, training, warranty, the pothole in the parking lot (a little sarcasm) OEM’s and technicians. Not much time to manage a CSA. 

A CSA without a direct supervisor soon becomes a “floater” or Product Support orphan employee.

A better solution would be a Product Support Sales Manager or a position with a similar title. This person would have 100% accountability for a successful CSA program. He or she would work closely with parts and service management in writing CSA goals that are in alignment with company goals. The Product Support Sales Manager would do the CSA’s bi-annual and annual performance reviews as well administer incentive plans and salary increases, create annual sales forecasts and work closely with the OEM representatives regarding OEM Product Support programs.

A Product Support Sales Manager is the mentor, manager, and coach in developing a CSA. CSA’s must have a career plan with defined goals in sales and service activity. I worked at a dealer who had an outstanding Product Support Sales Manager, super high energy. I truly believed this man could inspire CSA’s to sell snow plows in Miami Florida! 

A CSA MUST participate in technical training for the products the dealer represents as well as management level training in negotiating skills and people skills. A successful CSA will have a basic understanding of oil sampling, why on time PM’s are important and an excellent understanding of repair, rebuild or replace options. These skills development can be better managed by a qualified Product Support Manager who reports directly to the dealer principle.

CSA Vehicle: Car or Pickup Truck.

I’ve had responsibility for CSA’s and have experience with both the CSA company vehicle being a car or truck; pros and cons for both. If you give your CSA a car allowance and he or she uses their personal vehicle, you’ll soon find the car parked and a company truck “borrowed” for the day to run out some rebuild pumps and a cylinder or two. Car allowance or not, the CSA will be reluctant to damage or have spilled oil in the trunk or floor. In my opinion a pickup truck sporting the dealer’s name and logo is your best choice. Graphics today look sharp on the job site and rolling down the highway. And when on site, if there is something that the CSA can help out by running something back to the shop, it will not be a problem. However, you’ll want to avoid your newly minted CSA into becoming a parts runner. I do suggest that when a CSA plans his day, he or she will check with will call to see if there are some parts he can bring out and check the service WIP (Work In Process) to see if the customers he’s calling on today have any equipment in the shop and get the status, the customer will ask, be prepared!

CSA Salary & Expenses

CSA salary and expenses are usually split 50/50 between the parts and service departments. I’ve heard arguments that a CSA will sell more parts than service and parts should pay more of the percentage. Most CSA programs are salary and commission based. Another responsibility of the Product Support Sales Manager.

But keep in mind, a dealer’s best margin comes from labor sales. It’s the responsibility of the Product Support Sales Manager to steer the CSA into higher labor sales. If a customer needs a reman engine and the CSA provides a quote for the reman engine, the labor to do the remove and install must be included. I think Michael Jordan once said he missed every shot he did not take. The same applies here; don’t quote the labor and you surely will not get it. Your competitors may be quoting the same reman engine AND the labor. The customer likes the turnkey repair and asks your competitor when they can start. Always provide a professional estimate/quote and follow up with the customer. Add value and close the deal!

Customer Support ADVISOR

When I was a newly minted Product Support Sales Manager, I thoroughly enjoyed customer visits and scheduled customer meetings. I’d wait for an opportunity to ask the customer if a recent issue, wrong parts, late service call, etc. he brought up was discussed with his CSA (I did not use the CSA’s name). If the customer replied “oh you mean the guy who measures our tracks” then we’ve failed to make the ADVISOR relationship with the customer. A good gap we need to close. CSA’s need to listen when the customer talks and suggest solutions to equipment problems. I know we’re providing value when the customer asks the CSA “what do you think?” When the customer says those words, the rest is up to you to deliver the outstanding Product Support that makes you the “go-to” dealer!

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Discounting

Discounting

Today, we are proud to introduce our new guest writer, Bill Pyles. His blog today is on the topic of discounting. After separating from the United States Marine Corps, Bill started a lifelong career in heavy equipment dealer product support. Starting as an apprentice technician, Bill worked his way up to the General Service Manager for a multi-state Cat dealer. Bill continued to serve in similar roles as General Manager of Product Support to VP of Service for multistate OEM dealers. Coming up thru the product support ranks gave Bill an invaluable education of customer relations, dealer product support and an understanding of the dealers most valuable resource, the product support team. 

After 47 years of service, Bill has retired, living in Florida with his wife Diana and golden retriever, Shelby. Bill & Diana spend their time with their two sons and five grandchildren.

Bill can be contacted at LinkedIn; www.linkedin.com/in/billpyles or wlp69ss@gmail.com

Discounting

Don’t Sell Yourself Short.

At one time during my career, I worked for a dealer with a very large and diverse rental fleet. The OEM we represented did not provide a full construction and paving line needed to support a large rental fleet, so we purchased new and used equipment from other dealers.

Now after being on the dealer side for many years, my role was now the customer with other equipment dealers and I thought I’d ask for the one thing many customers ask for, the dreaded, deadly discount.

During my career I’ve worked with a few very large OEM dealers who had customers on the international level. They purchased the largest sized equipment on the market. I had personal relationships with many professional purchasing agents who know little about the equipment but knew every trick in the book to secure discounts.

My involvement at the time was service (shop, field, rebuild) related and these large customers ran hundreds of thousands of dollars through our service departments. Back in the 70’s and 80’s many dealers were not using data to analyze customers buying, renting, parts purchasing for large, if any customers. When the data did become available, and available to all product support and sales management, it became painfully apparent the dealer, while moving millions of dollars through the dealership, overall profitability was minimal. Why? Each department, not wanting to upset the large customer trotted down the discount road. Service was busy discounting labor; parts was in a hurry to discount while the sales department was taking the skinniest deals possible. These larger customers consumed a lot of dealer time and dealer resources. Regular meetings to discuss equipment and or product support issues. Demanded a very high parts availability percentage, major components in inventory on hold for their use only, an on-site field tech within 4 hours of the machine down call, guaranteed machine availability with consequences, and generous dealer policy dollars when the warranty expired (but did not purchase the extended warranty).

Were they bad customers? Absolutely not. They were very organized, knew their costs and had highly trained and professional managers, especially the purchasing managers. They in fact were holding all the cards when it came to dealing with most equipment dealers.

Dealers were discounting in all areas of dealer support. While the revenues of the financials were outstanding, the margins and profitability were poor due to unmanaged discounting. But one lesson quickly learned, no matter the size of the customer account, discounting has the same negative impact.

Let’s look at what just a 10% discount in labor (the same concept works for parts) does to your profitability.

The known variables are your:

  • Current labor rate (sell)
  • The cost of the labor
  • The resulting gross margin (labor rate minus cost)
  • Your expenses, many are fixed
  • Your EBIT (Earnings Before Interest and Taxes)

You control the labor rate and the potential to discount it.

Your cost for the labor is the tech’s wage and I doubt if you’ll get the tech to agree to discount his wage! Subtract the cost from the sell and you have your gross margin and remember, labor sale dollars do not pay your costs and expenses, gross margin dollars do that!

Consider your expenses that the margin dollars must cover, uniforms, training, utilities, tooling, depreciation, rework, policy, vehicle maintenance, and many others. Several of these expenses remain fixed month after month and must be paid. Yes, training is a variable expense but I’m thinking you will not want to cut your training program to support discounts.

Knowing all the above let’s look at the discount impact.

 

Labor Rate at List 10% Discount   15% Discount
Labor Rate $150.00 Labor Rate $135.00   Labor Rate $127.50
Cost $30.00   Cost $30.00   Cost $30.00
Margin $120.00 80.0% Margin $105.00 77.8%   Margin $97.50 76.5%
Expenses $72.00 48.0% Expenses $72.00 53.3%   Expenses $72.00 56.5%
EBIT $48.00 32.0%   EBIT $33.00 24.4%   EBIT $25.50 20.0%
  EBIT Reduced 7.6%   EBIT Reduced 12.0%
EBIT Percent Reduced 23.6%   EBIT Percent Reduced 37.5%

 

A simple, everyday give away of one hour of labor at 10% reduces your margin by $15 to $105 or 77.8%, your expense dollars remain the same at $72 but now that $72 represents 53.3% of total sales and dropping your EBIT dollars to $33 or 24.4% effectively reducing profitability by 7.6% or a total of 23.6%. Ten percent off the top will cost you over 20% in your profitability.  And it only gets worse from there. You can run these numbers for one hour of labor, ten hours of labor or 100 hours of labor, the dollars will change but the percentages will remain the same. And now you must make it up somewhere else; do not dig the discount hole. I realize this is easier said than done.

Remember my story above working for a dealer with a large rental fleet of other dealers’ equipment? Whenever there was a repair on a piece of equipment, we did not have the tooling or training on, I’d send to the local dealer. I sent the machine to the local dealer and not a shade tree outfit. Why? I knew the shade tree outfit had lesser labor rates and would figure it out eventually, but the dealer had trained techs, proper tooling and OEM technical support if needed. I knew I’d get a good repair, faster turn around time and most importantly, a product support warranty I could count on. I’d call ahead to let the service manager know the machine was coming in, a description of the issue and a request for a written estimate as soon as possible. A day or so later the service manager or service writer would call and send over the estimate.

The estimate could have been well below what I was expecting, for example all the machine needed was a sensor and not the entire harness as our techs had determined. But no matter how high or low the estimate was I always said the same thing (I mixed up the words a bit not to be too predictable) YOUR KILLING ME!!  And almost immediately I would be offered a revision of the quote with some level of a discount. My expectations were the estimate I would be getting would be thought out, based on OEM time guides, the right amount of labor included along with any additional shop costs (consumables). Rarely did the person calling me try to explain the costs and justify the estimate. When a service manager or service writer immediately drops to a discount it may tell the customer that he or she just shot from the hip, or perhaps your tried to fat finger the estimate.

You are providing excellent product support to your customers. You pay dearly for OEM training. Your shop has the correct and very expensive tooling. You have the machine history and know where the weak issues are. My point is your customer knows this and therefore he’s calling you and not Sunstroke Tractor (a reference for some of the gray beards out there). He knows that Sunstroke will eventually look at his machine, have the wash rack guy throw parts at it until something works. Who knows if the repair is correct and will last, but that’s why Sunstroke is much less expensive then you the OEM dealer. My sincere apologies if there is a Sunstroke dealer; I’m sure this is not your Sunstroke dealer being referenced.

Promote your dealership, invite your customer into your shop and show him around. Be proud of your techs and the work they produce.

Is all discounting an absolute evil? You can show a discount on certain skill levels. For example, perhaps you have a lower undercarriage repair rate, but I’d think an entry or lower level (not fully trained) tech would be skilled in undercarriage R&I and therefore make less in wages as compared to a senior tech. Put together a killer PM program; again, lesser cost could relate to a lesser sell rate. Some dealers will reduce a rental fee if the machine is in the shop. Some dealers offer a discount on the invoice if paid within a certain number of days (do you know if your dealer does?)

Do not blame the customer for asking for a discount, it’s almost second nature. He is asking for the best price from the best dealer to get his machine back in service. Do not let him down and you’ll stop being asked for a discount.

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