With business starting to slow, turn to service for cash flow
By Jeff Sheets
When the weather starts getting colder and the days start getting shorter, an outdoor power equipment business is given a chance to slow down. However, if business gets too slow, then sometimes you are forced to reduce expenses and lay off employees or cut back their hours significantly. These types of moves can be difficult, and you can lose good employees in the process. The old saying “Cash flow is king!” applies here. Instead of sitting back and waiting for business to come to you, why don’t you try to be proactive and produce as much business as you can in your service department? You have a great opportunity to generate extra income through trying to encourage your customers to get their service work done in the off-season. Your goal should be to re-train your customers to get their equipment to your service department early, so they can have it ready to use when the season is “to start” rather than wondering if the equipment “will start” when they bring it out of hibernation for the first time it in the spring. The more business you get in before the rush, the less strain on the system during the spring and the greater opportunity to get through the “slow times” without burning so much of your residual income from the previous season.
Many outdoor power equipment dealers have been doing what I call “Early Bird Service Programs” for years and received a good response. Some actually have their customers calling before they send out the notices in early winter. I love this kind of outcome because it means that your customer is now listening to the “expert,” which is you and your dealership, putting you in a good position to make other suggestions such as replacing equipment, adding new items, or providing maintenance tips. People perceived as “experts” get the advantage of people generally feeling a sense of loyalty toward them. Loyalty is one the top things that you should be looking to establish with your customers. A service program offers benefits far beyond just cash flow. How do you make sure that your program works the best and attracts as many customers as possible? Here are some suggestions:
Create an offer they can’t refuse
“Free” pick-up and delivery seems to be the best offer that motivates people to do this type of service from most dealers I have talked to, but a “discounted” parts or service package can be motivating too. Whatever you are offering, it has to be something that causes customers to do something they really don’t want to do, which is service their equipment. It also is a time where they are most likely thinking about the holidays or focusing on the snow that is in their front yard rather than the grass that will be growing in a few months. A follow-up call/text/email, after the initial advertising, goes a long way again toward reinforcing how important you think this is for your customers to schedule service for their equipment. I like the offer to have an end date of at least a couple of weeks before spring season starts, so that you can say time is of the essence in getting service scheduled. Whatever you offer, there must be a sense of urgency that you create within your customers to make sure they know this needs to get done by that date.
Free is really not free, and discounted is not totally discounted
You have a business that cannot really offer totally free or discount your prices too much because you will go out of business very quickly. If you are offering “free pick-up and delivery,” you still need to at least recover the cost of this service. That can be done by increasing your labor time or by adding a percentage service rider on the parts that you sell. You do need to come up with that number based on the distance you are traveling to pick up the equipment and what you are paying someone to pick it up. Hopefully, you have done that before you offer this type of service, so that you know what you need to recoup with regard to cost. If not, using the cost of mileage guides provided by the IRS, can help you establish a good cost of the vehicle depreciation, maintenance costs, etc. Whatever discount you are offering needs to be made up in the cost of the service that you are performing. Do not give away things that you cannot afford to give away, especially at this time of year when business can be very slow. The goal is to generate income and cash flow and not to reduce them in any way.
Make sure you don’t over-promise delivery
When you are doing this type of service, it might be a good thing to give yourself some extended time to accomplish the service program. Depending on where you are located, there could be equipment that needs to be worked on immediately, especially if snow is in the forecast or, in warmer climates, the grass just keeps growing. The equipment service needs to be accomplished around the normal equipment that comes in for repair. I would keep a running list of the service program equipment that has been brought in to make sure that you are completing them in a timely manner and letting the customers know that they are done and ready for delivery. You never want your customers calling you to see if the equipment has been serviced. Again, I favor texting and emailing over the phone if possible, because it gets the point across without having to wait on hold or get involved in long conversations that keep you from doing other things. Your goal is to make this part of the process very flexible for both the customers (and you), so that they will want to do the service program again next year.
Your goal with this type of service program, as I mentioned earlier, is to create customer loyalty. You are glad that they bought the equipment from you, but you want the future service and parts business too. You have to set the expectation that servicing their equipment yearly is the best way to keep it functioning in the proper way and extend the life of the equipment. This type of program should be mentioned when customers first purchase the equipment, so that when you contact them for the “annual service,” they are ready to join in because the stage was set early in the process. If you aren’t doing this, then you are missing a huge opportunity to not just create a great cash flow opportunity, but also establish future ongoing relationships with your customers. You would rather “service” than “repair” because during the service, you have the opportunity to address things beyond the original scope of work and let your customers know what problems that need to be addressed beyond the service work. That is a win-win situation in my book for both the dealership and the customer. You need to strive to make this process as smooth as possible by making sure that the whole dealership realizes it is a priority. The service department may be the focus at this point, but every employee needs to be ready to assist to make this program run smoothly. Done well, this can be an opportunity to shine, and that is what you as a dealership are always looking to do.
Jeff Sheets is the founder and owner of OPE Consulting Services. Whether a business is thriving or struggling to survive, Sheets’ rich experience in both the corporate and not-for-profit sectors allows him to partner with business owners to customize unique strategies for their needs. For the past nine years, he has worked extensively with hundreds of outdoor power equipment dealers to create best practices in business structure, personnel management and financial profitability. For more information, he may be contacted at firstname.lastname@example.org or (816) 260-5430. You can also follow him on Twitter @opeconsult, connect with him on LinkedIn, and visit his website at www.opeconsultingservices.com.