By Joe Dykes
I was recently asked by a manufacturer looking to introduce a new product into the OPE market, “What issues keep dealers up at night?” The general ones that always weigh on dealers’ minds immediately came to mind: profit margins, cash flow, finding qualified and engaged employees, among others. Over the years, several priority issues have been addressed by the OPE Council of the Equipment Dealers Association (EDA), and as a group, they have identified the following perspectives for each topic:
* Fair Warranty Treatment: The manufacturer should have a clearly defined policy. There should be a timely payment schedule (30 days maximum), and the manufacturer should communicate disputes upfront with the dealer for any payment that is less than originally submitted. The dealer should not be expected to subsidize manufacturer warranties or product improvements. There should also be the expectation of dealers that they must follow warranty requirements outlined in the manufacturer’s warranty policy. Manufacturers should clearly state the accountability and expectations of their dealers regarding training and understanding of their warranty policy. Manufacturers should consider their dealers a “Preferred Customer” regarding warranty implementation. Dealers should require treatment nothing more or nothing less from their manufacturer than they would treat their best customer. Finally, the manufacturer of the product should be 100-percent responsible for all warranty issues related to 100 percent of their products, including the engine and components manufactured and acquired by other suppliers but included as integral to the operation of the product under warranty.
* Mass Merchant Sales and Marketing: There is recognition of the validity of the retail business model of those manufacturers which include sales through mass merchant outlets and the opportunity for dealer aftermarket and product sales as a result. However, there needs to be a clearer objective and policy for mass merchant sales and agreements. Most importantly, mass merchants need to be held accountable by manufacturers, specifically relating to requiring mass merchants to not speak “out of school” regarding products they sell and what is required of the dealer after the sale. If manufacturers request and/or expect dealers to serve mass merchants as they would their own customers for service and parts, manufacturers need to ensure servicing dealers are paid fairly and promptly for warranty. It is not acceptable for dealers to lose money on warranty work for mass merchant customers.
* Internet Sales: There is also recognition that the Internet is and will continue to be a viable and profitable retail sales outlet for equipment and parts for manufacturers, dealers and third-party outlets. Many manufacturers, but not all, have established Internet policies for sales. However, all manufacturers should establish a clear Internet policy and strategy for marketing and sales. This policy should state the manufacturer’s intentions, requirements and/or limitations on Internet sales. In addition, manufacturers should clearly communicate the sales and marketing strategy behind the Internet policy, so that dealers can align their sales and marketing strategy with the manufacturers. Most importantly, the company’s Internet policy should be enforced, and equitable treatment should be shown toward its dealer network.
In addition to these priority issues outlined by the OPE Council, dealers have expressed some common and perhaps more fundamental issues that “keep them up at night.”
* Product Support: When dealers take on a new product line, they need additional support for the first couple of years, so they can build product awareness in the market. If the product is not known at all in the market area, a dealer would expect a very strong three-year support program if the manufacturer truly believes the product would provide opportunities. Dealers also need and expect to have demo products and support. Dealers look for and need a partner who provides a quality product that generates the best return on investment (ROI) for the dealer in the market. Finally, dealers look to a manufacturer for a true partnership relationship where there is a clear understanding on margins, product ordering, Internet policy and warranty policy/procedures among others and how the manufacturer intends to deliver in being a true partner for the dealer.
* Commitment to Dealer: According to many dealers, there is a perceived or real lack of commitment from manufacturers. For many dealers, it seems most of the manufacturers only want dealers when it suits the manufacturers. The manufacturers would like to sell through big box stores, online, hardware stores or anyone else that will give them an order. Then, when there is a problem, they need the dealer to fix it. The manufacturers that are going to be successful in the dealer channel are going to make a commitment to the dealers, not mass merchants or online.
The bottom line is dealers want and expect a fair business partnership with the manufacturers whose products they represent, sell, and service. They want open and clear communication of expectations, reasonable response to problems, and commitment to the dealer network. As part of EDA’s manufacturer relations efforts and on behalf of our dealer members, EDA discusses these important topics when meeting with manufacturers.
Joe Dykes is the VP of industry relations for the Equipment Dealers Association (EDA) and serves as the staff contact to the OPE Council. He oversees these functions while seeking additional opportunities to leverage existing programs such as the Compensation & Benefits Report and the Dealer-Manufacturer Relations Survey, as well as develop new products. In addition, he serves as a liaison to EDA’s industry partners, working to expand the services that are provided to OPE dealers. He monitors activities and coordinates meetings with OPE manufacturers to encourage productive and mutually beneficial relationships. His knowledge of the industry, as well as his relationships with members and manufacturers are tremendous assets in expanding EDA’s service to all dealers. For more information about EDA, visit www.equipmentdealer.org.