Scott Muehlhauser, left, owner, Scott’s Power Equipment, Inc., St. Louis, Mo. — discussing the finer points of the Ferris IS 3100ZP propane-powered mower with Brad Stricker, Rite-A-Way Lawn Care, LLC — understands how to attract and retain value-based commercial customers such as Stricker. (Photo by Julie Bode, Scott’s Power Equipment)By Bob Clements
As an OPE dealer, you are always looking for the best way to continue to grow your business. To do this, you can attract any one, or a combination, of three basic types of customers: consumer, commercial and municipal. All three are very different in what they are looking for in an OPE dealer, and each has to be wooed to your dealership in a very unique way. In this article, I will focus specifically on the one that has the potential to do the largest amount of business with you, year after year: the commercial customer.
All OPE dealers who are clients of my consulting firm have their own perspective on whether or not they want to work with commercial customers. Some aggressively pursue their business. These dealerships are set up to handle the trucks, trailers and equipment that commercial customers utilize to operate their businesses. They open their stores early and stay late to handle any of the last-minute items that commercial customers might need like blades, belts, oil and trimmer string.
These OPE dealers have service departments that are organized to handle the quick turn that commercial cutters demand, and their salespeople are proactive in both the marketing and sales to position themselves to have the first shot at any potential new equipment that the commercial customer will be purchasing. These dealers truly understand that equipment downtime is lost revenue for their commercial cutters, and do whatever it takes to make sure that their commercial customers are up and running.
On the other side of the coin, we have dealers who want nothing to do with the commercial customer. Their hours are more in line with that of the consumer or municipal buyers, and they are not interested in making the changes necessary to attract a large section of the commercial market. I find that many times these are dealers who have had a bad experience with the commercial customer and have chosen to focus their energy and efforts instead on the consumer and municipal segments of their market.
I don’t know that there is a right or wrong answer for your specific dealership. Whether or not you choose to work with the commercial market is up to you. However, I will tell you that, in business, spreading your risk across market sectors is always a good idea, and I believe that the commercial segment of business is something that more dealers should go after in a more aggressive manner.
For your dealership to have the greatest amount of impact in the commercial market, you have to start with the three essentials of marketing: identify, qualify and target.
1) Identify: In the beginning, you need to identify what people make up your commercial market. Don’t assume that because you know your area, you know who all the commercial cutters are. The best thing to do is a quick online search using a database company. For our dealers, we use a company called Infousa. You can go to its Web site, www.infousa.com, and following its simple directions, in less than 10 minutes have the total number of commercial customers for your market area. The only information you need is the “standard industry code,” which for your commercial customers is going to be “0782,” and your zip code. Based on that information, you can generate a list of the total number of businesses that match your criteria. Just for “fun” and this article, I searched commercial cutters using my office zip code in Kansas City and found 285 listed in a 30-mile radius. For $165, I could purchase that list and would end up with the key contact, mailing address, e-mail address and phone number of each of the businesses listed. I realize that not all dealers are in metropolitan areas and that not all of you have 300 commercial customers that you can pursue. But in every market, there are a few, and, if they are worth having, you might as well have them doing business with you.
2) Qualify: Once you have your list, you are ready to move to the second step of the process: qualifying. As an OPE dealer, now that you know to whom you are marketing, you have to figure out if they fit into the type of dealership you have.
Now is the time you pick up the phone to talk with or make a personal face-to-face contact with each of these potential customers. During your slow time, you could easily contact eight of these per day. So, if you had 100 commercial cutters in your marketplace, in 13 days you could make a personal contact with each one of them. In making the contact, you should ask the following five critical qualifying questions that will give you all the information you need to determine the best way to market your dealership to them.
How long have you been in business?
How many crews did you run this year compared to last year?
What type of equipment do you use?
What’s the most important thing about who you buy equipment from
If there was one thing that an OPE dealer like myself could do to make your life easier, what would it be?
With this information, you will find out if the potential commercial customer is a “price,” “brand” or “value” buyer; how well they might fit into your dealership; and potentially, how you might win them away from their current OPE dealer.
The commercial customers in your area will be a specific type of buyer: price-driven, brand-driven or value-driven. If you take the time to ask the aforementioned five simple questions and listen carefully to their answers, you will be able to place each potential customer into one of the following three categories.
You will find that about 15 percent of the people you call are going to buy based upon price. They are not looking for a long-term relationship; they just what to cut grass as cheaply as possible. Because of that, there is little need to sell them on your service, the size of your parts inventory or your smiling happy people. For them, it’s all about the money.
About 25 percent are going to be brand loyal. This group of businesses runs all the same brand of equipment — always have and always will. They are not interested in changing, and there will be little you can do to make them change. Regardless of how many demos you do or what your pricing is, they will always point out to you why the brand they currently use is equal or superior to the brand that you are trying to sell them.
The remaining 60 percent are “value” buyers. This is the group you will want to focus your time, money and energy on because of the potential payoff. With “value” buyers, it’s not about the equipment they run or the price you charge. It’s about what you, as a dealer, bring to their business that will help them make more money and make their life a little easier.
3) Target: Think about the three types of commercial customers (price-driven, brand-driven or value-driven). Then, answer the following question: In my current situation, which one would be more likely to come to my store? Let’s be honest: There is not much you can do to attract brand-loyal customers if you don’t have their brand — you either have it, or you don’t. So, don’t spend time or energy on a regular basis trying to win them over to your dealership. It doesn’t mean you shouldn’t stay in touch a couple of times a year, but don’t spend any significant amount of time or money on them.
Price buyers are just that — focused on price. You want to make price buyers aware of the specials you are having on parts, service and wholegoods. A great way to do this is by sending a quick e-mail that has a picture of what you are discounting, the quantity you have in stock, and the selling price.
If you are a dealer who is committed to holding your prices up, regardless of the economic situation going on around you, then this is not a buyer you are going to attract. I know as I discuss this with our dealers, the question always comes up, “Why would I want to attract price buyers to my store?” My answer is always the same: “Because in retailing, there are always times you have products that you have purchased that need to be moved out of your inventory, and price buyers are the ones most attracted to special deals!” Once you have decided that you no longer want to have a specific part or wholegood in your inventory, you should work hard to move it so that your money can be used to buy something that will make you money. I don’t care if you have to sell it at or below cost.
Of the three groups (brand loyal, price and value), the value buyers give you the greatest opportunity to make the profits you want to make if you are able to deliver more than just wholegoods, parts or service.
Scott’s Power Owner Scott Muehlhauser, right, constantly talks to his customers such as Sal Palermo, left, senior mechanic, M&P Landscaping, Inc., to stay on top of their needs. (Photo by Julie Bode, Scott’s Power Equipment)One of the dealers I have had the pleasure to work with and watch grow over the past several years is Scott Muehlhauser, owner of Scott’s Power Equipment, Inc., St. Louis, Mo.
Muehlhauser and his partners currently operate four retail locations in the Greater St. Louis area. Scott’s Power Equipment understands how to attract and retain those commercial cutters who are the value-based buyers.
Several years ago, Muehlhauser made the decision to be more than just another OPE dealer in the St. Louis market; he wanted to be a dealer who commercial cutters would come to when they needed advice and information that dealt with how to run their business so that they could be more profitable. Seizing the opportunity, he started hosting business education classes for commercial cutters during the slow season, bringing in guest speakers who specialized in customer service, finance, hiring foreign workers using the government’s H2B program, and management. Muehlhauser believed that if he could help commercial cutters be more profitable, he would have less pricing pressure on him as they came into his store to purchase equipment, parts and services.
From Muehlhauser’s perspective, aggressively going after the value buyer gives him the edge for the commercial market in his area. Outside of his focus on business education for his customers, he is constantly talking to his customers to stay on top of their needs. By using some simple surveys, Muehlhauser knows the type of media his customers read, watch, and listen to, ensuring that his marketing dollars are consistently hitting his target market. On most days, you are not going to catch him in his stores, waiting for people to come to him. Muehlhauser’s customers are on the move, and so is he. If it’s early in the morning, you’ll most likely find Muehlhauser at a convenience store, buying coffee for his customers who are getting ready to head out to work. If it’s in the heat of the afternoon, you’ll find him handing out cold, bottled water to his customers’ crews who are mowing.
Scott’s Power Equipment is successful because it has an owner with a strategy on how to capture the commercial market. There’s no magic to what Muehlhauser does; any dealer in any market in North America can do the same thing. Muehlhauser has a well-thought-out strategy that he is disciplined in applying. His margins on wholegoods and parts are at the top of any dealer who we work with. If there is a secret to his success, it’s that he has a relentless desire to capture that value-based commercial customer and is constantly reshaping his stores, his people, and his plan to meet and exceed their needs.
Attracting the commercial customer is a strategic process that any dealer can manage successfully. If you are willing to take the time to identify the commercial customers in your area, contact them, ask qualifying questions, and target those that fit your dealership model, strong profits, growth and success can be yours.
Bob Clements is the president of Bob Clements International, Inc., a consulting firm that specializes in the development of high-performance dealerships. His organization works hands on with dealerships throughout North America, helping them attain the personal freedom and financial wealth all entrepreneurs strive to achieve. For more information, contact Bob Clements at (800) 480-0737 or firstname.lastname@example.org or visit his website at www.bobclements.com.